The primary trend also bullish when one takes the “short-term” interpretation.
GOLD AND SILVER
In this post, I provided a thorough explanation concerning the rationale behind my use of two alternative definitions to appraise secondary reactions.
A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.
The primary trend was signaled as bullish on 11/11/21, as I explained here.
On 12/02/21, a bearish secondary reaction against the bull market was signaled, as I explained here.
On 2/14/22, GLD broke up above its primary bull market closing high of 11/17/21 at 174.50 unconfirmed by SLV. On 3/1/22, SLV bettered its 11/12/21 primary bull market high and confirmed GLD. Thus, on 3/1/22, the primary bull market has been reaffirmed, and the secondary reaction canceled. The table below contains all the relevant data:
B) Market situation if one sticks to the traditional interpretation demanding at least three weeks of movement to declare a secondary reaction.
The primary trend was signaled as bearish on 11/27/2020, as was explained here.
The primary bear market was reaffirmed on 9/17/2021, as was explained here
I reported the existence of a secondary reaction against the primary bear market in my 11/13/21 post.
The setup for a primary bull market signal was completed 12/2/21 (GLD) and 12/9/21 (SLV), as I explained here.
On 2/14/22, GLD broke up above its 11/17/21 secondary reaction closing high at 174.5 by closing at 174.74, unconfirmed by SLV. On 3/1/22, SLV broke topside its 11/12/21 secondary reaction high at 23.42 by closing at 23.54, thereby confirming GLD, signaling a primary bull market, and extinguishing the secondary reaction. Accordingly, now both the primary and secondary trends are bullish.
The table below contains the key figures and data:
GOLD AND SILVER MINERS ETFs
A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.
The primary trend was signaled as bearish on 1/27/22, as I explained here.
Off their 1/28/22 closing lows both SIL and GDX rallied for 11 trading days until 2/17/22. The rally satisfied both the time and extent requirements for a secondary reaction as you can see on the table below.
After the 2/17/22 highs a minor pullback ensued. It did not meet the extent requirement to setup both ETFs for a primary bull market signal, as the Volatility-AdjustedMinimum Volatility did not reach the minimum threshold. Hence, the setup for a primary bull market signal was not completed and the secondary reaction continue making higher highs.
On 2/14/22, GDX broke up above its 1/19/22 closing highs (highs of the first secondary reaction against the primary bear market that started off the 11/15/21 highs), unconfirmed by SIL. On 3/8/22, SIL did not break up above its 1/19/22 closing highs by a hair. Absent confirmation, no primary bull market has been signaled.
So please write down SIL 1/19/22 closing highs at 37.48. A primary bull market will be signaled if SIL breaks up above this level. As an aside, if we assessed the trend using GDXJ and SILJ, the trend would be bullish since 3/1/22. The junior miners are displaying more strength than the seniors, which tends to be bullish (appetite for risk in precious metals).
Below a chart displaying the relevant price levels (blue horizontal lines) to be broken topside. The horizontal lines display the first secondary reaction against the still existing primary bear market. The grey rectangles display the most recent pullback that lacked the necessary extent to set up SIL and GDX for a primary bull market signal.
B) Market situation if one sticks to the traditional interpretation demanding at least three weeks of movement to declare a secondary reaction.
The primary trend was signaled as bearish on 8/9/2021, as was explained here.
On 1/28/22 both GDX and SIL made lower lows, which terminated a secondary reaction against the primary bear market.
From the 1/28/22 closing lows both ETFs rallied until 2/17/22 for a total of 14 trading days. Given that we strictly demand under this section 15 trading days, the time requirement for a secondary reaction has not been met. Absent a new secondary reaction, we cannot look for the pullback that sets up for a primary bull market signal. However, we know that when markets do not oblige and do not easily produce the awaited setup for a primary bull (or bear) market signal, we have an alternative entry. In this case, the highs of the last completed secondary reaction are a valid price level to be jointly broken up to signal a new primary bull market.
GDX made its last completed secondary reaction closing highs on 11/15/21 at 34.90. Such highs were breached by GDX on 3/1/22 at 35.86. SIL made its last completed secondary reaction closing highs on 11/12/21 at 41.91. As of this writing, SIL has not bettered the 11/12/21 highs, and has not confirmed GDX. Therefore, no primary bull market has been signaled.
Below the updated charts:
Overview: The spreadsheet below displays the primary trend in the pairs SLV/GLD and SIL/GDX when we appraise them with either the “shorter-term” or “longer-term” interpretation of the Dow Theory. Red color displays a primary bear market, and blue displays a primary bull market.
Sincerely,
Manuel Blay
Editor of thedowtheory.com
