November 9, 2017

Dow Theory Update for November 9: The Transports are diverging seriously

Manuel Blay

Current bull swing (not to be mistaken with bull market) in jeopardy

I am writing before the close.

I apologize for my not posting very much but I am traveling and, as usual, time is not abundant.

US Stocks

The primary trend is bullish since November 21^st, 2016, as explained here and here.

The primary trend was reconfirmed on July 3^rd, 2017 as was explained here

On October 12^th, 2017 the Transports stopped making higher closing highs whereas the Industrials and the S&P 500 continue edging higher. My concern now is that the Transports not only are not confirming but are diverging (that is trending lower while the other indices continue trending higher). Such divergence seems to suggest that the current bull swing (now more than 6 months old as I wrote in my last post) may be coming to an end (that is at least a secondary reaction seems to be coming up).

Please mind that even if we had at hand a secondary reaction which might result in a change of primary trend, the sell signal would be given in at least 2-3 weeks, which implies that the current signal is very likely to exceed one year. After some “fibrillation” this last trade resembles the usual Dow Theory trade (longer duration).

Here you have an updated chart displaying the current situation. The trendlines say it all.

Too much weakness in the Transports

GOLD AND SILVER

The primary trend was declared bearish on July 7^th, 2017, as explained here and here

The secondary trend is bullish, as was profusely explained here.

The pullback that got started on September 8^th, 2017 has unambiguously setup SLV and GLD for a primary bull market. An in-depth explanation here. Please mind that a “setup” is not the actual signal. So, if the primary bear market lows were jointly revisited the primary bear market would be reconfirmed.

Here you have an updated chart:

Times goes by an nothing happens: This is normal when applying the Dow Theory

GOLD AND SILVER MINERS EFTs

The primary trend is bearish, as was explained here and here.

The secondary trend is bullish as explained here

For the same reasons given when analyzing SLV and GLD, no primary bull market has been signaled for SIL and GDX, as explained here. GDX did not better its secondary reaction closing highs by a hair, but it failed to do so. Furthermore, SIL is very far from its secondary reaction closing highs. All in all, no primary bull market signal in sight.

Here you have an updated chart: