Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Dow Theory Update For June 30: Time Requirement For Secondary Reaction In Stocks Met (Percentage Decline Requirement Not Yet)

|Includes:DIA, GDX, GLD, IYT, SLV, SPDR S&P 500 Trust ETF (SPY)

Gold, Silver and their miners ETFs made higher (minor) highs

Gold, Silver and their miners ETFs made higher (minor) highs

US Stocks

The SPY closed down. The Transports and Industrials closed up. Stocks are clearly losing momentum. Let's keep a watchful eye on them, as any decline exceeding 3% could usher stocks into a secondary reaction, since the time requirement for a secondary reaction has already been met (namely, interruption of the primary trend -failure to make higher highs- for a minimum 10 calendar days on 2 of the 3 indices with at least 8 trading days as the average of all three indices, as per Schannep's Dow Theory).

So one "shoe" has already dropped: the time requirement for a secondary reaction. The second, and last shoe to drop would be a confirmed decline exceeding 3%. Thus, the only way out of the threat of a secondary reaction would be stocks making confirmed higher closing highs. Failure to do this will more likely than not result sooner or later in a 3% decline, and accordingly in a secondary reaction.

The primary trend remains bullish, as explained here, and more in-depth here.

The primary trend was reconfirmed as bullish on October 17th, 2013, and November 13th, 2013 and March 7th, 2014, for the reasons given here, here and here.

So the current primary bull market signal has survived three secondary reactions.

The secondary trend is bullish too, as explained here and here.

Gold and Silver

SLV and GLD closed up, and made a confirmed minor high. For the reasons I explained here, and more recently here the primary trend remains bearish. GLD and SLV should soon make confirmed higher highs or else the current rally will start to become suspect.

For the primary trend to turn bullish, SLV and GLD should jointly break above the secondary (bullish) reaction highs. As a reminder, the secondary reaction closing highs were made on August 27th, 2013. From such highs the market declined without jointly violating the June 27th, 2013 primary bear market lows.

Today is anniversary day: One year that the primary bear market lows have not violated. On the other hand, SLV and GLD have been unable to better the August 27, 2013 secondary reaction highs. So in the longer time-frame is also see compression.

Here I analyzed the primary bear market signal given on December 20, 2012. The primary trend was reconfirmed bearish, as explained here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

On a statistical basis the primary bear market for GLD and SLV is getting old. More than one year since the bear market signal was flashed has elapsed. However, I am extremely skeptical as to the predictive power of statistics. I prefer price action to guide me, and the Dow Theory tells me that the primary trend remains bearish until reversed. However, the secondary bullish reaction against such old primary bear market is also getting quite old. Tie.

Furthermore, the June 27, 2013 lows remain untouched. The longer this situation lasts, the higher the odds that something might be changing. But I wait for the verdict of price action.

As to the gold and silver miners ETFs, SIL, and GDX closed up and made a higher minor high.

Please mind that a setup is not the real thing. So the primary trend has not turned bullish yet (or maybe "never").

The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GDX are not in a primary bull market.

The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GDX are not in a primary bull market.

The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

Sincerely,

The Dow Theorist

Stocks: SPY, DIA, IYT, GLD, SLV, GDX