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Dow Theory Update For September 23: US Stocks Set Up For Primary Bull Market

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

On September 22nd, both the SPY and the Transports declined by more than 3%. The SPY declined -3.13% and the Transports -3.88%. Today such declines have been extended. The Industrials failed yesterday and today to decline by more than 3%. However, as per Schannep's Dow Theory, it suffices with just one index to decline more than 3% to set up the stock market for a primary bull market. Thus, now stocks have set up for a primary bull market. If the 9/16 closing highs (for the SPY) and 9/17 closing highs (for the Transports) were broken up, a primary bull market would be signaled.

Conversely, if stocks continued declining and jointly violate the 8/25/2015 closing lows, the primary bear market would be reconfirmed.

So now, we have to wait. Either a new primary bull market will be signaled, or the primary bear will be reconfirmed.

Here you have an updated chart. You can see the lows, the rally (secondary bullish reaction against the primary bear market) that ensued (blue rectangles), and the recent pullback (orange rectangle on the right side of the chart) which has set up stocks for a primary bull market signal.

Set up for primary bull market completed

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

The secondary trend is bullish as explained here

GOLD AND SILVER

The primary and secondary trend is bearish as explained here.

No rally from the lows has qualified as a secondary (bullish) reaction against the primary bearish trend. So the bear remains entrenched.

GOLD AND SILVER MINER'S ETFs

As to the gold and silver miners ETFs,on 3/10/15 SIL violated its 12/16/2014 primary bear market closing low. On July 8, 2015 SIL violated its March 10th, 2015 closing low.

On 7/1/2015 GDX violated its secondary reaction lows of 3/10/2015, and hence, it confirmed the bearish action of SIL thereby signaling a primary bear market signal.

Thus the primary and secondary trend for SIL and GDX is bearish.

By the way, my musings concerning the need to promptly and without hesitation honor the Dow Theory signals do fully apply to SIL and GDX. Price action after the primary bear signal offered no respite to sellers. No rally, no mercy.

As with gold and silver, no rally from the lows has qualified as a secondary (bullish) reaction against the primary bearish trend. So the bear remains entrenched.

Sincerely,

The Dow Theorist