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Dow Theory Update For October 14: Primary Bull Market Reluctantly Signaled For Gold And Silver Signaled On October 12

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

However, I still don't fully like the secondary reaction that defined the pivot point to be broken out for a primary bull market to be signaled

US STOCKS

The primary and secondary trend is bullish as explained here and here.

http://www.dowtheoryinvestment.com/2015/10/dow-theory-update-for-october-9-primary.html

http://www.dowtheoryinvestment.com/2015/10/dow-theory-update-for-october-8-primary.html

GOLD AND SILVER

On October 12, 2015 GLD finally deigned to confirm SLV, and hence a primary bull market was signaled. Both SLV and GLD have bettered their secondary reaction highs, and hence the primary trend has changed from bearish to bullish.

However, I feel leery with this signal, and for good reason. When I analyzed the secondary reaction whose closing highs were to be bettered for a primary bull market to be signaled, I made clear that it was a "weak" or "dubious" secondary reaction, since the time requirement was barely met. More about my qualms concerning the secondary reaction here.

And here you have an updated chart:

Primary bull market signaled or just we have just had our real secondary reaction?

On a closer look, I have seen that SLV did not even manage to rally for at least 10 calendar days. According to Schannep, at least two indices should rally for 10 calendar days, irrespective of the average time of trading days. While all this is not carved in stone, and Rhean himself stressed the difficulty in defining secondary reactions, I feel that maybe the latest closing highs we have seen may not be indicative of a primary bull market, but rather constitute the real secondary reaction highs. Those willing to jump the gun, may consider the primary trend as bullish (especially given that the ETFs miners, which tend to lead, are already on a primary bull market of their own). Nonetheless, those more conservative may rightfully consider that the last recorded highs determine the real secondary reaction, and from this point we should wait for a pullback of at least 3% (in volatility-adjusted terms) on either SLV or GLD. After such a pullback the joint violation of the October 12 closing highs would entail a primary bull market.

So here, there is room for two alternative interpretations, both of them legitimate: Either the last recorded closing highs signal a primary bull market; or, if we consider that the last rally did not qualify as a secondary reaction, the last recorded highs constitute the real secondary reaction from which we have to wait for the development of the primary bull market setup.

GOLD AND SILVER MINERS ETFs

The primary and secondary trend is bullish since October 5th, 2015, as explained here.

Sincerely,

The Dow Theorist