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Dow Theory Update For August 2: Secondary Reaction For US Stocks Signaled Today

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

Primary and secondary trend for gold, silver and their ETFs miners bullish.

US STOCKS

The primary trend as per Schannep’s Dow Theory is bullish since March 1st, 2019 when both the Industrials and the S&P 500 closed at +19% from the 12/24/2018 bear market closing lows.

However, “capitulation” suggested the opening of a partial commitment to stocks on the very day of the market bottom (12/24/2018). More about that partial commitment here.

And more about “capitulation” in general in the following links:

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (NYSE:I)

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (II)

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (NASDAQ:III)

The secondary trend turned bullish (official end of secondary reaction) on 06/20/2019, when both the Industrials and the S&P 500 broke up their respective primary bull market closing highs, and, hence, the secondary reaction which was signaled on May 9, 2019 as explained here. and here was ended.

The current decline does qualify as a new secondary reaction under Schannep’s rules. As a reminder, the rules for a secondary reaction are:

a) A decline that interrupts the primary bull market.

b) That lasts a minimum of 10 calendar days on at least 2 of the 3 indices.

c) With at least 8 trading days as the average of all three indices.

The Transports made their last recorded closing high on 07/16/2019. The Industrials did so on 07/23/2019. The S&P 500 did so on 07/26/2019. The Industrials have declined for 8 trading days. The Transports have declined for 13 trading days. The S&P 500 have declined for 5 trading days. The average time of decline amounts to 8.66, which is more than 8 days.

The Industrials have exactly declined for 10 calendar days and the Transports much more than that and, hence, the calendar day requirement of at least 10 calendar day on at least two indices has been fulfilled too.

As to the extent requirement all the indices have declined more than 3%, which implies that this requirement has also been met. Here you have a spreadsheet

Hence, we can declare that with date of today (August 2nd, 2019) a secondary (bearish) reaction against the primary bull market has been signalled.

Here you have an updated chart.

Secondary reaction for US indices signaled today

As per the Rhea/classical Dow Theory, the secondary reaction has not changed. Since the Classical Dow Theory uses only two indices (Industrials and Transports) and the Transports, and the Transports have not bettered their primary bull market closing highs, the secondary reaction which started on April 2019 remains in force, and, hence, the setup for a primary bear market has not changed.

Here you have an updated chart as per the “Rhea/Classical” Dow Theory.

Nothing has changed as per the Classical Dow Theory. The "old" secondary reaction continues in force

GOLD AND SILVER

The primary trend is bullish since 12/24/2018 as explained here. No changes. We finally got a secondary reaction on 4/16/2019 when GLD violated its 03/07/2019 closing lows (and confirmed SLV which had done so some days ago). More about the entrails of such a secondary reaction here and here.

Furthermore, currently SLV and GLD setup for a primary bear market signal as was explained here.

On June 18th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmed by SLV. Hence, at that time we could not declare the end of the secondary reaction. However, on 07/18/2019 SLV broke up above its hitherto primary bull market highs, and hence the primary bull market has been reconfirmed.

Here you have an updated chart. The blue horizontal lines display the last primary bull market highs.

Primary bull market reconfirmed on July 18th, 2019. End of secondary reaction.

GOLD AND SILVER MINERS ETFs

The primary trend is bullish since 12/18/2018 as explained here. No changes.

The secondary trend is bearish (secondary reaction) since 4/18/2019 when GDX violated its previous 03/06/2019 closing lows (and confirmed SLV which had done so several days before), as was explained here. and here

Furthermore, currently SIL and GDX setup for a primary bear market signal as was explained here.

On June 17th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmed by SIL. Hence, we could not declare the end of the secondary reaction. However, on 07/17/2019 SIL broke up above its hitherto recorded primary bull market highs, and the primary bull market was reconfirmed.

Here you have an updated chart. The blue horizontal lines display the last primary bull market highs.

On 07/17/2019 SIL confirmed GDX and the primary bull market was reconfirmed. End of secondary reaction signaled

Sincerely,

The Dow Theorist