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Dow Theory Update For August 14: US Stock Indices Set Up For Primary Bear Market Signal

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

Trends for gold, silver and their ETF miners unchanged.

I am writing before the close, so things might change. Readers beware.

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)

http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation_22.html

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

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

http://www.dowtheoryinvestment.com/2019/07/dow-theory-special-issue-capitulation_11.html

On August 2nd, 2019 a secondary reaction against the primary bull market was signaled, as explained here. As of this writing US stocks indices have further declined (in the vicinity of -6%).

On 08/08/2019 the S&P 500 rallied more than 3% off the secondary reaction closing lows (blue rectangle on the chart below) thereby setting up US stock indices for a primary bear market signal. The Industrials and Transports did not manage to rally 3%. However, just one index rallying more than 3% suffices to set up stocks for a primary bear market signal. More about when we don’t require confirmation here.

Dow Theory special issue: Is the primary trend for stocks about to change?

Hence the 08/05/2019 secondary reaction lows are the level to be jointly broken (the S&P 500 must partake) so that a primary bear market is signalled. On 08/12/2019 the Transports by closing at 10033.58 violated its secondary reaction lows (10040.23). However, neither the S&P 500 nor the Industrials did confirm and hence no primary bear market was signalled.

Here you have an updated chart.

Setup for primary bear market completed (blue rectangle)

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 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.

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.

On June 18th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmedby 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. From that date both GLD and SLV have made further higher highs. A bull market.

GOLD AND SILVER MINERS ETFs

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

On June 17th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmedby 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. Since that date both ETFs have been making higher highs. A bull market.

Sincerely,

The Dow Theorist