Wednesday, January 6, 2016

Dow Theory Update for January 6: US Stocks remain under bear market spell

Joshua Brown, of the Reformed Broker, sees global bear market

Trends have not changed since my last post of December
24th. Market action, though, seems to confirm the picture I have
been depicting during December: Be cautious with US stocks, and, after all,
gold and silver miners might not be so weak after all. I am writing before the close.

Following the primary bear
market signal of Friday 11th December, stocks made lower confirmed lows on
12/18/2015 and 1/6/2016 (today). Hence, any secondary (bullish) reaction is to
be counted starting from these last recorded lows. Hitherto, no secondary
reaction has materialized yet. Here you have an updated chart.

Primary bear market in full gear

Furthermore, there is global
headwind for US stocks. Joshua Brown, quoting Meb Faber, and UBS, believes that
a worldwide primary bear market is underway. Here you have the link to his succinct
and interesting post entitled “The Global Bear Market Has Already Begun”

SIL has violated its 9/10/2015
closing low (last primary bear market low) unconfirmed by GDX. Both ETF miners
are under a strong secondary reaction (displayed by the red rectangles on the
chart below).

We have to wait for GDX to
confirm. Until then we cannot declare a new primary bear market. The longer it
takes for GDX to confirm, the better the odds for the primary bull market to
survive. However, price action is king. Since mid-November GDX has refused to
confirm.

I see that gold and silver
miners ETFs seem to be weathering the storm afflicting US (and world) stocks.
Given pervasive weakness all around, their relative strength might be
indicative that strong hands are quietly accumulating such stocks.

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This blog (dowtheoryinvestment.com) is strictly a personal journal applying my interpretation of Dow Theory principles to the action of the stock market and my musings about investment and trading in general. This blog is intended solely for entertaining, illustrative or informational purposes. I am not a registered investment advisor and neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, option, ETF, mutual fund, currency, commodity, or any other security. I am unaware of any readers personal circumstance, financial condition, risk tolerance or goals and objectives, so nothing read here should be considered advice suitable for them. Anyone reading this blog does so with the understanding that this is strictly meant as an analytical exercise and does not proffer actionable advice in any way, shape or form. Trading and investing always entail risk and possible loss of funds and should only be undertaken after appropriate due diligence by the trader/investor and after consulting a registered investment adviser.