PM Daily Market Commentary - 7/18/2013

davefairtex
By davefairtex on Fri, Jul 19, 2013 - 12:03am

Today was a relatively quiet day.  Jobless Claims and the Philly Fed Survey caused some price movement which seemed to be good for running stops in both directions.  Gold once again outperformed silver - it recovered most of its losses from yesterday.  Silver, not so much.  Volume was a bit light.

Positive

  • shorts didn't push the market down further; gold rebounded

Negative

  • gold/silver ratio rose again to 66.30
  • miners were off slightly even though PM was up

Looking Ahead
The downtrend in gold is still in place (as defined by its multiple moving averages), but we are still within range of gold $1300.  I have my doubts about silver, but its possible if gold can make it through $1300, it will drag silver above $20.20 along with it.

The $1300 price in gold represents a point where (in aggregate) many short term traders on the long side decide to take profits, and where traders inclined to go short will pile in perceiving a good entry point.  Something needs to happen to break the cycle, to tip the balance of supply and demand in the futures markets either in one direction or another.

Selected miners are doing much better than gold itself.  Some have even broken through their 50 MA, which is a few checkpoints further along the way to reversing trend.  You can identify them by comparing them against gold itself.  For instance, one of my favorites is PVG - a very thinly traded junior gold miner with a high grade find in Canada (Full Disclosure, I'm long PVG).  PVG is very volatile - it can be up 10% (and down 10%!) in one day, as it was two days ago.  But see it here overall outperforming gold itself:

(source: Stockcharts.com)

Contrast this against the chart for the junior gold miners and you'll see what I mean.

(source: Stockcharts.com)

I'll talk about that more this weekend, both ratio charts to find outperforming stocks, and how to use moving averages to identify trend.  I'm going to work on attaching some candlestick charts inline.

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