PM Daily Market Commentary - 9/18/2013

davefairtex
By davefairtex on Wed, Sep 18, 2013 - 12:49am

Gold was down $3.90 on average volume to 1309.70, with silver down $0.08 to 21.75 on average volume.  The gold/silver ratio rose slightly to 60.22.  After rallying in asia and europe touching 1325, gold was sold down in NY trading to 1306 and only rallied modestly off those lows.  Each rally is lower than the last one, continuing a pattern of progressively lower highs characteristic of a move to the downside.

After the NY close today, in early asia trading gold broke 1300 support, touching 1291.50; silver too broke support, hitting 21.37.  So far the rebound has been anemic.  This is not good at all.

The dollar was up +0.23 [+0.28%], bouncing off 81 yesterday but without much conviction.  Currently, gold's downtrend has nothing to do with dollar action as far as I can see.  In fact, both the dollar and gold seem to be more or less falling together over the past few weeks.

Here is something odd.  Since early August, whenever SPX (US equity market) has been in a downtrend, gold rose and vice versa.  Look at the chart below.  Black line is SPX, candlesticks are price of gold.  Gold peaked Aug 28, which is more or less when SPX hit its cycle low.  And SPX has rallied since then, while gold has plummeted.  What does this mean?  If SPX tops out, will gold start to rally again?  With SPX nearing that all time high right before the Fed meeting, it is an intriguing thought.  It also suggests that an SPX breakout to new highs may be dangerous for gold.

Today GDX was up +2.13%, GDXJ +0.78%.  GDX broke its recent pattern and rallied modestly but steadily all day long, closing at its high.  Volume was solid, and if it weren't for gold's poor performance, I'd say GDX was preparing to break out to the upside.  There was definitely steady buying in the miners; some of the smaller miners I watch were up 3-4%.  There appears to be a pattern of accumulation forming in the miners over the last 3 days, against a backdrop of falling PM prices.  That's a bullish indication.

That said, I'm quite concerned about gold's break of 1300 support after the close, along with the anemic bounce.  With the gold price below the 50 MA, and the 20 EMA turning down, its not a good picture.  Next support level is 1275.  If we close below that, our uptrend is over and the correction we've been experiencing will change into a downtrend.

The Fed meeting concludes tomorrow, with the announcement at 14:00, and the press conference at 14:30.  I won't pretend to know what they'll decide, and even if I did know, I couldn't possibly know what the market's reaction to that would be, which is the really important bit.  It all feels very fluid right now.  We'll know more tomorrow.

6 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5417
FED: no change in policy; gold 1347 +37

One-liner from econoday: "Fed does NOT taper.  Waiting on "more evidence" with no preset course.  More details to follow.

Bernanke speaks at 1430; 13 minutes from now.

 

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2832
Cntrl-P

Print to the end...

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Online)
Joined: May 26 2009
Posts: 3078
This is big news

The Fed's decision not to taper is revealing that they truly have painted themselves into a corner with QE and ZIRP.

The cheap-money addict is still so sick -- and now so dependent -- that any attempt to even slightly reduce the intravenous liquidity injection is deemed too risky.

In parallel with the no-tare announcement, the Fed has reduced its economic forecast.

And here in Bizarro World the Dow and S&P rocket to new highs....

Chris will be posting a synopsis with his thoughts shortly today.

westcoastjan's picture
westcoastjan
Status: Platinum Member (Offline)
Joined: Jun 4 2012
Posts: 572
HughK's picture
HughK
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 761
Can we gather and compare....

Dear All,

I am swamped with work right now, but still fascinated with the conversations in PP and certainly with the no-taper news.  I'd like to find the time to compare all of the stories and interviews on the possibility of a taper found in various sources, to see which sources were more likely to doubt the possibility of a taper, and which sources tended to leave the reader/viewer with the impression that a taper would happen.

It's my general impression that CNBC had more stories and interviews suggesting that a taper would happen, for example.

On the other hand, Egon Von Greyherz, at King World News, correctly predicted that there would be no taper.  Now von Greyerz tends to have very high, and recently incorrect estimates for imminent increases in gold prices, I think.  But, I find it interesting that he made the right call, whereas a large financial media company - as far as what I understand - seemed to think that a taper was likely.  I realize that I'm comparing apples (a large media company) to an orange (one individual), but still, I'd be interested to hear other people's impressions or - if anyone has the time, cited data, regarding which sources more accurately called today's no-taper development ahead of time.

OK, my computer time is up.

Buenas noches,

Hugh

Nervous Nelly's picture
Nervous Nelly
Status: Silver Member (Offline)
Joined: Nov 23 2011
Posts: 209
Canadian billionaire predicts end of US Dollar as

Adding oil to the fire.

NN 

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