PM Daily Market Commentary - 9/23/2013

By davefairtex on Tue, Sep 24, 2013 - 1:07am

Gold dropped -3.10 to 1322.50 on relatively light volume, with silver down -0.27 to 21.66 on moderate volume.  The gold/silver ratio continued its climb, up +0.60 to 61.06.  Silver was pounded down to 21.28 in early asia trading (60 cents in 10 minutes), managed to recover its losses by the NY open, sidetracked during the day but then faded pretty dramatically towards the close.  Gold's chart was almost identical, if less volatile.

Of note: silver's move in asia dropped it cleanly through its 50 day MA; it recovered enough ground however that even with the fade at the end of the day in NY, it managed to close more or less at its 50 MA, which means a bearish signal was avoided.  Silver is still at a danger zone, with support in the 21.25-21.50 trading range.  Buyers need to appear soon or its likely one of these moves through the 50 will stick.

The dollar was basically flat, +0.01 today to 80.57, moving in a tight trading range.  My interpretation: the buck doesn't believe Bullard and his "we might taper in October" comment, at least not so far anyway.

Mining shares had their third bad day - GDX was off -2.29% on heavy volume, with GDXJ down -1.88% also on heavy volume.  GDX did its now-usual pattern - rally in the AM when the bargain hunters appear, only to be sold all day long.  However, there was one bit of interesting action at end of day.  GDX 25.06 was a previous low from 6 trading days ago, and old lows often act as support.  As the NY close approached, selling increased in GDX until that 25.06 support level was cracked.  Stops were hit, GDX plunged rapidly to 24.75 on heavy volume, only to see some pretty intense buying occur in the last 3 minutes of the day, pushing GDX back above its support level by the close.  It was a curiously positive end to an overall bearish day.  Still, GDX is hovering just above a support level which if it cracks, will likely not stop until (at best) 24, about 4% away.

Miners are saying: the post-Fed bounce may be over - but for the last 3 minutes, it would have said this conclusively today.  Silver is on the fence, while gold still remains relatively comfortably above support.  Gold/silver ratio is bearish.  It's not a happy picture, with most indicators either neutral or down.

Lest we develop a persecution complex about PM, oil too was hit for a $2 loss - it was hit harder than silver.  SPX sold off -0.47% for its third down day in a row.  Lastly, bonds continued their rally, with TLT up +0.73%.  TLT had its first close above its 50 day MA since the start of the big bond plunge back in early May.  That's a buy signal for the long bond - not that I'm backing up the truck or anything, but its a signal that money may continue to flow into the bond market and from other places such as equities and commodities.  TLT has had a 20% drop since May 1, and now, finally, it is starting to bounce.



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