PM Daily Market Commentary - 12/09/2013

davefairtex
By davefairtex on Tue, Dec 10, 2013 - 12:11am

Gold closed up +9.70 to 1239.70 on light volume, while silver closed up +0.30 to 19.82 also on light volume.  The gold silver ratio, falling for the past week, was down -0.46 to 62.55.  Starting at 0730 EST gold rallied most of the day.  It was not high volume, but it was relatively steady, and it pushed gold above its 8 EMA while also causing a bullish MACD crossover.

Silver's move was even stronger and it too pushed through its 8 EMA, all signs of a possible reversal.

The dollar continued drifting lower, off -0.13 [-0.16%] to 80.14.  At this point, the buck's 200 MA and the 50 MA are both headed downhill.  We aren't expecting "Dollar Hyperinflation" at this rate, but the slow slide in the buck should support the price of gold.

GDX was up +2.66% on moderately heavy volume, while GDXJ was up +2.77% on heavy volume.   The miners rallied steadily all day long, closing at their highs for the day.  The miners have pushed right up to the 8 EMA without crossing over, however the move today on good volume suggests that the mining shares are preparing to rally given any encouragement at all from the metal.

This was the second day in a row of upside move for gold and silver.  If gold & silver can add just one more day to that string, GDX should break up sharply as the shorts run for cover.  For now, the technicals seem to be aligning in favor of a PM/miner rally.  Now we just need the buyers at COMEX to cooperate!

Next week we get our lords and masters at the Fed having their December (17-18) meeting complete with Press Conference.  My guess: once again, no taper, but that won't stop them from sending out a flock of regional Fed presidents speaking on "just how close the vote was" and how tapering should begin "soon next year."  We first heard this taper-talk in Feb 2013.  One wonders just how long the market will continue to react.

I think any actual tapering, without preparation from the Fed, would cause the equity market to seize up, likely not a welcome thing for pre-Christmas shopping/retail cheer.  In addition, the 10 year treasury yield ($TNX) has risen 35 basis points since late October to 2.87%, without any tapering at all.  It is close to its cycle high of 3% reached back in September 2013, and any tapering decision by the Fed would most likely cause it to rise sharply, yet another unwelcome outcome from their perspective.

My sense: Fed is in a box.  Tapering means the equity market sells off, and so does the bond market leading to rising rates and falling asset prices.

 

3 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
after a long bear market...

The risk after a long bear market is that we are so emotionally beaten up (by trying to buy every dip, only to have each buy fail) that we just don't believe it when things finally turn up.

Gold has moved through its 8 EMA with moderate vigor prior to the NY market open, and if those COMEX buyers keep buying and push gold above 1250, the shorts should start running for cover and we should see a nice move up.  Believe the technicals, that's why we use them.

If gold moves above 1250, most likely GDX will respond, and then we'll really see some fireworks.  The number of Managed Money shorts is immense - almost historical - they have a lot of covering to do, and once they start short-covering, that should provide the fuel for the first stage of the rally.

That 1250(ish) level is key, but the buying pressure moving into the NY open today looks steady - continual cup & handle breakouts followed by small flurries of short-covering as each new high is made.

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
Gold Halted- This Time To The Upside

After all of the obvious bear raids, some that even tripped the circuit breakers, we saw the opposite this morning, with gold spiking higher on massive contracts and tripping the circuit breaker for a full ten seconds:

So let me be the first to say that this reeks of a broken market, one that is the personal playground for 'somebody' and is not at all in alignment with a well-functioning market.

Or should I say " " "market," " " because the resemblance is poor.

This ain't your daddy's market.  This is what momentum ignition algos do...they play in a world where a millisecond is a long, long time.

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1148
the dollar

took a hit at the same picosecond.

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