PM Daily Market Commentary - 4/17/2014

davefairtex
By davefairtex on Thu, Apr 17, 2014 - 10:35pm

Gold closed off -7.70 to 1294.60 on moderate volume - silver was up +0.02 on moderate volume.  Gold more or less moved slowly lower today, while silver traded sideways within a relatively narrow range.  From the standpoint of the metals, the day was relatively uneventful.

The buck traded lower in asia but then rallied prior to the NY open, eventually closing up +0.04 to 79.94, more or less flat on the day.  Once again the buck is moving sideways and appears not to be affecting the metals at the moment.

Copper continued to rally, perhaps that's why silver outperformed gold today.  Copper was up +0.02 to 3.05, which brings it back up to that resistance zone at 3.05 which copper has had a hard time penetrating in recent weeks.  A breakout should help silver at least to some degree.

GDX just slowly dropped all day today, closing down -0.97% on light volume, closing at its lows of the day.  Its partner GDXJ looked worse, off -2.37% on moderate volume, and GDXJ made a new cycle low.  While GDX has remained above support, GDXJ has broken down and its chart looks downright ill.  Junior miners appear to be in a serious "risk off" mode and are leading the PM complex lower.   Then again, that's what they tend to do in a downtrend.

Once the worm turns, GDXJ should be leading the complex higher - that's one of the signs of a PM rebound, a consistent outperformance in GDXJ over GDX.  Here's the ratio chart illustrating GDXJ's underperformance.  Note that the ratio started giving off warning signals a month before gold topped on March 17th.  It also gave us a few days warning prior to gold's move higher on Dec 31st 2013 too, since the ratio bottomed a few days before gold's rally started.

SPX moved up only slightly today, +2.5 to 1864 on relatively heavy volume.  This is day #4 of the rally off the 1815 low, and the market looks a bit tired.  I'm not seeing big bullish moves in the former market leaders, so that's one warning sign that this might not continue.  However based on the VIX (a low level of 13.36) it would seem complacency is high, which is one vote for a continued rally.  Bonds had a bit of a sell-off today too (TLT off -1.1%, a reasonably large move) so they're betting on a continued move higher in equities also.

Someday all those complacent people will be horribly wrong, but in each downturn for the past five years, the dip-buyers have been right.  A close above 1272 and SPX will likely break out to new highs.

 

3 Comments

HughK's picture
HughK
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 763
Why the weird gold chart today?

Hi,

The gold and silver charts at goldprice.org are weird today.  Here's the gold chart:

They are the same at Kitco.  Is this just a reporting error of some type?   Is this linear pattern due to something obvious or simple that I just don't know about?

Thanks,

Hugh

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5843
Not weird...
HughK wrote:

The gold and silver charts at goldprice.org are weird today.  Here's the gold chart:

 

They are the same at Kitco.  Is this just a reporting error of some type?   Is this linear pattern due to something obvious or simple that I just don't know about?

It's a holiday in the US and the markets are closed.  Charts go flat for some sites on holidays...

HughK's picture
HughK
Status: Platinum Member (Offline)
Joined: Mar 6 2012
Posts: 763
Thanks, Chris

I didn't realize today was a holiday in the US.

Hugh

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