PM Daily Market Commentary - 5/21/2014

By davefairtex on Wed, May 21, 2014 - 5:57pm

Gold closed down -2.40 on moderately heavy volume; silver closed even, remaining at 19.40 on moderately light volume.  Gold was steadily driven lower today likely in anticipation of the FOMC minutes release at 1400 EDT.  At the time of the release, there was the usual volatility, even though nothing new was said.  At the time of the release, gold was hammered down to 1282.90, stopping out 4000 longs in a one-minute spike exactly at 1400.  Then gold rallied back, recovering all that was lost in the spike and more.  Silver followed along, but it was not hit as hard.

The gold market's reaction to FOMC - and the price action prior to the release - suggests to me that there may have been an overhang of uncertainty regarding FOMC and the minutes that was cleared up upon release.  I can't think what that uncertainty might be, but the initial spike down was hard, and then buyers appeared and drove the price higher and that's definitely a positive response, especially given that the eventual close was far above the breakdown price, which I always think is a bullish sign.

Econoday provides summaries for the various market-moving news releases: here's what they had to say about the FOMC:

The buck had a wide trading range today, at one point down -0.15 during London trading, and then up almost +0.30 during the NY session, but it ended closing up just +0.03 to 80.12.  It seemed to fall back after the FOMC minutes release - perhaps it found something disagreeable within.

GDX closed up +0.26% on light volume, and GDXJ was up +1.06% also on light volume.  Right up until FOMC minutes release at 1400 EDT, GDX was displaying all the signs of the lackluster buying we have seen for the past several weeks.  Immediately after the release, GDX dropped further, only to rebound 15 minutes later along with gold and silver.  Both GDX and GDXJ closed at the highs for the day, a bullish sign.  Volume is still light, and my guess is that GDX will take its lead from gold, rather than vice versa.

Its nice to see GDX outperforming gold for a change.  Its only one day, but its bullish and nice to see.

SPX closed up +15 to 1888 on relatively light volume, wiping out yesterday's losses and then some.  The VIX dropped to 11.91, its lowest close since early January.  Other indicators are mixed - some pointing higher, others lower.  Financials remain below their 50 MA along with IBB, while technology continues to make new highs.

Bonds (TLT) closed right at its 20 EMA - if you believe in the bond market rally, this would be a good time to buy.  I say that only because it was a good time to buy TLT the last 3 times it touched its 20 EMA.


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