PM Daily Market Commentary - 5/28/2014

davefairtex
By davefairtex on Wed, May 28, 2014 - 8:34pm

Gold continued downhill today but velocity decreased substantially, with gold closing off only -4.90 to 1258.50, with very heavy volume.  Silver was off just -0.03 closing at 19.01, on only moderate volume.  Silver seems to have found support at 19, at least so far, but buyers at COMEX do not seem willing to chase silver prices much higher than 19.20.  Declining velocity is a positive sign, but momentum is still pointing down, at least for gold & silver.

The buck moved up clean through its 200 day MA and continued higher, closing up +0.18 [+0.22%] to 80.60.  Money is clearly flowing into the dollar and out of pounds and euros.  The euro closed below its 200 MA for the first time in 8 months.  Historically this generally hurts gold - unless the move into the buck is of the "safe haven" variety.  Its hard to say right now why this is going on.  Perhaps euro-holders have decided that Draghi is serious about his printing threats.

SPX tried climbing higher today and failed, closing off -2 to 1910, on moderate volume.  It looked like a modest distribution day, which is not too surprising given the 4 straight rally days immediately prior.  The rest of the equity market looked much the same.

Bonds broke out to new highs today, with TLT +1.24%, a big move.  Paperbugs everywhere rejoice!  Seriously though, this is one strong bond market move.  I keep expecting a correction, and it just keeps on bouncing off its 20 EMA and breaking out again.  The 10 year is now yielding 2.44%, the 20 year is at 3.01%.  Problem is, if you have to manage big money, you don't have so many choices where to go - mostly that means you have to be a paperbug of one sort or another.  That's one very nice benefit of being a small fish.  We can move our stash almost anywhere without moving the market.

GDX continued downhill again today, off -1.65% on heavy volume, rallying modestly into the close.  GDXJ looked substantially better - it was down as much as 2% during the day, but managed to close down only -0.39% on exceptionally heavy volume.  GDXJ printed a doji candlestick, which together with the volume indicates that a reversal is in play.

The higher the volume, the stronger the signal, and today's volume for GDXJ was massive.  However we still need to see a break above 33.26 tomorrow (and a close above that level as well) for the reversal to be confirmed.

Since GDXJ tends to lead GDX, and the miners tend to lead gold, this could be an important development for the PM complex as a whole, although tomorrow will tell us more.  Certainly both the miners and PM are "oversold enough" (RSI-7 for GDX: 13, RSI-7 for gold: 18) - they have had their "flush" - and so timing and momentum-wise this is a good setup for a rebound and then a rally.  Now we just have to wait and see if the market cooperates.

 

6 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5459
silver broke below 19

That's not good.  If we don't rally back with some amount of enthusiasm, silver is likely to sell off pretty hard.

Silver is getting to a dangerous area.  Drop below 18.68, and we'll probably test 18.  Below 18, I don't even want to contemplate.

Let's hope we see some buyers appear prior to the NY open.

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
Well that was the lamest

Well that was the lamest triple bottom ever. I guess the symmetry police are angry

I wish I could take advantage up this "wonderful" opportunity.... I made this decision to back to school for 5 weeks, and I'm going to miss this...

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1191
if i can take delivery

for less than 20$/oz. silver? I buy

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5459
2nd GDP revision 1Q 2014: -1.0

Market appears to have this already baked into the cake.  Equities rallied.  Perhaps they liked the jobless claims report which fell this week more than they focused on the contraction of real GDP.

It does seem a bit surreal.  Equities rallying when GDP drops negative.  I guess companies are still able to make money regardless of how the actual people themselves are doing.  Off-shoring and very low interest rates.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5459
GDXJ confirming - so far

GDXJ is confirming yesterday's bounce - at least so far.  Silver has slowly crawled back to 19...yes, there's a breakout to 19.02 just now.  Let's see how we close.  So far, so good.

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
I hope we don't go lower....

Keeping my eye on $45 silver before October 2015 based on previous charts I have posted. Any price movements lower will be a blip on the radar screen.

Thanks for the update

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