PM Daily Market Commentary - 6/2/2014

davefairtex
By davefairtex on Mon, Jun 2, 2014 - 10:27pm

Gold dropped for the sixth day in a row, down -7.60 to 1242.90 on light volume; silver dropped too, down -0.07 on light volume as well.  Gold made yet another new cycle low, to 1241.  Gold was hit late in asia trading after which it traded sideways for the rest of the day.  Silver did slightly better - it didn't make a new low.  That's about the best that could be said.

At this point, gold is quite oversold (RSI-7 rating of 12) while silver is relatively oversold (RSI-7 of 21).  Usually these RSI values don't go much below 15, so the 12 rating for gold is quite low.  I expect a bounce soon - but I've been expecting one for a few days now, so - who knows when the market will cooperate.  Gold 1240 is a decent support level.  I think all we need is some sort of positive catalyst.  I'd be happiest if we had some massive flush that dropped gold 20 points and had it rebound.  Happy in the sense that it would definitively mark the low.  All else being equal though, I'd prefer if the drama happened while I was asleep!

The buck drove higher today, up +0.24 to 80.68.  There was no single catalyst that I could see, it just steadily moved higher all day long, making a new cycle high for the buck and moving it back above its 200 MA.  Rising dollar is usually not good for gold.

GDX opened lower and then traded sideways within a range, closing down -0.93% on moderate volume.  GDXJ looked worse, dropping -2.17% on very heavy volume.  GDXJ had another strange close today - in the last few minutes it jumped higher, and then right at the close, it sold off hard, about a 2% trading range in the span of four minutes.  Traders look uncertain about market direction for the miners right now, that's the only conclusion I can draw, but the volume is definitely high so the uncertainty is basically a tug of war between big players taking significant positions rather than the case of "nobody cares."

SPX closed up slightly today - that means another all time high - up +1 to 1925.  SPX had a brief early-morning sell off good for 10 points.  However, the dip was bought, and the market traded largely sideways for the rest of the day.  Something interesting though - in the morning SPX selloff, I noticed that the mining shares definitely got a bid, and as soon as SPX bottomed, the miner bid vanished.

Perhaps the catalyst we need is that long-awaited correction in SPX.  VIX remains low at 11.58.

Commodities continued to drop, down -0.11% .  They are moving slowly lower almost every day now.  This correction in commodities is likely making it a bit harder for gold & silver to rally.

Bonds dropped, with TLT down -0.74%, but bonds seemed to find support on the rising 20 EMA once again.  The price chart still looks quite bullish, and each minor correction in bonds have been bought for 5 months now.  While SPX is up 5% year to date, TLT is up 12%.

And although it doesn't feel like it, miners have actually done all right this year - up almost 10%.  Of course, they were up 34% back at their peak in March...

 

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