PM Daily Market Commentary - 7/21/2014

By davefairtex on Tue, Jul 22, 2014 - 12:57am

Gold closed up +1.30 to 1312.70 on light volume and silver was up +0.03 to 20.97 also on light volume.  Gold traded within a relatively narrow trading range and volume was low.  An attempt to rally failed for both gold and silver, giving me a slightly bearish feeling for today's price action.

The USD was flat today, closing unchanged at 80.61.

The miners sold off in the morning trading session, with GDX being off as much as 1.7% at one point, only to rally back to close almost flat, down -0.15% on light volume.  GDXJ did better; after its morning sell-off, it rallied back to positive territory by end of day, closing up +1.01% on moderately light volume.  Miners are still seeing buy-the-dip mentality, which I interpret as positive.  The mining share charts also look more bullish than gold or silver.

So miners looked somewhat positive, gold & silver seemed slightly negative, leaving me without any strong sense as to near term market direction.

SPX was down -5 to 1974.  SPX sold off a bit during the morning session, rallied back to flat, but then sold off into the close.  I'm starting to get a feeling of some weakness in the broader market.  The sector picture is mixed: techs and industrials continue making new highs, while the small caps ($RUT - Russell 2000), biotechs, and social networking have sold off for the past few weeks.  The VIX remains slightly elevated at 12.81.

Long term treasurys (TLT) made a new high today, closing up +0.50%, continuing its steady move higher.

Brent crude was up +0.41 to 107.68; it is struggling to rebound, and it still remains below all 3 of its moving averages.  Oil above $100 is not good news overall, but it is much improved over the $116 recent high, and the short-to-medium term picture still looks bearish.



KennethPollinger's picture
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 656
Jumping into TLT?

Do you think this might be a good move now?  If so or not, why?

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
TLT buy point

I'm more a fan of buying pullbacks in an uptrend at support than I am of buying breakouts.  It means I end up missing some trades, but I just like to get things at a discount.

In the medium term, if you think SPX will correct, then TLT should be good for a trade.   Not buy-and-hold-forever, but a trade.  Still - no rush.  If we can get SPX to break out one more time and have it hit 2000, we might see a TLT dip, which would be the buy-in point as long as it holds its 20 EMA (or its 50 MA).

It looks like we're setting up for that SPX breakout today.  And here I thought things were looking weak...

TLT won't make you rich.  Don't expect too much.  But if we get a serious correction in SPX, it could do relatively well.  And I believe in it more than I believe that SPX has a lot more upside.

But just remember, free advice from some guy on the Internet that doesn't understand your risk profile or your investment objectives - caveat emptor.  :-)

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