PM Daily Market Commentary - 8/13/2014

davefairtex
By davefairtex on Thu, Aug 14, 2014 - 2:30am

Gold closed up +3.30 to 1313.70 on moderate volume, while silver was off -0.11 to 19.81 on heavy volume.  Gold rallied along with bonds, and the dollar took a hit at 0830 EDT at the time of the unexpectedly poor US Retail Sales report release.  Silver rallied too, but then sold off, touching a new cycle low of 19.70 before bouncing back modestly.

Once again, silver underperformed gold today sending the gold/silver ratio +0.53 to a new closing cycle high of 66.31.  Silver is now clearly threatening to break down below 19.75 support.  It needs to rally above at least 20.20 to cause the shorts to back off.  Volume pattern clearly shows distribution in silver over the past several weeks.

The USD was up +0.11 to 81.68; after taking a pretty big hit at 0830 EDT, the dollar subsequently rallied strongly, regaining all its lost ground.  The dollar is showing significant strength right now; it is close to breaking higher once again.  At this point, I'm guessing that a continued move higher is more likely than a drop, based on how it performed after the Retail Sales report today.

The senior miners traded more or less flat in a narrow trading range, closing off -0.13% on light volume.  GDXJ was down -0.35% on light volume as well.  Not much happened in the mining shares today.

Curiously, SPX did not react to the poor Retail Sales numbers.  It rallied steadily, closing up +13 to 1947, slightly above its 20 EMA.  Volume remains light, but the close above the peak of two days ago seems bullish rather than bearish.  The VIX agrees - it dropped -1.23 closing at 12.90, a big move lower.  We're not quite back to complacency, but we are getting there.  Let's see how SPX does when it gets closer to the 50 MA.

Long term treasuries (TLT) rallied sharply, regaining the losses from yesterday, up +0.65%.

Brent crude bounced strongly today after yesterday's breakdown, closing up +1.26 to 104.28, but not quite making it back to its breakdown point.  Until it does, to me the jury is still out on Brent crude.  WTIC traded sideways, up +0.15, remaining within its trading range.

Commodities overall continue moving lower, and now copper is joining the downside party, off 3 cents to 3.12, down 15 cents over the past month.

It is quite the mixed picture; falling commodity prices, rising US long bonds, rising dollar, rising gold, falling silver and falling oil prices and now falling copper.  The odd man out to me is equities.  Maybe its a money flow thing.

 

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