PM Daily Market Commentary - 8/14/2014

davefairtex
By davefairtex on Fri, Aug 15, 2014 - 1:03am

Gold closed up just +0.20 to 1313.90 on moderate volume, and silver rose +0.05 to 19.85 also on moderate volume.  At 0830 gold spiked higher above 1320 and silver almost to 20 at the time of the Jobless Claims report, but neither metal could not hold the gains for very long, eventually closing almost flat on the day.

Trends remain the same - gold looks generally positive, while silver is threatening to drop below 19.75 and continues to show signs of distribution.

The USD had a wide trading range but ended up closing down -0.04 to 81.64.  Although today the dollar dropped slightly, the current trend seems to be a slow but steady move higher.

The senior miners fell today, with GDX off -0.97% on moderate volume and GDXJ off -1.11% on moderately light volume.  While GDX still looks strong and today's move could be interpreted as senior miners taking a rest after a breakout, the juniors are looking somewhat worse, dropping below their 20 EMA today and possibly in the process of forming a new lower high.

It is earnings season, and mining shares are being hurt or helped as earnings reports come in.  Today a pair of silver miners reported and apparently disappointed investors today: PAAS was off -5.43% and SLW was down -5.00%, both on very heavy volume.  These are just a few examples of the "execution surprises" that can happen when owning mining shares.

SPX rallied through its 20 EMA all the way up to its 50 MA, closing up +8 to 1955.  Volume was light, but there is definitely a bullish sense to the market now - SPX rallied several points right into the close.  VIX dropped further, closing at 12.42.  The 50 MA is a key resistance point; failure to rally above it will lead to selling, while a break above the 50 may result in new highs for the SPX.

If we close higher to end the week, that's a bullish sign in that traders are regaining confidence to hold equities over the weekend.  I would interpret that as a "risk on" signal.  The converse is true - if the market sells off Friday, that says traders remain nervous.  The last 30 minutes will usually tell the story.

Long term treasuries (TLT) rallied again today, scoring a new cycle closing high, up +0.81%.  Since the beginning of the year, long term bonds are up 16%.

Oil was absolutely hammered, with Brent crude closing down -2.21 to 102.07, and WTIC down -1.83 to 95.50.  Both contracts set new cycle lows on heavy volume.  Copper fell another 3 cents too. 

I'm still watching oil's descent and wondering what it means.  MSM has picked this one up as well; there are several articles out there wondering if oil is signaling something odd.  Of course they don't know either; if they did, they'd be super-rich oil traders not writers!

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