PM Daily Market Commentary - 9/9/2014

By davefairtex on Tue, Sep 9, 2014 - 10:31pm

Gold closed up +0.30 on moderately heavy volume, while silver was up +0.03 on moderate volume.  Both metals made new intraday lows today with gold touching 1248 and silver 18.89, but both rebounded in the last hour of trading in NY to close slightly above even.  Gold printed a doji and silver - more or less a doji as well.  These are good candles to see if you are looking for a low, especially with the decent volume today in gold.

Technically, we need a close above 1260 to confirm the doji in gold, and above 19.20 in silver.

The dollar fell today, dropping -0.19 to close at 84.10.  The buck made a new intraday high but failed to hold it, and this probably helped gold to recover.  The euro and the pound both are working hard to find lows, and are extremely oversold.  It wouldn't take much good news to cause them to rebound.

The aussie dollar took a hit today, probably from news out of China - AUD was off a big -0.83% and copper sold off really hard, down $-0.08 [-2.42%] on extremely heavy volume.  Copper and the AUD tend to be linked.  Everywhere you look, something interesting is happening, and this is driving the markets hard.  Big volatility like this is enough to drive traders into cash until things calm down; while -0.83% doesn't seem like a big move, if you are leveraged 20:1, your position will be down 16% in just one day.

GDX seemed to like gold's doji and rallied in the last hour to close up +1.53% on moderate volume; GDXJ did even better, up +3.19% on very heavy volume.  For the mining shares, up-day volume is still below down-day volume, which is not a great sign; I'd interpret that to mean that traders are hopeful this might be the low for gold, but are wary that this could just be just another one-day bounce.  If the buck breaks out again tomorrow, the gains we saw today could simply evaporate.  Still, its nice to see that miners will rally if gold so much as stabilizes.  It tells me traders are still quite interested in accumulating mining shares.

SPX was down -13 to 1988, with the losses happening in the second half of the trading session.  VIX was up big to 13.50.

Long term treasuries (TLT) dropped a bit, off -0.08%.

As Chris pointed out, JNK took a pounding today, down -0.49%.  JNK is a pretty good indicator of the market's willingness to take on risk; a big move down in JNK aligns well with the risk off assessment and a safe haven flight to the dollar.

Commodities were down once again, off -0.35%.  Brent dropped -1.04 to 99.14, WTIC off -0.37 to 92.75, with both oil contracts making new lows.  Dropping oil and commodity prices won't help PM.

While we do have some encouraging signs from PM today along with a possible dollar top - we have to remember, how many times have I talked about the dollar finding a top?  Volatility in world markets drives traders to pay down margin debt and flee to the buck.  What's more, commodity prices aren't looking very good right now.  Still at some point we'll get a rally in the euro and the pound, and that should help PM to recover.

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