PM Daily Market Commentary - 9/23/2014

davefairtex
By davefairtex on Wed, Sep 24, 2014 - 12:58am

Gold closed up +8.00 to 1223.50 on heavy volume; silver was up +0.04 to 17.77 on heavy volume as well.    Both gold and silver broke higher in london trading stopping out a bunch of shorts, but the bulk of the gains faded soon after US trading started.  Gold outperformed silver once again.

While the rallies today were strong, buyers refused to chase prices higher.  In the recent past, these sorts of failed rallies have led to unhappy outcomes - especially for silver.

No doubt the dollar was a big part of the problem - it was down substantially early in the trading day in London, but it had rallied back to flat a few hours after the US market had opened.   The buck ended dead flat on the day, closing at 84.79.  The dollar's strong headfake lower seemed to have at first helped PM to rally, and then snatched it away once again as the dollar rebounded.  It reinforces my thinking that the linkage between the buck and PM remains quite strong.

Miners opened higher today, managed to rally pretty strongly during the day, but were ultimately sold an hour before market close.  GDX closed up +1.62% on moderately heavy volume, while GDXJ was up +2.83% on heavy volume.  The miners really did seem to want to rally.  If gold had held its gains, I'd guess mining shares would have been up 4-5% today, just based on the strength of the rally I did see.

SPX sold off for the second day in a row, closing down -11 to 1982.77.  Support (the most recent low) lies at 1980 as well as the 50 day MA at 1976.  Most of the loss came in the last 30 minutes of trading.  My sense from the current velocity is that SPX may well not stop at 1980.  VIX jumped again, up +1.24 to 14.93 - two days of fairly good-sized moves in the VIX.

Long term treasuries (TLT) rose +0.62%.  It looks like yesterday's poor performance was just a one-day affair; TLT moved above its 50 day MA, and along with the rising VIX it suggests a move from equities to long bonds.

Commodities were almost flat, closing down -0.04%.  WTIC was up +1.05 to 91.72, Brent down -0.12 to 96.85.  Oil overall looks ready to make another move lower, in spite of WTIC's good day.

Song remains the same.  Strong dollar is causing PM and the commodities trouble.  PM is quite oversold and it really did seem to want to rally today - traders saw the same potential I did in the strong rebounds yesterday and bought on the initial dollar weakness, and the miners confirmed that as well, but the intraday dollar rebound threw a wrench into the plan.  If the buck breaks above 85, PM will most likely sell off further.

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