PM Daily Market Commentary - 10/7/2014

davefairtex
By davefairtex on Wed, Oct 8, 2014 - 1:18am

Gold closed up +1.40 to 1208.70 on heavy volume, while silver dropped -0.16 to 17.17 on moderately heavy volume.  PM spiked higher several times during the day but neither silver nor gold could hang onto gains made, selling off into the close.  At one point silver was up 30 cents, but it ended up as yet another failed rally in PM.

The USD closed down -0.12 to 85.75, just barely below the EMA-9 but not enough to mark a convincing reversal.   We need to see the buck break below 85.75 by at least 0.10-0.20 points for us to convincingly mark the high in the buck.  Until it does, it appears that PM will remain capped below its EMA-9.

Mining shares were crushed today, with GDX off -3.50% on extremely heavy volume, while GDXJ was down -4.35% on merely very heavy volume.  GDX sold off all day long, closing at the dead lows, and making a new cycle low in the process.  GDXJ managed to avoid a new low by a very thin margin.  Mining shares do not appear to believe that the dollar is topping.  This looks really bearish to me; it appears that mining shares are back to behaving the way they did in 2013.

After failing to rally through its 50 MA yesterday, SPX sold off hard today, with half its losses occurring in the last 90 minutes of trading.  SPX was down -29.72 points to 1935.10.  Momentum appears to have shifted again.  The VIX was up +1.74 to 17.20, a new closing high for the VIX in this cycle.

The bearish move in SPX sent long term treasuries (TLT) to close strongly higher, up +1.35% and scoring a new cycle high.  TLT is now up 19% on the year, and is clearly benefiting from the drop in equity prices.

Commodities tried to rally today and failed, closing off -0.20%.   WTIC had a very bad day, closing down -2.03 to 88.43; Brent did better, dropping only -0.68 to 92.11.  Oil continues to look weak.  I'm not sure PM will rally under these conditions - whatever is driving crude lower also affects silver, which in turn affects gold.

For now, the buck is hanging tough, refusing to correct.  Until it does correct, PM looks to be capped below its EMA-9, and meanwhile traders are throwing mining shares off the lifeboat by the truckload the same way they did in 2013.  Its an ugly picture, and until something changes this dynamic, the downtrend remains firmly in place.

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5 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5417
another asia breakout - will it last?

Gold is looking particularly good today; the move off 1183 has been pretty steady, unlike silver which has been volatile but not steady.

If gold holds through the close at 1218, we can call this a breakout.  It would be a lot more reassuring if the buck breaks down.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5417
FOMC minutes release - GDX goes nuts

FOMC minutes were released at 1400 EDT today.  The dollar immediately dropped hard, and PM rallied.  GDX was particularly happy, and is up now +5.58%.  We have a technical breakout above the EMA-9 for both gold and silver, as well as GDX at this point too.  I'm happy to see GDX performing as I had hoped; traders really did want to see the buck top out before they stepped up to the plate and bought.

Econoday reports that the FOMC minutes appeared dovish, with concern over inflation being "below target" for quite some time to come.

Gee after a debt bubble pop, who woulda thunk?

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
It's amazing

That the markets really expected the FED to tighten next year.. and that this blowout today is all about the market's "surprise" that they might not.  So many of the alt. commentators have said that there is simply no way the FED can or will tighten into the face of the weakness.  How can so many market participants be so easily fooled.. I guess because they have not been reading articles like this;

  http://investmentresearchdynamics.com/census-bureau-worker-blows-the-whi...

When I spoke with this whistleblower earlier this year as part of my investigation of Census, she told me that hundreds of interviews that go into the Labor Department’s unemployment rate and inflation surveys would miraculously be completed just hours before deadline.   John Crudele, NY Post – LINK

It’s pretty much been accepted for many years now that the economic data being reported by the Government is unreliable and fraudulently manipulated.  Toxicity + toxicity does not equal purification.   Not only does the Government manipulate the data to suit its needs – like reporting a sub-6% unemployment rate a month before mid-term national elections – but the data itself is one big fraud.

A whitleblower from the Denver Census Bureau office has opened up to the NY Post’s John Crudele.  I’m sure she took the story first to the Denver Post.  But the Denver Post is nothing more than a megaphone for whatever news the powers that be want the hoi polloi to ingest.  For instance, the Denver Post did not even report the story on the Goldman Sachs/Fed tapes.

At any rate, I encourage everyone to read the article linked at the top.  In a testament to the complete criminality that has engulfed our political and economic system, I’m sure this story will be swept under the rug and this whistleblower will be silenced.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5417
timing indicators

JimH-

Do you find your stable of alt. commentators to provide reasonably good timing signals for PM purchases, or do they just provide you interesting background information?

 

DisappearingCulture's picture
DisappearingCulture
Status: Bronze Member (Offline)
Joined: Jun 21 2014
Posts: 38
"I'm not sure PM will rally

"I'm not sure PM will rally under these conditions - whatever is driving crude lower also affects silver, which in turn affects gold."

The whatever is almost always market manipulation; very rarely a free market price discovery mechanism. It is often timed right before or in juxtaposition with a FOMC minutes release.

"At one point silver was up 30 cents, but it ended up as yet another failed rally in PM."

Not a failed rally, a crushed rally.

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