PM Daily Market Commentary - 12/18/2014

davefairtex
By davefairtex on Thu, Dec 18, 2014 - 11:16pm

Gold moved higher today, closing up +9.00 to 1198.20 on moderate volume, while silver rose +0.12 to 15.88 on moderately light volume.  Gold started rallying early in asia, and spiked as high as 1214 during the London session, but lost most of its gains during NY, printing an inverted hammer candle.  Silver more or less followed gold.  For both, today was a failed rally day.

A possible cause for gold's failed rally was the dollar, which ended up +0.22 to 89.46, which made a new multi-year closing high.  From what I can tell, the USD just loves hearing Fed Chair press conferences, and the afterglow lasts for several days.  To give you a sense of dollar strength, the last time we were up at this level was back in 2009.  March 2009.

Mining shares continued their rally from yesterday, with GDX up +4.34% on moderately heavy volume, while GDXJ was up +7.78% on heavy volume.  GDX is now back through its EMA-9, as is GDXJ, as are both of the ratios GDX:$GOLD and GDXJ:GDX.  Now it is the miners turn to outperform.  The next big test will be what happens at the 50 MA.  GDX has been unable to close above that level since September - if it can close above the 50, that should bring some more buyers on board.

The afterglow continued for SPX too - US equities rose a massive +48.34 to 2061.23, only 20 points away from yet another all time high.   VIX dropped -2.63.  Velocity on this move higher suggests we probably have some more upside, and I'd guess we'll probably see new highs as well.  Money is moving into the US, and apparently the US equity market is where it wants to be.

TLT dropped -1.78% continuing its correction from yesterday, moving through its EMA-9.  Money is flowing out of bonds and into equities fueling the move higher in SPX, although US treasury bonds still remain in an uptrend.  JNK continued higher, rising +0.71%, although the spinning top candle print in junk showed a lot less enthusiasm than SPX's close at the highs of the day.

Commodities fell, with the $CRB down -0.84%.  WTIC initially rallied almost $3 during the London session, only to lose it all and close down -0.92 to 54.89 - another failed rally in oil.  The last two days have seen failed oil rallies, which look bearish to me.  It appears that the shorts are using moves higher to sell.  While oil equities are doing well, the market is hinting to me that oil itself may still have some more downside left.  If the lows at 53 fail and the stops get hit, oil will probably not stop until the high 40s.

Still, oil is really, really, REALLY oversold.  At some point it will stop plunging.  But so far, there's no clear indication from the charts that here and now is that time.

Failed rallies in gold, silver, oil, and a falling commodity index.  The single bright spot was the mining shares.  Looks like it is still hard for commodities to find their footing against a rising dollar.

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9 Comments

HoldGold's picture
HoldGold
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 13
insanely high volume in PM mining stocks on friday 12/19/2013.

What's with the insanely high volume in PM mining stocks on 12/19/2014? I've illustrated AGI and NG as examples, but almost every other PM mining stock shows a huge volume surge on Friday too. 

HoldGold's picture
HoldGold
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Posts: 13
Edgetrader Plus- December 20, 2014 - No Respite For PMs

http://tinyurl.com/llw6589

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5412
big volumes on PM equities

HoldGold-

Nice observation.  Friday was options expiration (a.k.a. "opex") where sometimes, a whole lot of really odd things can happen.  Big players sometimes have a massive outstanding options position, and they want them to expire as worthless as possible.  Sometimes it makes sense for them to hammer (or boost) the underlying equity even if they lose money to do it, order for them to make a lot more money in options.

Here's an intraday example of a big miner, NEM.  See what happened at EOD.  There was a big spike at 345 higher, which someone didn't like, so the next 15 minutes were spent pounding the stock down.  That my assessment of what went down at least with this one stock.  Really massive volume, too, which is where (I'm guessing) your large daily volumes come from.

HoldGold's picture
HoldGold
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 13
big volumes on PM equities

Thanks. True, triple witching Friday shenanigans. Plus maybe, PM equity share accumulation. 

HoldGold's picture
HoldGold
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 13
davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5412
tiny url

Tiny urls make me nervous.

HoldGold's picture
HoldGold
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Joined: Apr 24 2008
Posts: 13
tiny urls

LOL. I was trying to conserve space. 

http://www.peakprosperity.com/discussion/89980/pm-daily-market-commentary-12182014#comment-174471

Hebba Investments - "It seems like hedge funds are jumping into the gold market"

locksmithuk's picture
locksmithuk
Status: Silver Member (Offline)
Joined: Dec 19 2011
Posts: 123
Tiny url previews

@HoldGold, you can provide a preview to a tiny url, so that a reader/readers know where you're taking them. Instructions here

HoldGold's picture
HoldGold
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 13
tiny url previews

Thanks for the tip. I've enabled this feature. smiley

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