PM Daily Market Commentary - 3/10/2015

davefairtex
By davefairtex on Tue, Mar 10, 2015 - 11:23pm

Gold fell -5.30 to 1161.00 on heavy volume, while silver dropped -0.11 to 15.62 on moderately light volume.  Gold sold off in Asia and London trading, hitting a low of 1153.80 which is a new cycle low.  It rebounded strongly but was not able to hold onto its gains.  Silver's intraday low was 15.58.

Miners still have not found a low just yet, with GDX dropping -1.34% on moderately heavy volume, while GDXJ plummeted -4.01% on extremely heavy volume, hitting a new all time low intraday.  While the descent in the senior miners does seem to be slowing down, there are still more sellers than buyers, and the volume continues to be heavy.  Distribution of senior mining shares continues.  Juniors look much worse than seniors at this point.

The GDX:$GOLD ratio has continued to plummet.  Six trading days ago, something changed in the tone of the market, and the ratio hasn't stopped dropping ever since.  Until that ratio rebounds, for me it is "hands off" the entire sector.

The USD rose a massive +0.97, closing at 98.60.  The buck is quite overbought, but every day there seems to be new reasons for the Euro to fall (today: down -1.70 to 106.81) or for the buck to rally.  Gold in dollars is not happy about the dollar rally.  Gold in Euros continues to do relatively well.  This tells me gold's drop is being strongly influenced by currency moves.

US equities (SPX) sold off hard, starting in the futures market overnight and then continuing throughout the trading day in NY right into the close.  SPX dropped -35.27 [-1.70%] to 2044.16, plunging through its 50 MA pretty much like it wasn't there.  Rally yesterday looks like it was used as a selling opportunity.  VIX rose +1.63 to 16.69.  Winning sectors were mostly dividend-payers: REITs, Utilities, Healthcare.x

Long bond ETF TLT jumped higher, up +1.32% and managing to close above its 9 EMA, marking a swing low in bonds.  Bonds appear to be somewhat belatedly benefitting from equity market weakness.

The CRB (commodity index) fell once more, down -1.49%.  Commodities do not like the strong dollar much at all.

WTIC fell -1.27 [-2.54%], remaining within its recent trading range.  Oil equities, on the other hand, have been hit hard the last four days - likely following Brent crude, which has been weakening faster than WTIC.  The Brent-WTIC spread is down to 7.68.

Dollar continues to rise, putting the hammer on gold, silver, and the rest of the commodity index.  Until the dollar stops climbing, I don't think gold (in dollars) will bottom out.  We might get some hints as to when that might happen from the mining shares.  They were the tell six days ago [down 18% since then] - and perhaps they will provide us with another clue at or near the lows.

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1 Comment

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
another crazy dollar day: +0.62 to 99.83

Buck hit a high of 99.92 today - astonishing strength, the buck is simply going vertical right now.  Euro down to 106.05.  My guess is we'll find support at parity.  Hopefully before.  Round number 100 might be resistance for the buck.

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