PM Daily Market Commentary - 3/24/2015

davefairtex
By davefairtex on Wed, Mar 25, 2015 - 2:09am

Gold climbed +3.70 to 1192.50 on moderately heavy volume, while silver fell -0.03 to 16.94 on moderate volume.  PM traded mostly sideways all day long, with gold performing slightly better than silver.  Gold has climbed for five days in a row.  That hasn't happened for a while.  Volume in gold continues to be strong and steady on the move higher, which is a positive sign.

Miners were mixed, with GDX down -0.56% on light volume, while GDXJ rose +0.28% also on light volume.  The drop-off in volume and the fall in GDX suggests that our recent miner rally is beginning to look a bit tired.  Without some catalyst to propel the miners higher, I suspect we are looking at a retracement coming soon.

The dollar rallied today, rising +0.15 to 97.45.  It printed a bullish hammer (ish) candle on the daily chart, which could signal that the recent move lower in the buck is at an end.  Pulling back to the weekly chart, we see the strong move higher and the support provided by the 9 EMA.  If this trend continues, price cannot close below 96.30.  We haven't quite reached that point yet, so maybe we have a bit more downside move on the buck before it reverses higher.  This suggests gold may have a little more room left to run.

SPX dropped today, falling -12.92 to 2091.50 marking a bearish swing high on the daily chart.  SPX failed to make a new high on this particular cycle.  A lower high (which won't happen unless SPX closes below 2035) would signal a possible trend change in SPX.  We aren't there yet, however.  VIX climbed +0.21 to 13.62.  Puts are still cheap.  VIX appears to be bottoming out.

I continue to do research on SPX and the factors that lead to corrections in the broad market.  My research is confirming my original findings: I believe we have a correction coming soon, anywhere from 5-10%.  More,  if the macro data continues to fall.

Long bond ETF TLT broke higher today, climbing +0.97%.  It is clearly above the 50 MA and is rallying strongly.

The CRB (commodity index) fell -0.11%.  CRB continues to move inversely to the dollar.

WTIC spiked higher, reaching 48.56 at one point but could not hold on to the gains, managing to close up only +0.20 to 47.69.  Still, given the rise in the buck, I'll take it.  Oil is above its 9 EMA, but below its 50 MA, in a short term "no mans land" - still bearish.  Oil is struggling to turn its bounce off the lows into something more bullish; it needs a close above the 50 MA as a down payment.  Today's spike higher touched the 50, but a rebound in the buck right around the time of the spike higher made sure that oil would not close above it.

I expect the dollar correction to end soon, and this should put renewed pressure on commodities, including gold, silver and oil.  If this occurs, how they react to the pressure will help us to see if PM is ready to rally on its own, or if this whole recent move higher was simply a currency effect.  Silver might be a bullish surprise, it has done unexpectedly well in the past week.

Also - watch SPX closely in the next few weeks.  Today's swing high may be the start of something interesting.

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1 Comment

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5683
selling today in SPX

Equity market looks like some traders are a bit nervous about the "lower high" in combination with the "swing high" printed yesterday.  Down -21.50 and still dropping.

Key levels to watch:

  • 2067 (50 MA)
  • 2030 (previous low)
  • "about" 2015 (monthly 9 EMA)

Daily close below 2067 is not a great sign, but not fatal.  We could see that happen today pretty easily.

Daily close below 2030 confirms that "lower high".  That's when a bunch more disciplined traders will bail out.

A monthly close below 2015 - that 9 EMA - is something we haven't seen since 2012.  If that happens - and it could conceivably happen this week - things could get extremely ugly very fast.

Once each of these levels is cracked, selling will occur.  The only question is, will the buyers appear to create the bounce.  If not - all the talk we have heard about for years about small exits and a whole lotta people in a fiery room will actually happen.

I can't tell you how this particular downturn will play out - if the buyers will show up after this sell-off cracks each level in turn - but I think the market is fast running out of time.  Macro data on which I believe the market depends for its support is turning down.  If this trend continues, its only a matter of time.  If it isn't this correction, then it will be the next.

Yes, I'm now bearish.  :-)

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