PM Daily Market Commentary - 3/26/2015

By davefairtex on Fri, Mar 27, 2015 - 5:17am

Gold rose +9.00 to 1203.60 on heavy volume, and silver climbed +0.15 to 17.10 on moderate volume.  Gold and silver both rallied strongly in Asia trading, with gold hitting 1219.50 at its peak in London.  However the dollar eventually found buyers, and the rebound in the buck caused the rallies in both silver and gold to fail, with most of the gains lost by end of day.

Gold and silver both printed bearish-looking inverted hammer candles.  Coming after a relatively long and steady rise, and given the high volume for the day in gold, this looks suspiciously like a top.

Miners did not like the inverted hammer candle printed by gold; GDX dropped -1.50% on moderate volume, while GDXJ fell -2.28% also on moderate volume.  Senior miners closed below the 9 EMA, which is a danger sign.  Notice how although gold remained up on the day, traders sold the miners.  This confirms the thesis of a top in PM.

The dollar rose today, climbing +0.49 to 97.68.  The dollar initially dropped in Asia trading, hitting 96.32 at one point; the dollar's low point coincided exactly with gold's high mark of the day.  Once the dollar found buyers, gold fell, and by the close the dollar had printed a bullish hammer candle.  I believe this might mark the low in dollar for this particular cycle.

SPX fell today, dropping -4.90 to 2056.15.  About four hours prior to the US open, the e-mini (SPX futures) hit their low point for the day, down almost 15 points.  Interestingly, the day low in the e-mini futures matched the day high in gold, silver, and oil, as well as the low in the buck.  Once the dollar started to rally, so did the e-minis.  The SPX rally continued once the NY market opened, with most of the early losses on the day wiped out by the time the market closed.  The VIX climbed +0.36 to 15.80.

I do not think we are out of the woods yet with SPX.  Some buyers did show up, but the low must be confirmed by a close above today's high.

Bonds continued dropping today, with TLT down a big -1.56%, falling through both its 9 EMA and 50 MA.  After marking the swing high yesterday, bonds continue to look weak.  Falling bonds could be helping SPX.

The CRB (commodity index) had another good day today, climbing +1.07% and is currently just below its 50 MA.  Can the rebound in commodities continue if the dollar stops falling?  Sure, but it will be harder.  CRB hasn't closed above its 50 MA in months.

WTIC broke out today, climbing +2.03 on heavy volume, closing at 51.00 exactly.  Oil actually hit a high of 52.48 at the same time gold & silver peaked, but then it fell back due to that dollar rally.  Still, oil managed to keep most of its gains, and it has closed above its 50 MA for the second day in a row.  The 50 MA is even starting to gently rise.  Brent crude looks even more bullish.

How can this be happening with all these storage issues?  Seriously: ignore the news.  Watch prices.  News will just lead you astray.

Gold and silver appear to be topping, dollar appears to have found a low.  These two things are closely related.  If the dollar resumes its uptrend, I expect PM and the miners to sell off.  Miners have already started this process.  Oil looks stronger, and may resist moving lower.  SPX is the wildcard - if more bad US economic news appears, I expect SPX will continue to sell off.

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