PM Daily Market Commentary - 4/8/2015

davefairtex
By davefairtex on Thu, Apr 9, 2015 - 1:30am

Gold dropped -5.50 to 1202.70 on moderate volume, while silver plunged -0.32 to 16.51 on moderately heavy volume.  Gold dropped modestly today, while silver was hit hard - losses in silver came at about the same time WTIC had its big sell-off - immediately following the 1030 EDT Petroleum Status report.

Why would silver drop when oil fell?  You got me - they are relatively closely correlated, but its a bit unusual to see them this tightly linked in terms of magnitude.

Another event today was the FOMC minutes release at 1400, which caused the buck to rally and gold to drop a bit.  Nothing new was revealed - at least that I could see, but dollar traders seemed to find at least modest comfort in the minutes.

Gold's fall today was follow-through from the swing high marked yesterday.  Gold looks to be slowly correcting after the high last Thursday.

Silver has been weakening over the past couple of weeks - the gold/silver ratio is up almost 3 points (to 72.85) over that period, rising +1.04 just today.  The gravestone doji (and failure to make a new high) last Thursday was a clue; silver has now made a new low, is below both 9 EMA and 50 MA, and I'm starting to wonder if it will retest the lows at 15.50.  Certainly the high volume selloff today is not a good sign.  The COT report last Friday showed a disagreeably large number of Managed Money longs, something that sometimes marks a top.  It looks like they are getting washed out this week.

Buyers in silver certainly aren't showing up just yet.  We probably have farther to fall in silver.

The miners did all right today, with GDX down -0.52% on light volume, while GDXJ lost -1.69% on moderately light volume.  Senior miners were actually in the green prior to the FOMC minutes release; immediately after they sold off hard, but then rallied into the close.   Given that gold fell, and silver was hit hard, I'd say mining shares looked reasonably strong today.  Still, if gold continues dropping, miners will probably follow.  But the good news is, they don't seem to be leading lower right now.

The dollar rallied today, +0.07 to 98.13, a modest move that came mostly following the FOMC minutes release at 1400 EDT.  Buck needs a close above 99 to resume its bullish uptrend in the short term.  Anything that hints of a rate rise helps the dollar these days, and the gang at the Fed were at least still talking about rate increases at the meeting, which seemed to cheer up the dollar holders.  Myself I don't see it happening unless the macro data stops its topping process.

SPX rallied modestly today, climbing +5.57 to 2081.90.  From a technical standpoint, the direction of SPX is up in the air right now - it has been chopping sideways within a shrinking range for the past few weeks.  The market looks to be getting ready to break one direction or the other.  My favorite direction is down, given the trends in the macro data, and I'm guessing it will be some bad bit of economic news that will send SPX over the edge.  But given how long this uptrend has been in place, I'm going against the odds here by saying this.

Bond ETF TLT rose +0.03% - basically unchanged.  Bonds too are trading mostly sideways within a range right now.  Likely, if SPX jumps one way, bonds will jump the other, but TLT is refusing to give us any clues as to which way it will be.

The CRB (commodity index) was hammered hard today, dropping a big -2.46%, completely wiping out the gains from the past several days.  CRB is now back below 9 EMA and 50 MA - back to bearish mode.

WTIC was also hit hard today, with most of the losses coming immediately after the Petroleum Status report at 1030 EDT.  The report showed a 10 million barrel build, and the estimates were for around 4 million barrels.  The report caused oil to drop $3 within 30 minutes of the release; WTIC rallied somewhat to close down "only" -2.27 [-4.26%] to 50.98.  WTIC remains above its 9 EMA and 50 MA and is doing better than its cousin the CRB, but the market was clearly not expecting such a big inventory build.  If WTIC can hold above its 50 MA (49.19) that will be a positive sign.  I'd expect buyers to appear there.  Let's see if enough of them show up.

Gold's swing high looks to be a sign of a near-term top; gold and especially silver are now selling off even though the buck isn't moving very much.  That's not a great sign.  Let's hope the buck stays in its near-term downtrend, otherwise it will probably be trouble for PM.

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