PM Daily Market Commentary - 4/16/2015

davefairtex
By davefairtex on Fri, Apr 17, 2015 - 2:22am

Gold fell -3.70 to 1197.90 on moderately heavy volume, while silver dropped -0.03 to 16.26 on moderate volume.  Both gold and silver fell during NY trading, and in spite of the very weak dollar (down a big -0.91) neither gold nor silver were able to get back to even by end of day.

Gold in Euros was down -1.03% - in USD, that would be down $12 on the day.  Gold's inability to rally on what should have been a positive day based simply on currency effects suggests gold remains weak.  For some reason, it's just not ready to rally just yet.

The miners fell as well, with GDX dropping -1.20% on moderately light volume, and GDXJ fell -1.12% on light volume.  There wasn't a lot of selling in the miners today - but no buying either.  Miners are still poised to break higher out of their ascending triangle formations.  If they can do this, that will be bullish.  I suspect even a modest gold rally would send the miners nicely higher.

The dollar fell for most of the day, dropping a big -0.91 to 97.61.  This is the third day of dollar decline - another day of this, and the dollar will be testing its 50 MA.  Support for the buck lies at about 96.25 (a previous low) but a close below that 50 MA would be a big deal, since the dollar hasn't done that since July of 2014.  If gold can simply stay even in Euros, a dropping dollar would have gold rise for us here in the US.

SPX tried to rally today and failed, closing down -1.64 to 2104.99.  SPX is hovering just below its previous high of 2108 - and not that far from its all time high of 2120.  Market seems to be having trouble breaking out to new highs, but it also seems unwilling to drop.  We are now waiting for something to break the impasse.  VIX fell -0.24 to 12.60.  Puts are cheap once again.

Bond ETF TLT fell -0.50%; bonds seem unable to move higher at the moment.  Bonds are still bullish longer term, but in the shorter timeframe bonds are slowly starting to fade.

The CRB (commodity index) continued moving up, rising +0.96% and closing above its 50 MA for the second day in a row.  Its enough to give me hope that the long commodity correction may be nearing an end.

WTIC continued rising, up +0.58 to 56.53.  It will be interesting to see how high oil manages to go before the selling pressure starts to hit.  If shale drilling is profitable at (say) 60, then I think we would see sellers enter the market at 60 in order to hedge their production.  I don't think anyone in shale is interested in gambling on steadily rising prices at this moment.  Of course, WTIC at 60 means Bakken producers realize about $50/bbl.  We should also see some more wells completed once basic profitability levels are reached.

Failure of gold to rise on such a strong drop in the buck suggests gold is not yet ready for prime time.  Miners still look poised to break higher, but it is hard for them to do so with no enthusiasm from gold.  Commodities are looking better, helped by the recovery in oil.  Over time, rising commodities will help push gold higher.

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