PM Daily Market Commentary - 5/14/2015

By davefairtex on Fri, May 15, 2015 - 12:06am

Gold rose +6.20 to 1220.90 on heavy volume, while silver climbed +0.35 to 17.47 on very heavy volume.  Today's rally looked like a continuation of yesterday's price action; silver especially powered higher as a result of steady buying.

Today's gold rally made a new cycle high as did silver.  This means both gold and silver have marked a higher low and a higher high, which means the uptrend dating back to the November lows remains intact.  Furthermore, both gold and silver managed to close above their 200 MA.  This is a particularly big deal for silver, since it has not been above the 200 MA for about 10 months.

Silver moved more strongly than gold, driving the gold/silver ratio down -1.07 to 69.89.  Silver's 50 MA has even started to turn up.

Mining shares initially did well at the open, but soon after 10:00 they sold off and continued being sold through the end of the day.  GDX closed up +0.19% on moderate volume, while GDXJ actually fell -0.34% on moderately light volume.  Both mining ETFs printed inverted hammer candles, which tend to mark tops.  It looks like mining share traders were cashing in on gold's breakout. 

The buck dropped modestly, down -0.15 to 93.50.  There was some volatility around the time of the Jobless Claims and Producer Prices reports at 08:30 EDT, but largely the buck continued to look weak as it has for the past month or so, continuing its fall after dropping through 94 support yesterday.  The Euro closed up +0.55% to 114.14, having chewed through 112-114 resistance over the past week.

SPX (US equities) started rallying in the futures markets during London trading hours, and just powered higher from the NY open right through to the close, climbing +22.62 to 2121.10, a new all time closing high.  The market closed at its highs for the day.  I'm not quite sure what drove the market higher today; this wasn't about any US economic release, or about any sort of currency move.  Money is flowing into equities from somewhere though, that's for sure.  VIX dropped -1.02 to 12.74.

Bond ETF TLT rose +0.27%, trying to rally but mostly failing.  The money pouring into equities is not making it into bonds.

The CRB (commodity index) rose +0.27%, a new closing high for this cycle for the CRB.  Commodities keep chugging higher; the uptrend remains intact.

WTIC (west texas crude) dropped again today, falling -0.41 to 59.67.  Oil has gone up now for 8 of the last 9 weeks.  Perhaps if the buck ever manages to put in a low, maybe that would send oil into its expected correction.

The miner outperformance may be starting to fade, or it could just be traders ringing the cash register after a long move higher in the shares.  We'll know more tomorrow if the miner inverted hammer candles are confirmed by a lower close.  Gold and silver have made new highs for this cycle, which assures that the uptrend dating back to the November lows remains intact.  Gold has been a tough trade; other than the steady accumulation in mining shares and the recent outperformance of the juniors, PM gave us no indication it was ready to power higher.  Certainly there was no news I could see that caused the breakout.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
INDPRO update today

The Industrial Production report released at 09:15 EDT was unexpectedly negative - well unexpected to the economists surveyed by Econoday, that is.  I saw no visible reaction from the equity market to the release.

Still, in the past few cycles, when industrial production tips over and starts to sink, the equity market generally follows.  This makes five straight months of decline for INDPRO.

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