PM Daily Market Commentary - 6/15/2015

By davefairtex on Tue, Jun 16, 2015 - 3:17am

Gold rose +5.00 to 1185.60 on moderate volume, while silver climbed +0.11 to 16.03 on heavy volume.  PM was all over the map today, with gold down during European trading hitting a low of 1172, and then rocketing higher in the late morning in NY to 1190.  On balance the day was positive, although silver looked weaker than gold - it lost the vast bulk of its rally by end of day.  My sense: this was all about news from Greece.

Neither metal made either new highs, or new lows.  Today, gold managed to close back above its 9 EMA, and is not far from the 50; a close above the 50 and a move back above 1200 would certainly make me feel more comfortable.  It has already marked a swing low, which is a good first step.

Silver was still not able to confirm its own swing low - closing below the magic 16.04 level by one cent.  It just doesn't look ready to rally yet.  At the same time, the general sideways movement looks more like accumulation, which I'd say is positive.  Well, perhaps its not negative.  Silver seems to have support around 15.75-15.90.  Certainly, traders aren't willing to bid it higher once it rises above 16, but they do seem willing to buy down at 15.75.

Mining shares tried to rally today but failed, with GDX up just +0.22 on moderately light volume, and GDXJ up +0.36% on light volume.  GDX has yet to break its downtrend line and its 9 EMA.  Same situation for GDXJ.  Miners aren't signaling anything positive yet for PM.

The dollar had a relatively wide trading range today, but ended up only +0.11 to 95.10.  No change in trend; the buck remains below its 50 MA as well as its 9 EMA.  While the news from Europe about Greece suggests an approaching Götterdämmerung, you can see from the +0.12% move in the buck today that the currency traders are not nearly as impressed.  In fact, the Euro was actually up +0.18% on the day.

I'm not saying "the market is always right" - but these guys may well have information sources that we peons don't, sources within government who are thinking ahead to their next job after government.

SPX (US equities) sold off today, losing -9.68 to close at 2084.43.  Most of the losses came overnight in the futures markets; there was a further sell-off right at market open in NY, but that was quickly bought.  Market still looks weak to me, my bet is we break below the previous low at 2072.  VIX jumped +1.61 to 15.39 on the day, a big move higher.

We had two economic releases today - the May INDPRO number which came in negative and weaker than expected, as well as the Empire State manufacturing survey which gives us an early look at June, which was also (surprisingly?) negative.  Right now, there seems to be no letup in the bad news from manufacturing, which runs directly counter to the good news from retail sales and new home construction.  My interpretation: there is no clear macro economic signal at the moment.  We are in a "manufacturing recession" but that does not seem to be taking down everything else.  Why is that?  Well, payrolls provide the life blood of money flow through the economy.

MANEMP: manufacturing employment

PAYEMS: total nonfarm payrolls

Chart below: percentage of total nonfarm payrolls employed by manufacturing: now at 8.71%, having started at 30% in 1939.  [How cool are these two timeseries - dating back to 1939!]

Bond ETF TLT tried to rally and had troubles, gaining only +0.16%.  Even though TLT made a swing low last week, I'm not sure this is a bounce to buy.

The CRB (commodity index) fell again today, down -0.44%.  It remains in an uptrend, but a few more days of this kind of selling and it will have formed a lower high, which will signal a trend change back to "bearish" again.

WTIC (west texas crude) sold off too, dropping -0.32 to 59.62.  WTIC was down more heavily in the morning in NY, but the buyers showed up once price dropped below 59, and so WTIC bounced right back up again.  WTIC printed a hammer candle on the day.  I'm not sure where prices are going in oil; the WTIC chart is looking pretty strong right now, while Brent is looking weaker - Brent dropped below its 50 MA.  The Brent/WTIC spread has been drifting slowly lower, and is at $4.25 right now, down from a high of $12.50 back in March.

Turbulence in Greece may be acting as a mild catalyst for gold.  Silver appears to be bouncing along a low, finding support at 15.75-16.00.  Both metals have had a whole lot of Commercial short covering action last week, which is bullish.  Yet commodities look to be weakening, oil is looking for direction, and ... that brings us to this week's next bit of excitement which is the latest FOMC meeting, which starts tomorrow.  Woohoo!  Will we get the rate raise?  What tea leaves will we all get to read?  What will our central planners decide is best for us?

Its not the effect of the 0.25% rate rise itself that causes all the trouble.  It is the signal that "the party is over" and the expectation that there will be more rate raises to come.  That's the issue.

Peons like us get to hear the next installment of the drama at 14:00 EDT Wednesday, and we get to hear even more details from Chair Yellen herself at the press conference at 14:30 EDT.

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