PM Daily Market Commentary - 6/16/2015

davefairtex
By davefairtex on Wed, Jun 17, 2015 - 2:10am

Gold fell -4.50 to 1181.10 on moderately light volume, while silver dropped +0.06 to 15.97 on moderately light volume also.  PM was hit at around 9 am EDT but rallied back - still the bias was down on the day.  Mostly, PM has been trading sideways for the past week.

The metals look to be in more or less of a holding pattern right now, perhaps due to the FOMC meeting now taking place, due to finish tomorrow with the release of the meeting statement at 14:00 EDT followed by the press conference at 14:30.

Mining shares continue to sell off, with GDX down -1.40% on moderate volume, and GDXJ off -0.76%.  The pace of the selling is accelerating in the senior miners; I have seen several cases of support breaks or new multi-year lows being set, and those situations are usually accompanied by a fair amount of selling.  For instance, Goldcorp made new lows today, and is now back to price levels not seen since 2008.  The big miners look ill, and they probably should be left alone until they decide to break their downtrend line at a minimum.

Junior miners continue to fair substantially better than the seniors; the GDXJ:GDX ratio continues its uptrend.  Silver mining shares are also outperforming - heck the silver mining ETF SIL broke its downtrend line and has moved back above its 9 EMA and is right at the 50 MA, which is better than any other PM component out there.  I have no fundamental explanation for why they are doing so well - traders continue to buy them in preference to the bigger gold miners.

The dollar rose +0.18 to 95.26; it has traded sideways within a range for the past week.  In spite of the "just about to default" news from Greece, we are not seeing any sort of safe haven move into the buck.  Perhaps the FOMC meeting is taking precedence this time around.  Will the Fed raise rates?  If they do, it should be dollar positive.

SPX (US equities) sold off in the futures markets during London trading hours, but then rallied through to the NY open, and it just continued to climb steadily all the way through to market close.  SPX closed up +11.86 to 2096.29.  Popular thinking is that SPX will sell off if the chances of a Fed rate rise increase, because it is the start of the end of the party for very low rates.  Why did SPX rise today?  You got me, but the bid was quite steady.  No alteration in my overall sense that the current direction is lower.  VIX fell -0.58 to 14.81.

Bond ETF TLT climbed higher, up +0.79%.  It continues to slowly recover from the losses of the past few months, but TLT remains in a downtrend with a clear pattern of lower highs and lower lows.  It needs to clear the most recent "lower high" to bring that to an end which requires another 4% move higher.  We'll see if it can do that.

The CRB (commodity index) rallied +0.55%.  It was a decent performance, breaking three days of downside move, and the medium term uptrend remains intact.

WTIC (west texas crude) rallied too, rising +0.43 to 60.05, moving back to the middle of its 58-62 seven week trading range.  Brent continues to drift lower, losing -0.12 to 63.75.  That Brent-WTIC spread continues to fall, and is now at 3.70.

Things look to be more or less moving sideways into the FOMC meeting, due to finish tomorrow.  Traders will be looking for clues from our central planners as to when the rate rise will occur.  Heck, it may even happen at this meeting, although that would be a very large surprise.  Standard thinking is, equities fall, dollar rises once the Fed starts to raise rates.  Likewise, emerging markets carry trades start to be unwound.

As for PM?  That I don't know.  Reply hazy, try again.

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