PM Daily Market Commentary - 8/17/2015

davefairtex
By davefairtex on Tue, Aug 18, 2015 - 12:32am

Gold rose +3.80 to 1116.90 on moderate volume, while silver climbed +0.07 to 15.29 on moderately light volume.  Both metals tried rallying several times during the day, but failed to retain the gains through to the end of trading in NY.  Gold printed an inverted hammer candle on the day, which looks a bit bearish.  Still, with the dollar rising today, gold's performance wasn't bad.

Gold remains above its rising 9 EMA.  A trader I respect is seeing a potential cup & handle formation potentially forming for gold - you can see it diagrammed in the chart below.  An aggressive buy is the bottom of the "handle" - right around now.  A less aggressive buy is on the breakout, on a move above 1128.  Stop is placed below the handle, perhaps 1105 or so.  Of course, big guys know this, so they'll try and hose you by running stops and having false breakouts, etc.  My suggestion: focus less on the specific technical levels and more on the concept.  Gold looks to have support roughly around 1110-1115 (the lower part of the "handle") and resistance around 1128 (the rim of the "cup").  If it can break 1128, the longs may well buy the breakout, the shorts will start covering and we're off to the races once again.

Silver looks quite similar to gold - holding above its 9 EMA and potentially forming its own cup & handle pattern.  It remains just below its 50 MA.

GDX did quite well, especially in the face of a strong dollar and a relatively modest move in gold.  GDX rose +3.80% on heavy volume, recovering much of the losses incurred at the end of last week.  GDX breakout happens on a move above 15.50.  The miners sure are volatile, aren't they?

Junior miners didn't do quite as well, rising only +2.63%.  They are lagging a bit, which is not the best sign.

The USD closed up +0.28 to 96.82.  It didn't seem to like the surprisingly weak Empire State Manufacturing Index report at 08:30, which caused the buck to drop a bit, but it recovered relatively quickly closing near its highs for the day.  The buck looks to be bouncing off its 50 MA, but I'm not convinced this rally is the real deal just yet.

SPX was hammered early after the bad Manufacturing Index report, but it found support right around its 200 MA and after that, it just took off higher, closing up +10.90 to 2102.44.  The move pushes SPX back above its 50 MA.  VIX actually rose on the day, up +0.19 to 13.02.

Bond ETF TLT climbed +0.56%, quite close to making a new cycle high.  Bonds are up about 8% over the past six weeks, and remain in a strong uptrend.

The CRB (commodity index) fell once more, down -0.73% making another new low.  If downside momentum is slowing, nobody told this to CRB which remains in a strong downtrend, below the 9 EMA for the past six weeks.

WTIC (oil) fell as well, dropping -0.30 [-0.71%] to 41.88.  It too has been below the 9 EMA for the past six weeks.  Its as though a bell was rung on July 1, and commodities just started selling off, and the selling just hasn't stopped.  I wonder what happened back then that might provide some explanation?

Gold and silver both look reasonably positive, miners even more so, while commodities continue to fall.  The divergence between gold and commodities is becoming more pronounced.  As long as we hold those 9 EMA levels, the PM rebound remains clearly intact.

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3 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Gold backed digits in 4 States.

We now have legislators in four states that have introduced legislation to require state administration to set up electronic payment systems using gold.

CAF.

http://www.scoop.co.nz/stories/HL0902/S00300.htm

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1227
2009?

Arthur,

You do realize that the link you posted is more than 6 years old don't you?

Mark

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
Economy 2.0 Revival in Japan?

Catherine Austin-Fitts likes to talk about Economy 2.0 vs Economy 3.0, by which she means the old-style industrialized production model vs the new stuff that is wildly different - biotech, software/services, robotics, drones, 3-d printing, etc.  She states time and again that money is gushing out of Economy 2.0 and pouring into Economy 3.0.  Detroit -> San Francisco Bay Area.

Japan is a great example of Economy 2.0 - run by top-down planning, the ministry of industry and trade directing credit flows, and currency devaluation to support exporters.  Abe seems to be trying to revive the Economy 2.0 export model that worked great back in the 1980s.  Here's an article that explains how this is playing out:

http://www.bloombergview.com/articles/2015-08-17/japan-exports-its-way-to-irrelevance

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