PM Daily Market Commentary - 9/1/2015

davefairtex
By davefairtex on Wed, Sep 2, 2015 - 4:20am

Gold rose +5.40 to 1139.30 on moderate volume, while silver fell -0.03 to 14.57 up +0.02 to 14.60 moderately light volume.  Both metals had a momentary spike higher around 09:00 ET but neither metal could hold onto the gains into the close.  Still, both metals did better than their commodity cousins, which sold off hard today.

How gold did today depends on the lens you view it through.  If gold is a commodity, gold did quite well, as it rose while the CRB endured a dramatic sell-off.  Platinum dropped -0.56%, palladium was hammered -4.41%, and copper fell -1.86%.  So in that sense, gold did really well.  However since the buck fell more than gold rose, it didn't really stay even.  And on the chart, it looks like gold had a bit of a failed rally.  But it sure beats what happened to everything else.

Silver continues to look weak; it made a new high but was unable to retain those gains into the close.  It continues to move sideways, any rallies capped by the 9 EMA.  While it did better than many other things just by remaining mostly even, it does not look like it is setting up for a breakout.  Rather, it looks ready to break down.

Miners chose to follow SPX rather than gold; GDX fell -3.12% on moderately heavy volume, and GDXJ dropped -3.10% on moderately light volume.  It looks as though the brief miner rally was stopped at that 9 EMA - and that's not a great sign.  Unless buyers appear in a hurry for the miners, we're likely to retest the 13 lows for GDX very soon, and more likely than not, break down to new lows.

The USD fell for the second day, dropping -0.41 to 95.45 and falling below its 9 EMA.  While the dollar fell vs the Euro, the two commodity currencies AUD and CAD both did even worse, with AUD breaking down to new 6-year lows vs the USD.  The last time AUD was at 70 was back in early 2009.  I'm guessing that's commodity-related.

SPX had a seriously bad day, falling -58.33 [-2.96%] to 1913.85; last week's low was 1867.  My sense is, this was probably a drop in sympathy with the rest of the world equity markets, which also had bad days.  When traders decide they want to sell rallies, any "plunge protection" efforts simply result in those traders getting out at higher prices than they otherwise would have received.  Those traders are happy, and the trend remains unchanged.  If the people running the "PPT" really are clever, they know this full well, and instead of fighting the trend (which is financial suicide - essentially handing free money to traders eager to sell), if they do anything they simply keep the trend orderly, buying the dips, but then selling the rallies.  My opinion, of course.

Name Chart Change 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Eurozone EZU -2.44% -11.46% falling falling falling falling ma200 on 2015-08-17 2015-09-01
Europe IEV -2.86% -12.96% falling falling falling falling ma200 on 2015-08-12 2015-09-01
United States VTI -2.94% -3.17% falling falling falling falling ema9 on 2015-08-31 2015-09-01
Emerging Asia GMF -3.53% -19.01% falling falling falling falling ema9 on 2015-08-28 2015-09-01
Latin America ILF -3.71% -44.49% falling falling falling falling ema9 on 2015-09-01 2015-09-01
Developed Asia VPL -3.98% -12.70% falling falling falling falling ema9 on 2015-08-31 2015-09-01

Bond ETF TLT rallied back +0.72%, regaining only half of yesterday's big bond market loss.  Given the sell-off in equities, bonds do not look particularly well-behaved.  Normally I would expect them to be taking off since SPX seems destined to re-test last week's lows, but no.  They barely move.  That bodes ill for bonds, in my book.  Probably the dollar weakness has a little something to do with that, but I feel its something more than that too.

The CRB (commodity index) was really hit hard, dropping -3.01% retracing all of yesterday's big gains and a bit more besides.  Is the CRB short-covering rally now over?  Its hard to say, since CRB remains above its 9 EMA so that is still positive, but today's sell-off looked quite unpleasant.

WTIC (oil) was crushed today, falling -3.97 [-8.24%] to 44.19 - a massive loss that more than retraced yesterday's big gains.  Where oil goes from here is anyone's guess - it might even continue moving higher at a much slower pace - but the short-covering phase is probably done.  Today looked like longs that made 20% in 3 days were ringing the cash register, followed up by shorts eagerly jumping back in.   It will be interesting to see the COT report for oil this Friday just to see how many Managed Money shorts got burned by this $10/one-week oil rally.

So, equities are selling off worldwide, US treasury bonds don't look great, commodities were hammered led lower by oil which endured a massive loss, silver remains in no mans land but appears primed for a sell-off of its own, the buck continues to weaken, while gold continues to inch higher.  Given that viewpoint, gold is actually doing pretty well.

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