PM Daily Market Commentary - 10/27/2015

davefairtex
By davefairtex on Wed, Oct 28, 2015 - 2:02am

Gold rose +4.10 to 1167.00 on moderately light volume, while silver rose +0.03 to 15.87 on moderately light volume too.  It was another quiet trading day.  FOMC meeting announcement is tomorrow at 14:00; most likely the quiet period will end at that time.

Gold's correction is starting to flatten out; gold is now back above its 9 EMA.  It would not take much to push gold back above the 200 MA which is currently at 1175.

Silver has also risen above its 9 EMA and is only 6 cents from its 200 MA.  Both metals seem poised for a breakout.

Miners also had a narrow trading range, with GDX up +0.19% on very light volume, while GDXJ fell -0.55% on light volume.  Really, not much happened today.  My computer is bullish on the miners.

The buck sold off at the time of the Durable Goods report at 08:30, but then recovered to close up +0.04 to 96.99.

SPX fell -5.29 to 2065.89.  SPX sold off earlier in the day, but found support on its 200 MA.  Again, things seemed a bit quiet.  I'd like to say the equity market is running out of gas, but so far the technicals don't show any signs of that right now.  VIX rose +0.14 to 15.43.

JNK fell -0.27%, printing a swing high, and is now right at its 9 EMA.  JNK is not looking so healthy right now, with the rally off the lows of Oct 1 fading.  JNK was not able to surpass the recent "lower high" - and this suggests momentum remains down for JNK.  A drop below that 9 EMA and JNK probably retests its low.

Bond ETF TLT rose +0.25%; bonds are nearing the top of the trading range, and they appear to be edging slowly higher.  Taking a rate rise off the table seems to have helped bonds.  TLT is above all 3 moving averages, which is bullish.

The CRB fell -0.49%, making a new low for this cycle.  No good news for commodities.

WTIC oil fell -0.34 [-0.78%] to 43.39, plunging at one point to 42.58.  However it managed to find some buyers and rally back, printing a small hammer candle on the day.   This is the first sign I've seen of some support for oil, but it appears somewhat tentative and momentum still seems to be pointing lower.  Petroleum Status Report is out tomorrow at 10:30 - will there be good news for oil which has dropped 7 of the past 8 days?  My computer still is bearish.

Natural gas (US) had its front-month contract roll today, which confused the chart a bit; if we look at the previous month, we see natgas plunging to 1.95, finding buyers and rebounding to 2.10 printing a nice hammer candle.  We might have a low in natgas.

Gold and silver are moving sideways having worked off their overbought conditions, while commodities continue to fall.  Is it possible that Yellen will stop talking about a rate rise after Draghi's money printing signal?  Fed probably doesn't really want a stronger dollar.  Backing off the rate-rise speak "for now" would probably send the buck lower - and PM higher.

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4 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
silver breakout: 16.29

Silver has broken out to new highs for this cycle, cutting through its 200 MA (15.87) on the way up.  Looks like the shorts (who probably loaded up during the past 3 week consolidation) are in the process of covering.

Gold is following along behind, and it too is back above its 200 MA, but it has not yet risen above its previous high of 1191.70.

This is before any results from the FOMC.  Is gold and silver sniffing out a potentially dovish announcement from the FOMC this afternoon?  Will Yellen start to engage in currency wars by taking a rate hike off the table?

The buck thinks, maybe so.  It is off -0.27.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
Yellen cries wolf again

Once again the Fed suggests there could be a rate hike in December, with the decision turning on an improvement in jobs and greater confidence that inflation is moving towards the 2% goal.

To me this wasn't news, but to the market...it was definitely news.  Now it might be that someone shellacked gold right at the FOMC minutes release - but the fact is, the buck had a swing of 1.30 points today, from low to high, and that's enough to serve up gold's head on a spike - at least most days.

I would not have expected the buck's reaction to this sort of "same old same old" Yellen Cries Wolf, but I guess the market was expecting something much more dovish, as in, "rate cut is no longer going to happen."  They didn't get it, and so we get crazy moves once again after FOMC.

Silver showed surprising strength, closing green.

My guess: PM may have to wait until the next Nonfarm Payrolls report.  Crazy market still believes Yellen.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
davefairtex wrote: Once again
davefairtex wrote:

Once again the Fed suggests there could be a rate hike in December, with the decision turning on an improvement in jobs and greater confidence that inflation is moving towards the 2% goal.

To me this wasn't news, but to the market...it was definitely news.  Now it might be that someone shellacked gold right at the FOMC minutes release - but the fact is, the buck had a swing of 1.30 points today, from low to high, and that's enough to serve up gold's head on a spike - at least most days.

I would not have expected the buck's reaction to this sort of "same old same old" Yellen Cries Wolf, but I guess the market was expecting something much more dovish, as in, "rate cut is no longer going to happen."  They didn't get it, and so we get crazy moves once again after FOMC.

Silver showed surprising strength, closing green.

My guess: PM may have to wait until the next Nonfarm Payrolls report.  Crazy market still believes Yellen.

What market is left?   The S&P 500 graph today looked PPT seeding for the Algos.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
davefairtex wrote: Crazy
davefairtex wrote:

Crazy market still believes Yellen.

Has Yellen made a public appearance since her mini stroke?

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