PM Daily Market Commentary - 10/29/2015

davefairtex
By davefairtex on Fri, Oct 30, 2015 - 4:04am

Gold fell -10.20 to 1145.50 on heavy volume, while silver dropped -0.36 to 15.57 on very heavy volume.  Gold and silver tracked sideways until a few hours before the US market open, then they started selling off slowly but steadily throughout the day in NY.   Both metals made new lows on the day.  It was a bad day for PM.

Gold's two day $20 plunge has brought it close to the 50 MA, which is the first place we could expect to see buyers appear.  The RSI-7 shows that gold is starting to move into oversold territory, which also suggests that a normal correction might be nearing an end.  However, I'm a bit concerned that all the selling isn't quite done yet; today's follow through from yesterday's sell-off was a bit too enthusiastic, and this all happened on the same day the dollar was quite weak.  And, tomorrow is the last day of the month, and in recent years (according to my studies) that has typically been a bad day for gold.  Bottom line: I'm concerned that the 50 won't stop the decline.

Silver also followed through from yesterday's FOMC-driven sell-off, making a new low on high volume.  Silver's chart looks substantially better than gold's chart, but both metals appear to be preparing for further moves downhill.  I think silver has a better chance of finding support on its 50 MA.  Silver's swing high on such high volume definitely is a source for concern.

Traders threw the miners right off the lifeboat today; miners gapped down at the open, broke below their consolidation range, and then just sold off for most of the day.  Miners had been holding up quite well until that FOMC meeting; the whole psychology of the PM market shifted after 14:00 Wednesday.  Based on today's performance and especially the small sell-off at end of day, I suspect we have a few more days of selling ahead of us before it is all exhausted.

Not every miner is behaving the same.  Its earning season for the miners too, and some of them are doing quite well as a result of low gasoline prices and weaker currencies.  Newmont reported substantially lower all-in sustaining costs this quarter, and was up +3.86%.  Agnico Eagle had good results also, and rose +1.12%.  Goldcorp - well, Goldcorp reported a surprise loss.  It dropped -10.31%, a massive loss on huge volume.  Goldcorp had a very bad day.

The buck fell, dropping -0.50 to 97.36 and giving back a good chunk of yesterday's rally.  This suggests to me that perhaps the dollar's rally may be nearing an end, at least in the near term.  There was no particular trigger, it was just a steady move downhill.

SPX was mostly flat today, dropping -0.94 to 2089.41.  It traded in a narrow trading range, and not much happened of note.  VIX rose +0.28.

JNK fell -0.22%; JNK printed a swing high a few days ago and now appears to be drifting lower.

Bond ETF TLT gapped down and sold off hard, dropping a big -1.59% and plunging through all 3 moving averages, stopping right at support.  Bonds - for some reason - look about ready to break down.  Everything was looking great yesterday, but if you are long bonds right now, I'd be extra careful out there right now.

The CRB fell -0.47%, an unfortunate move given the weak dollar.  Other than yesterday's moment of strength, commodities appear headed lower.

WTIC fell -0.42, traders ringing the cash register after yesterday's 6% move.  Even though oil marked a strong swing low yesterday, I'm just not sure the low is really in.  I want to see a few more rally days strung together before I'm a believer.

As far as PM goes, it appears that there were a bunch of traders who were betting on a dovish FOMC meeting result.  They were hanging tough right up until yesterday at 14:00.  However when they didn't get what they wanted from Yellen, they bailed out - or are in the process of bailing out.  As a result, the gold correction has accelerated.  The fact gold, silver, and the miners all fell on a weak dollar day simply underscores the move out of gold.

At some point Yellen crying "rate rise" and failing to deliver will wear thin, but for right now she still appears to have juice with the market.  In the meantime, we may have a few more days of selling before a low is reached.  How much lower we go depends on just how many traders still want out, but have yet to sell.   It could all turn around tomorrow, but I'm going with the odds.

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