PM Daily Market Commentary - 11/19/2015

By davefairtex on Fri, Nov 20, 2015 - 9:11am

Gold rose +11.80 to 1081.30 on heavy volume, while silver climbed +0.10 to 14.23 on moderately heavy volume.   PM attempted a rally in Asia which failed, but then rallied again an hour before the US market opened.  Both gold and silver ended up confirming yesterday's reversal bars, with gold looking especially strong while silver continues to look relatively weaker.

Today was the first 10 point up-day for gold in more than one month.  Someone stepped up and started buying seriously at around 08:30 Eastern, and they didn't stop until gold was $16 higher at around noon; my guess is those commercials have now largely covered their short positions, and now its time to move into the rally phase.  How long this lasts is the key question - and I certainly don't have the answer.  The last few times gold has rallied, it climbed for several weeks before topping out.  I'd be happy if gold was able to reach the 50 MA before losing momentum.

Silver's initial rally at 08:30 was just as strong as gold's, but silver was unable to hang on to most of its gains - by end of day, silver was just barely able to mark a swing low.  In fact, silver's candle print is right on the edge of being an inverted hammer, which is the sign of a failed rally.

Miners gapped up at the open, moved higher, and by end of day managed to close above the 9 EMA while also marking a swing low.  GDX was up +3.56% on moderate volume, while GDXJ rose +2.80% on moderate volume also.  Miners are the first PM element to close above the 9 EMA - they continue to outperform.

The buck fell hard today, dropping -0.68 to 99.06, closing below its 9 EMA for the first time in six weeks.  Most likely, the current dollar uptrend is now over and the buck is entering a correction phase.  Its no accident that the dollar correction is starting at the same time as gold marked its swing low.

Equities traded in a very tight range, with SPX dropping -2.34 to 2081.24.  Looks like equities are taking a rest.  VIX rose +0.14 to 16.99.

JNK fell hard today, dropping -0.59% and making a new closing low for this cycle.  That's a strong risk off signal from JNK.

Bond ETF TLT jumped +0.67%, a surprisingly strong move given the recent weakness in bonds.  Perhaps its a move out of lower quality debt into higher quality.

The CRB rose +0.28%, but remains below its 9 EMA and remains in a solid downtrend.

WTIC tracked sideways today, falling -0.13 to 41.85.  Oil traded in a relatively tight range - it tried to rise above its 9 EMA but was unable to do so.

So where to from here?  Momentum should carry gold higher for the next few days at least.  Given that gold made a new low during this process, I don't expect gold to change its longer term trend in the near future.  What we will see, most likely, will be a bounce rather than a major move.  That's what the odds say anyway.  We'll have to see how the market reacts to gold's swing low and the dollar weakness.  Silver remains weak, but the miners look good.

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