PM Daily Market Commentary - 12/14/2015

davefairtex
By davefairtex on Tue, Dec 15, 2015 - 12:48am

Gold fell -14.10 to 1059.60 on moderately heavy volume, while silver plunged -0.24 to 13.65 on moderately heavy volume also.  Both gold and silver sold off hard today; it was an ugly day for PM overall.

I just don't have a rationale as to why gold and silver fell today - it wasn't oil, which ended up rallying, nor was it the buck which ended the day relatively neutral.  Commodities did drop, but platinum and palladium were actually up.  Perhaps it was just pre-Fed meeting jitters, or maybe the big money wanted to get the miners to sell off.  Or perhaps it was official intervention.  It wasn't aligned with any of the usual drivers that I could see.

Gold is now through the 9 EMA, and appears to be headed for a re-test of its lows at 1045.40.  My guess is gold will rally after FOMC, just based on the COT report and sentiment, but until the meeting it appears we will be faced with pre-meeting selling at COMEX.  I'm not entirely sure the 1145 low will hold, as we have a lot of trading time between now and then.

Silver was driven to a new multi-year low today; today's rally in oil did manage to cause a momentary rally in silver, but it was promptly sold, with silver closing almost at its low for the day

Miners were crushed today, with GDX dropping -5.70% on heavy volume, while GDXJ fell -3.67% on light volume.  GDX closed at its dead low, which suggests we may have further to fall tomorrow.  GDX also was driven below its 9 EMA, same as gold.  Hopefully buyers show up tomorrow, or we could see new lows for the mining shares.

The USD rose +0.10 to 97.65, climbing back above its 50 MA.  The buck remains in a short term downtrend, but it does appear to have some support at the 50.  I suspect we'll see a big move after FOMC, one way or the other.  It certainly could be "sell the news", especially if the Fed disappoints with the details of its rate rise.

SPX found buyers today, climbing +9.57 to 2021.94 after an early-morning sell-off, eventually printing a hammer candle on the day.  If history is any judge, this will end up being a reversal bar and equities probably rally for the next few days - at least into the FOMC meeting.  VIX dropped -1.66 to 22.73.

JNK continued selling off, falling a big -0.80% and making a new low.  There is serious smoke coming out of the trillion-dollar junk bond market, and a few flames as well.  That's a clear sign of risk off, and it suggests to me that any equity market rally should probably be sold.

Bond ETF TLT fell hard, dropping -1.29% and retracing most of Friday's large move higher.  TLT remains above its 9 EMA, but not by much.

CRB fell -0.34%, making yet another new low.  So far, no relief from the commodity sell-off.

WTIC managed to rally today after making a new low of 34.53, climbing +0.91 to 36.27.  This might mark a temporary low for oil, but we will need to see confirmation tomorrow with a close above 36.70.  Oil's rally definitely helped silver to rally intraday, even though it didn't hold through end of day.  If oil does recover, that should help provide a bid under silver at COMEX.

US Natural gas ($NATGAS) possibly printed a capitulation low today, hitting 1.86 - a price level last seen 13 years ago, in January 2002.  I'm pretty sure nobody makes money with natgas at that price.  Natgas closed down -3.94% to $1.90, but it printed a small hammer candle reversal bar, and it is dreadfully oversold.

My guess is, the selling pressure will abate after FOMC, which starts its meeting tomorrow and will release a statement on Wednesday at 14:00 Eastern.  The big money commercials are set up for a move higher in PM.  Given the importance of the announcement, I think it is likely those commercials already know what the Fed will announce; quite possibly the Fed felt it had to "test-market" its actions to the financial community, as it has done in the past.  That's some nice work if you can get it.

There is a well known strategy where you first hammer an item lower before backing up the truck long, so the other traders are wrong-footed and you end up getting a lower price for your position.  Perhaps that is what is going on now - a hard sell in PM prior to the meeting.  We'll know more Wednesday afternoon.

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2 Comments

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 154
my $0.02

Dave,

That's my gut feeling too; that JPM & Co. are trying to get the specs as short as possible prior to a nice PM rally post FOMC.

Now that I said that, and also bought a couple of GLD Calls, the exact opposite will happen..  :)

Steve

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 654
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