PM Daily Market Commentary - 1/25/2016

By davefairtex on Tue, Jan 26, 2016 - 2:00am

Gold rose +9.90 to 1108.10 on heavy volume, while silver climbed +0.22 to 14.24 on moderately heavy volume.  Gold and silver rose steadily; a fading equity market, a falling dollar, and falling oil prices seemed to help PM move higher today.

Gold continues to edge closer to the previous high at 1113.10; there was no failed rally today, only a rally that closed quite near the highs of the day.  Gold's safe haven bid is becoming more pronounced, and it seems to be dragging silver higher with it, for whatever reason.  The bullish cup & handle pattern seems to be playing out to perfection, with gold being supported on the low end by the 9 EMA.

Silver's decent-sized move has pulled it convincingly above its 50 MA for the first time since October, and it has also moved right up to its downtrend line.  While in the longer term (weekly chart) timeframe silver remains in an unrelenting downtrend, on the daily chart it does appear to be scooping out a low; at least according to the 9 EMA, which now appears to move moving gently higher and is quite close to crossing the 50 MA.  The gold chart is far more bullish, but it may be that silver is now ready to catch up.

Miners rallied nicely today, with GDX up +2.69% on moderate volume, while GDXJ rose +1.47% on moderately light volume.  GDX managed to regain its 9 EMA, which is the first technical sign that the miners have been able to recover at least somewhat from their big sell-off.  Buyers really started to show up for miners at 12.50, which was the low for GDX set back in September.

Platinum staged a strong rally, up +3.35% and closing just above its 50 MA (first time since October), while palladium fell -1.55%.  Copper fell -0.55%, dropping below its 50 MA.

The buck fell today, dropping -0.24 to 99.35.  Nevertheless, the dollar remains in an uptrend, above all 3 moving averages.

SPX traded sideways in Asia, but then sold off for the remainder of the day, closing quite near the lows, off a big -29.82 to 1877.08.  SPX printed a "bearish engulfing" candle on the day, suggesting that last Friday's swing low may be in jeopardy.  VIX rose +1.81 to 24.15.

JNK fell -0.85%, dropping back below its 9 EMA.  JNK is showing a bit of risk off as well.

TLT rallied +0.54%; not really enough of a rally in my eyes to signal any sort of directional change.

CRB fell -2.04%, dropping back below the 9 EMA.  Two days of commodity market rally was all we get, I guess.

WTIC oil dropped a massive -2.45 [-7.60%] closing at 29.80, completely erasing the gains from the rally on Friday, printing a bearish engulfing candle.  This looks bad for oil; it appears that last week's rally may have just been a two-day short covering (dead cat) bounce, which may now be over.  That's the risk anyway, one the equity market appears to be contemplating also.

Oil appears to be leading the equity market right now, and the big moves on heavy volume in the past few days suggest that we may be nearing a low.  However, today's bearish engulfing candle print also suggests the low may not yet be in.

Gold seems to like all of the fuss; the gold/oil ratio continues to climb, and gold's chart is moving steadily higher and may break out shortly.  Silver now seems to be following along, moving against the flow of the rest of the commodity complex.  Even the miners are recovering.  Its not your usual commodity-driven rally - the pattern of price movement is nothing like we saw in 2009-2011 - but prices are moving higher, so you can't really argue with that.

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davefairtex's picture
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FOMC announcement: tomorrow 14:00

The every-six-week FOMC meeting starts today, with the usual announcement coming tomorrow at 14:00.  My sense of the market is that it expects "happy news" from the Fed - namely, some chatter about how the economy is weakening, which results in a "less likely chance of a rate rise" at the next meeting.

Today it just feels like everything has a bit of a bid underneath it - oil included - which is now hovering just below 31.

davefairtex's picture
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Posts: 5683
day of short covering

Looks like everyone who had a short covered it prior to the FOMC meeting outcome tomorrow.  That's my guess anyway.  Its tough to go long before FOMC, since God himself only knows what the Fed will say these days, but ... traders are not wanting to be short going into the meeting.  Excessive dovishness would just ruin the day of anyone betting on further moves down.

  • SPX: +1.44%
  • Gold: +13 [+1.31%]
  • Silver: +0.28 [+2.03%]
  • Copper: +2.00%
  • GDX: +4.11%
  • Oil: +1.66 [+5.47%]
  • DX: -0.19

Fun was had pretty much by all.

Dogs_In_A_Pile's picture
Status: Martenson Brigade Member (Offline)
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Posts: 2606
Happy Are Those.....

who called a bottom at 15,500......

And traded appropriately WITH the market.

You wouldn't believe the numbers.

cmartenson's picture
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Posts: 5969
And blessed are those...
Dogs_In_A_Pile wrote:

who called a bottom at 15,500......

And traded appropriately WITH the market.

You wouldn't believe the numbers.

I agree.  

That sounds great.  Let me know if you know of anybody who posted that call in advance with specific trades.


HughK's picture
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Posts: 764
except NFLX
davefairtex wrote:

 Excessive dovishness would just ruin the day of anyone betting on further moves down.

Excepting Netflix. Somehow, they're dove-proof today.  It was from Chris that, a few years ago, I heard of NFLX's crazy PE ratio, and while that first short in 2013 didn't work out too well, the last 6 months have been much better.  Thanks for that, Chris and PP!

Now that I've posted this, the price will probably recover between now and close...

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
more details please


Might you have a thumbnail sketch as to what you saw at the low?

I'm not asking for your entire trading system, just a marked up chart with various events labeled.  Simply knowing what indicators you follow would be interesting too.  I know, I asked you a variant of this before.   But I'd still like to get a chart.  Think of it as a tease for the rest of us.  Leave stuff unexplained, so we have to ask you for more.  :-)

Last request.  Next time you spot a major low, perhaps you could consider letting us know same day?  Maybe end-of-day, perhaps?

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