PM Daily Market Commentary - 4/6/2016

davefairtex
By davefairtex on Wed, Apr 6, 2016 - 10:51pm

Gold fell -8.90 to 1224.00 on light volume while silver dropped -0.08  to 15.06 on moderate volume.  Gold sold off before the US market opened, and again at the time of the FOMC minutes release at 14:00 Eastern, but found support both times on the 50 MA and rallied back to some degree.

The fact that gold's 50 MA is continuing to act as support is a good sign.  Gold is now starting to move sideways rather than down; if the 50 continues to hold, the downtrend may end here in spite of the COT report.  This would be a surprising outcome, and would indicate a significant change of sentiment in the gold market - for traders, there would be no "dip" to buy, and at that point the trade would be to buy the breakout.  We are not there yet, but it could happen so be prepared.

The gold-in-euros chart is also starting to move sideways.

Silver sold off today, found support at its 200 MA, tried to rally but encountered resistance at the 50 MA.  Right now silver is in no mans land sandwiched between the two moving averages.  It remains in a downtrend, although as long as the 200 holds, it will start to move sideways out of the downtrend.

Miners just moved sideways today, with GDX up +0.10% on very light volume, and GDXJ rose +0.39% on light volume.  There was no material change in the miner chart today.  Miners remain in a shallow downtrend, but above their 9 EMA.  If gold doesn't decline further, traders would be forced to buy the breakout in the mining shares too.  The good news is, miners are still very cheap at these levels - if gold were to recover back to 1900, GDX could well be a threebagger.

Platinum fell -0.75%, palladium dropped -0.84%, and copper fell just -0.02%.  Copper is now beginning to move sideways also; no reversal yet, but a consolidation is the second-best outcome.

The USD fell -0.20 to 94.44; it tried to rally today but failed.  Buck remains below its 9 EMA, but it has been moving roughly sideways for the past week or so.  My sense is, if commodities stop dropping, buck will probably continue to move down.  Or maybe its the other way around.

WTIC rally yesterday was no fluke: oil rose again today, up +1.17 [+3.20%] to 37.73, confirming yesterday's bullish harami, printing a swing low, and squeaking back over its 9 EMA.  Price rallied following the Petroleum Status report at 10:30 Eastern which showed a drop of -4.9 million barrels in inventory.  Odds suggest we've marked a low for oil.

SPX really liked the rebound in oil, rising +21.49 to 2066.66 (!), moving back above its 9 EMA, and printing a bullish engulfing candle pattern - a 62% reversal chance in this context.  Earnings continue to fall, Atlanta Fed's GDP Now is now at +0.4% for 1Q GDP, but the market continues to rally, this time led by health care (+2.69%), energy (+2.16%), and materials (+1.15%).  VIX fell a big -1.33 to 14.09.

TLT sold off, losing -0.73% but managing to remain above its 9 EMA.  Bonds have done quite well especially considering the teflon-coated equity market.  Today was a loss, but TLT remains in an uptrend.

JNK rallied strongly, up +0.74% closing back above its 9 EMA.  If oil continues to rally, most likely so will JNK.

CRB rose too, climbing +1.39% and managing to close back above its 50 MA and also printing a swing low.  This arrests the CRB downtrend for now.

Gold has yet to rally above that downtrend line, but the fact that the 50 MA is holding is a positive sign.  Oil's rebound might help - it certainly should help silver.  Miners remain strong.  Lots of moving parts right now; I'm most surprised by oil, but that was a news-driven move.  Falling inventories is a sign traders have been waiting for.

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