PM Daily Market Commentary - 6/22/2016

By davefairtex on Thu, Jun 23, 2016 - 4:36am

Gold fell -1.80 to 1268.90 on light volume, while silver rose +0.03 to 17.33 on very light volume.

Gold followed through off yesterday's swing high and drop through the 9, making a low in Asia of 1263.80.  It wasn't much of a move even though it did manage to liberate about 2k long contracts on one spike lower slightly before 2am Eastern.  Trading continued in a narrow range for the remainder of the day.

On the chart we can see the light volume and the relatively narrow trading range; the small spinning top candle doesn't give us much of a sense where things might go next.

Silver outperformed gold again today; it spiked lower in Asia also, but the spike was rapidly bought and silver traded in a relatively narrow range for the rest of the day.  Silver remains above its 9 EMA, and today's trading volume was very light.  Copper continues to perform well, and I believe that's helping silver do (relatively) well also.

Miners did relatively well, with GDX up +2.29% on moderate volume while GDXJ gained +0.86% on very light volume.  The senior miners traded sideways for most of the day, only to rally strongly in the last 30 minutes.  It feels to me that some traders are betting on a BRExit.  From what I can see, there is almost no selling pressure right now.  GDX managed to close back above its 9 EMA as a result of the end-of-day rally, printing a "closing white marubozu" which is very mildly bullish (20-30%) in this context.

Platinum fell -0.17%, palladium rose +1.81%, and copper closed up +0.42%.  Copper's multi-week rally off the 2.02 lows has brought copper back to test resistance at the 2.15 level as well as a close above the 50 MA for the first time in 8 weeks.  Copper really needs to close above 2.15 to get the ball rolling on a larger move higher, but simply avoiding a fall through $2 has been helpful.  This multi-week rally suggests we might not be seeing any catastrophe out of China at least in the near term.  We care because copper's rally helps silver.

The buck fell, losing -0.41 to 93.76, with the Euro (+0.61%) and the Pound (+0.75%) being the cause.  It appears that the currency market is voting Remain.  Gold in Euros dropped -0.75% on the day.  More safe-haven trade unwind as we approach the referendum happening tomorrow.

WTIC fell -1.20 [-2.39%] to 49.00.  Oil was looking strong right up until the EIA's petroleum status report at 10:30 showed a draw of only -0.9 million barrels - disappointing those who expected it to match the more bullish API report from yesterday.  Does this if herald a trend change in the oil market overall?  Today's bearish engulfing candle pattern provides a 25-40% chance of marking a near-term top.

SPX fell -3.45 to 2085.45, printing a small spinning top candle.  SPX had rallied early in the session, but sold off as the day wore on.  In truth today's trading wasn't very eventful.  However, the VIX screamed higher as traders bought protection going into the referendum; VIX rose a huge +2.69 to 21.17.

TLT rose +0.16%, trading in a relatively narrow trading range.  It remains in a short term downtrend.  It looked fairly neutral to me today.

JNK fell -0.08%, also trading in a narrow range.  No signal from JNK either.

CRB dropped -0.66%, dropping below its 9 EMA.  CRB has been more or less chopping sideways for the past few weeks, but it remains in a fairly strong uptrend.

Voting starts today at 07:00 GMT (02:00 US/Eastern), and continues through 22:00.  While no news organizations have commissioned exit polls, a poster here reminded me that various financial institutions have contracted exit polls of their own (cost: roughly $20/person interviewed; if you only want 2,000 people in your poll, that's only $40k), so we could see some market-moving activity perhaps...quite soon.  And of course there may also be official intervention too, which could cloud the picture further.  When the formal results finally appear "at about breakfast time on Friday" (in the UK), the markets will probably already have picked a direction.

Latest from the gamblers: 24% Leave/76% Remain, and while I'd prefer the UK to vote leave, I believe it will be Remain also.  Currency market (currently) points in that direction also.

"It isn't the people who vote that count...its those who count the votes that matters..."

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.


davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5740
market reaction to referendum

Today's market reaction basically shouted "Remain".

  • Pound up +0.97% (and up perhaps 7% over the past week)
  • SPX +27 (and add another +10 after hours)
  • Gold -10
  • TLT -1.14%
  • Crude +1.00
  • VIX -3.92 [-18.5%]

I'm sure the fix was in, at multiple levels (and if the vote-counters actually end up saying "Leave" when I wake up tomorrow, I'm going to be very unhappy), but the point of the exercise isn't for us to somehow force justice to prevail via the trades we make, it is for us to understand what is really going on, so we can avoid getting caught in the switches.

Best trade of the day: selling the VIX.  Market open tomorrow should see even further movement, assuming Remain is the outcome.

If in fact we really do "know" that the elections will be rigged, you can make a fairly large amount of money betting on the outcome.  The question is - how much do you believe your own storyline?  Enough to put money on it?

Boy I'll really have egg on my face if they end up voting Leave.  :-)

"Markets seem to have almost entirely priced in a 'Remain' vote win, meaning that the market moves and volatility around the vote may be far less than many had expected," Angus Nicholson, a Melbourne-based market analyst at IG, said in a commentary.

hugho's picture
Status: Member (Offline)
Joined: Jan 11 2010
Posts: 10

We are waiting on tinderhooks for Dave's commentary which I am sure he is pounding out right now!!

Markhemp's picture
Status: Member (Offline)
Joined: Nov 29 2013
Posts: 21
Egg and Bacon

Pound back up stocks back up, EU will try to make us pay as they did Greace, Juncker sounds like a Nazi - spit his dummy out propper.

Hope we can leave in one piece before the EU and the euro disappear up there own bottom.



Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments