PM Daily Market Commentary - 7/13/2016

davefairtex
By davefairtex on Thu, Jul 14, 2016 - 6:24am

Gold rose +9.60 to 1343.30 on moderate volume, and silver climbed +0.19 to 20.41 on moderate volume also.

After two days of correction, gold managed to regain a small portion of its losses; on the chart we see the rally was stopped at the 9 EMA.  Formerly, 9 EMA acted as support, but on the way down it is acting as resistance.  Today's rally does nothing to change the new trend, which is down.

One spot of good news: Gold OI decreased by a huge 24,757 contracts today.  To me, this says the commercials are enthusiastic to get out of their short positions.  I still see lower prices ahead, but I do not think the decline will be precipitous, since those commercials still have a very large short position they need to cover, and they appear to be doing so right off the bat.

Silver did slightly better than gold today, causing the gold/silver ratio to drop -0.14 to 65.82.  Silver remains in an uptrend, well above the 9 EMA which continues to act as support.  Likely, the ongoing copper rally is helping silver to continue moving higher.

While today's rally did not invalidate yesterday's miner swing high, it does appear that buy-the-dip is alive in well in the mining shares.  Apparently a 4% one-day discount represents an irresistible buying opportunity - GDX closed up +3.30% on moderate volume, while GDXJ climbed +4.62% on heavy volume.  Miners remain above their 9 EMA and the miner uptrend remains in place.

Platinum rose +0.45%, palladium jumped up +2.84% breaking out to a new high, while copper rose +0.99%, also breaking to a new high.  Copper appears to have resumed its uptrend, which is positive for PM overall.

The buck fell -0.28 to 96.21 - it is finding the 200 MA to be tough sledding.  A dollar break above the 200/96.50 resistance would make life harder for commodities, but it also might signify a greater amount of worry in the EU.

WTIC flipped direction once again, falling -1.51 [-3.24%] closing at 45.11.  Today's drop was all about the Petroleum Status report - the report was nominally bullish, showing a draw of 2.1 million barrels, but the market was not pleased, plunging about $2 in the space of 60 minutes.  In other words, it cratered on what appeared to be relatively good news.  What are we to make of "up one day, down the next?"  Crude remains below its 9 EMA, and that suggests it remains in a downtrend.

SPX rose just +0.29 to 2152.43, more or less going nowhere after three straight up days.  The "northern doji" print isn't particularly bearish, nor is SPX seriously overbought.  It looks like the market just took a rest today.  VIX fell -0.51 to 13.04.  Puts are getting cheap again.

TLT staged a sharp rally, up +1.18%; perhaps dip-buyers exist in Treasury bonds too?  They still seem pricey to me.  Trend is probably down, although today's rally was quite sharp.

JNK fell -0.25%, printing a swing high - although it has done that before with no apparent ill effects.  Some items print swing highs and its no big deal, while others end up selling off afterwards.   JNK is one of the former ones.

CRB fell -0.86%, losing a chunk of yesterday's rally, but remaining above its 50 MA.  CRB remains in a downtrend.  Industrial metals and agriculture are doing fairly well, but energy is pulling commodity prices lower.

Gold is in a short term downtrend; today's rally doesn't change this.  Silver remains apparently immune, and the miners are caught in the middle - although they continue to rally on just about any excuse.  I still think commercial short covering will be putting a cushion under any price drop.  Oil is moving lower in fits and starts, and SPX is resting after a brisk breakout to new all time highs.

If that Italian banking crisis gets resolved in a flurry of misdirection, "bad banks", and handouts from the taxpayer (i.e. the usual), I'd expect gold to take a larger leg down.

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