PM Daily Market Commentary – 11/30/2015
Gold rose +7.90 to 1064.00 on moderate volume, while silver fell -0.01 to 14.06 on moderate volume too. Gold traded sideways until about an hour before the NY session, when it caught a bid and rallied steadily through to end of day. Silver just traded more or less sideways.
Gold ignored the climbing dollar and managed to rally today, actually closing back above the previous low of 1062. This means gold was able to overcome the first obvious resistance point in its struggle to reverse. Sellers often come in at points like this – the fact gold overcame this selling pressure is a good sign. Next step: a close above 1073.90, which will form a swing low, and will also move gold above its 9 EMA. While I realize the last swing low didn't lead to a reversal – that's sometimes just how things go. All you can do is trade what you see – swing lows aren't a sure thing, they just set the odds in your favor.
Not much happened in silver today – it looked for a time as though silver might stage a rally alongside gold, but silver faded into the close, losing its gains. Silver really needs a close above its 9 EMA before it will go anywhere. Until then, the shorts remain in control.
Miners had a good day, with GDX up +2.30% on moderate volume, while GDXJ climbed +1.01% on light volume. It is tax loss selling season, gold literally just made a new six-year low last Friday, and yet the miners are finding a bid. That's a positive sign.
The buck made another new high today, closing up +0.14 to 100.21. Right now, nobody wants the Euro, with Draghi setting up for another print-fest in the upcoming ECB meeting. Euro at 105.69 is quite close to its previous low of 105, and a fall through 105 could lead to a lot of selling. I think the ECB meeting is more likely to be a "sell-the-news" event, but maybe that's just my hope talking. I'm looking for a catalyst for gold, and I'm hoping that will be it.
SPX fell -9.70 to 2080.41, which is actually a swing high for SPX. So far, SPX has not yet been able to surpass its previous high of 2116.48; this means the jury is still out on this rally. Computer is now short SPX. VIX rose +1.01 to 16.13.
JNK fell -0.03%; it appears to be having trouble rising above its 9 EMA. JNK remains in a strong downtrend, and it continues to signal risk off.
Bond ETF TLT climbed +0.40%, a decent move which is also a new high for this cycle. Two more days like this and TLT will cross its 50 MA.
The CRB fell -0.38%, and remains below its 9 EMA and in a strong downtrend. No good news from commodities.
WTIC tried to rally today but failed, losing -0.09 to 41.68. The loss wasn't much, but the failed rally didn't look so great. WTIC remains below its 9 EMA; computer was unhappy enough with the move that it is now short crude.
The COT report was released after market close today. It shows a strongly bullish position for gold, and a not-quite-yet-bullish position for silver.
Gold commercials closed a massive 31.3k gold shorts this week, leaving them with the smallest short position since the 2008 gold low. This is a very bullish setup. It doesn't necessarily mean we rally tomorrow, but it does mean that the big banks have already rung the cash register from the recent drop in gold. If history is any guide, this means gold will rise sooner rather than later. Managed Money also has a very low net long position, which also aligns with a low for gold in the near term.
Silver COT report shows an ongoing reluctance of Managed Money to bail out of their long positions. While they continue to load up short here at the lows, the position isn't historically at an extreme just yet. Commercials may not be quite ready for silver to rebound either; they closed 5.6k shorts this week, but the silver COT chart isn't as conclusive as the gold chart.
Strong dollar continues to cause problems, dropping commodity prices aren't great either. All that said, the gold COT report is pretty exciting – my guess is that gold will rally pretty strongly once it does actually reverse. In other words, I think this upcoming reversal may be more than just a bounce. The usual things apply – top in the buck would be nice, so would a bottom in commodities.
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