PM Daily Market Commentary – 11/9/2015
Gold rose for the first time in 9 trading days, up +2.50 to 1091.40 on heavy volume, while silver fell -0.21 to 14.53 on moderately heavy volume. Gold traded in a relatively narrow range, while silver sold off starting around 08:00 Eastern and recovered somewhat by end of day. Commodities dropped, which likely hurt silver.
While gold managed to avoid dropping today, which is a blessing, it did not show any material signs of a rebound. There looks to be decently strong support around the 1080 level, and without one of the early-morning assaults, it appears that enough buyers will show up here around 1080 for gold to keep price from dropping further. That, and/or the shorts will start to cover. So far anyway.
Silver may have found some support at 14.36, a previous low. It actually rebounded somewhat at end of day, which is mildly encouraging. I'm not certain this is "the" low for silver; perhaps that will have to wait for either 14.25 or 14.00 but at least we saw a few COMEX buyers appear at end of day – after 8 straight days down.
Miners liked both the falling dollar, and the fact that gold didn't plummet; GDX was up +2.75% on moderately heavy volume, while GDXJ rose +2.33% on moderately heavy volume too. Miners didn't reach a particular support level – I think it was all about avoiding another drop in the price of gold that did it for them. My sense is that traders are eager to buy the beaten-down mining shares; if and when gold ever does put in a low, the miners will take off like startled deer, with the crappiest miners performing best. (Does anyone recall what happened to Citibank stock after it didn't die in 2009?). But we aren't there yet. The weak miners might well still go bankrupt between now and whenever "the low" for gold happens.
The buck fell -0.19 to 99.08, a small retreat after a large gain. The buck has been on a tear: 5% up over the last four weeks. This will deepen issues for the manufacturing sector, but that's only 9% of US employment. It will make all US imports cheaper. In spite of what you might be reading elsewhere, there is no impending crash of the US dollar. My computer is suggesting the dollar might have topped out for now, but unless we get some sort of bad payroll report in December, I don't see any major move lower.
SPX sold off today, dropping -20.62 to 2078.58. SPX closed below its 9 EMA for the first time in 6 weeks. Although it did manage to rally towards the end of day, there are a variety of technical signals which all say SPX is entering a correction period. Given the strength of the rally that we just experienced, I'm not certain this will lead to anything major, but you just never know. VIX rose +2.19 to 16.52.
JNK fell for the 4th straight day, dropping -0.44%. Volume is starting to pick up, and the pace of the decline is accelerating. JNK is sending a strong risk-off signal right now. This reinforces my sense that a short-term top is in now for equities.
Bond ETF TLT can't seem to catch a break. Even with the equity market sell-off, TLT fell -0.56%. If bonds can't rally when equities sell off, that's a bad sign. Stay away for now.
The CRB dropped a big -0.95%, making a new low and driving below its recent trading range. CRB is on track to re-test its Aug 24th lows. This won't help silver.
WTIC dropped -0.41 to 44.11, finding buyers at the 44 price level as it has for many weeks now. A drop of oil through 44 won't help PM or commodities. I am seeing this as more likely to happen than not. My computer remains short oil.
Is this "the low" for gold? I usually like to see some sort of exciting capitulation day to mark the lows. We haven't seen one yet. There are some encouraging signs from the miners, and if the buck tops out, that will help too. Commodities are still moving lower. Its a mixed bag; the signals don't all point in one direction right now. We could bounce here, but if we do, I suspect it won't be the final low for this cycle.
Oh, lest I forget: the gold uptrend is over. Dead and buried. Sorry about that. Buying dips here is risky – good for a short term trade, but … be careful out there.
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