PM Daily Market Commentary – 12/15/2015
Gold rose +0.80 to 1060.40 on moderate volume, and silver climbed +0.14 to 13.76 on moderate volume too. PM tried to rally; gold failed to hold its gains, while silver managed to retain its upward movement, probably supported by the rally in oil.
The dollar staged a relatively strong rally today; that made it difficult for gold to move higher. Gold remains below its 9 EMA going into the FOMC announcement tomorrow. My sense is that gold will probably rally following FOMC, but its hard to know for certain. The chart doesn't look great; if I just had the chart to go on, I'd say gold is setting up for a re-test of the lows at 1045.
Not much change in silver's position from yesterday – it staged a modest bounce after setting a new low yesterday. Silver needs a close above 13.96 to print a swing low. It will probably follow gold, while being influenced by oil and the rest of the commodity complex.
Miners also had a very modest bounce after yesterday's big sell-off, with GDX rising +0.52% on light volume, while GDXJ climbed +0.69% on very light volume. While its nice the miners didn't plummet further, yesterday's plunge below the 9 EMA still feels a bit alarming.
Platinum and palladium both had good days, with platinum up +0.85% and palladium up a big +3.78%. My hopeful side wonders if these two metals are indicating the ultimate direction for PM tomorrow.
The USD rose +0.57 to 98.22, pushing the dollar back above its 9 EMA. The buck has definitely found support on its 50 MA, and looks to be setting up for a move higher post FOMC.
SPX confirmed yesterday's bullish reversal bar, closing up +21.47 to 2043.41. Dip was bought once again, but SPX still remains below all 3 moving averages, and has set a lower high and a lower low. A logical place to enter short is the confluence of the 50 and 200 MA at around 2060. VIX fell -1.78 to 20.95.
JNK finally rallied today, climbing +1.17% and marking a swing low. However it printed a doji candle on the day – almost a gravestone doji – which doesn't inspire confidence in this rebound. My sense is that some of the happy junk bond shorts were ringing the cash register in front of the FOMC announcement tomorrow.
Bond ETF TLT continued dropping, losing -0.59% and closing right at its 200 MA. Bonds are poised to move in either direction following FOMC tomorrow.
CRB dropped -0.02%, essentially unchanged on the day. CRB remains at all time lows.
WTIC rose +0.47 to 36.74, printing a swing low – by four cents – but showing signs of a failed rally, printing an inverted hammer candle on the day. At one point oil hit 37.88, but it could not hold those highs. While I'd like to believe that oil has made its low, the inverted hammer gives me pause. Petroleum Status Report comes out tomorrow at 10:30 Eastern.
US Natural gas ($NATGAS) plunged -4.95% closing at 1.81 today; yesterday's capitulation lows got even lower today, with natgas dropping another 9 cents. With an RSI-7 of 7.15, you don't see things this oversold too often. This is just another commodity crushed by the downturn; warm US weather isn't helping either.
Where PM heads next will – most likely – be set by the actions of the FOMC. Announcement will be released at 14:00 Eastern, with a press conference by Chair Yellen at 14:30. Supertankers full of (figurative digital) ink have been spilled about what they will do, but we must remember that the COT report shows that gold is set up for a rally. I'm going with the COT, assuming the commercials have better insight than I do.
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So far it looks like the anticipation of the FOMC meeting really was pulling down PM and that is being unwound this morning. Perhaps shorts are covering, or traders are going long in advance – its hard to say. If the market follows through from the way it is currently leaning, we could have quite the PM rally.
Its really tough to know right now what is baked into the cake from the market's point of view regarding the upcoming Fed action, however. This nice pre-morning move could be wiped out in milliseconds if the Fed is surprisingly hawkish.
Well, we will know in 40 minutes.
DOW did a 200 point dance step swing in 4 minutes right at 2 pm???
How about this idea. PMs are losing their allure in the West but not in the East?
Gold is not money in our neck of the woods anymore.