PM Daily Market Commentary – 2/04/2014
Gold closed down -2.90 to 1254.10 on light volume, silver up +0.19 to 19.49 also on light volume. Gold/silver ratio fell a big -0.78 to 64.35. For the first time in recent memory, silver rose on a day when gold dropped. Is it possible we've found the bottom for silver? Price action looks good, but volume makes me wonder.
Silver was likely helped by copper, which had its first (modest) up-day in weeks. Copper closed up +0.46%, oil was up +1.13%, and overall the commodity complex rose by a big +0.85%.
The USD rose +0.10 [+0.12%] to close at 81.24, moving in a relatively tight trading range for the day.
GDX closed up +1.24% on light volume, while GDXJ was up +3.42% on extremely heavy volume. Mining shares rallied from the open through to the close, showing good strength on a day when gold itself dropped. Junior miners did especially well, which always says "risk on" in the gold market to me.
So – GSR dropped (bullish), GDXJ:GDX climbed (bullish), GDX:$GOLD rose (bullish), commodities rose (bullish) – if I'm looking for directional evidence in PM, today was a positive day all around, even though the price of gold itself dropped.
Of course everyone's focus is on the equity market, which rebounded +13.31 [+0.76%] on heavy volume – but compared to yesterday's big move down, both the price action and the volume behind it were a bit underwhelming.
The next solid point of entry for the shorts in SPX is the 1770 level, which was the support level that broke yesterday. In a downtrend, you will often see prices rally back to a former support level and then cascade lower when the price fails to move through resistance. So, if SPX can rally and close above 1770, then given the longer term uptrend still in place the buyers might start to appear. Otherwise – we likely go lower.
Best bet is to watch the newsflow, and see how the various news releases affect the market. How is it reacting to good news – as well as bad news?
Well that was interesting.
Or something like that. It's getting really lame and obvious…