PM Daily Market Commentary – 3/17/2014
Gold closed down -15.20 to 1367.30 on heavy volume. Silver dropped -0.27 to 21.19 on light volume. Gold hit a new high early in asia trading at 1392, but could not hold – it sold off for the rest of the trading day. It looked like the shorts had a nice day for a change, pushing gold down several times and stopping out some new longs.
The dollar rose +0.07 to 79.51 – not much of a move and seemingly a non-factor in gold's price action today.
GDX dropped hard today, down -3.35% on very heavy volume, wiping out the gains from last Thursday's breakout. GDXJ did worse, off -4.57% on very heavy volume also. Both miner ETFs remain above their respective 20 EMA averages, but both closed at the lows. Miners tend to lead gold, and the heavy volume along with the big price move for the miners is a warning shot across the bows of the bulls.
Several times during the 2014 gold rally there have been high-volume sell days in the mining shares, and the bulls came out the very next day and bought the dip. Bull markets can certainly handle the occasional distribution day like today, and the dip-buying could happen again. So far the 20 EMA has acted as good support for the miners. That said, a move through the 20 EMA would be a distinctly bearish sign.
Commodities continued their two-week fade today, losing -0.28%.
Copper was up +0.32% to 2.95, more or less unchanged. It appears to have at least stopped its downward momentum, but copper needs a close above 3.00 to even start the process of a rebound.
Of course SPX rallied strongly – having dropped 2.1% from its all-time high, its time for buy-the-dip. Amazing. Volume was light, which suggests to me that the enthusiasm for the move isn't that great, but I've told that story before and we got another all time high so – unless I see some bearish-looking candlestick, I'm not going to jump in short.
The Industrial Production timeseries (INDPRO) was released today – last month's minor dip was erased and its upward trend has resumed. INDPRO is one of my big four timeseries I watch looking for signs of economic weakness. When it remains in an uptrend, usually the equity market does as well.