PM Daily Market Commentary – 3/5/2014
Gold was trading sideways up until the news broke that Russia had recalled their troops from their "exercises", after which gold dropped $14 in a couple of minutes. Looks like that $14 was the "safe haven premium." Gold ended the day down -15.90 to 1334.40 on moderate volume, with silver off -0.17 to 21.17 also on moderate volume. Silver found support today once again on its 200 MA. It may be behaving badly when compared to gold, but at least there is buying support at the 200.
The USD rallied +0.07 [+0.08%] to 80.17, moving weakly higher. For the buck to be a more serious bullish threat, it needs a close above its 50 MA, which is around 80.68.
GDX was off -0.76% on light volume, with GDXJ down -0.17% also on light volume. Miners opened lower today because of the move down in gold, but rallied after the open, with the juniors especially closing back to almost flat. That's a relatively bullish performance on a day with gold off $16. Senior miners appear to be trading within a consolidation range; the last time miners consolidated for a few weeks, it was followed by a massive break higher. I'm not saying the same thing will happen, but there does seem to be buying support for miners, which is bullish. A consolidation is a good way for an instrument to work off an "overbought" condition. Of course a break below the consolidation range (25.50) would signal a larger correction in the mining shares.
The commodity index $CCI rallied again today, up +0.61%. The commodity move seems unstoppable. There are times when the "momentum indicators" are useless – when money is just pouring into (or out of) a sector, and prices just keep going and going. I can't imagine how little fun the commodity shorts are having right now. I don't watch the COT reports for the rest of the commodities, but I'm willing to bet most of the shorts have been simply blown out of the market, especially after this second leg higher.
The SPX broke to new highs today – up +28 [+1.53%] to 1849. At least half of the move came well before the NY market open, right around 0100 EST when those pesky Russians called their troops back to their bases. The e-mini futures broke up 13 points at the same time gold plunged, and the minis just kept climbing, into the NY market open right into the close.
There does still seem to be a loose linkage – what's good for equities is not so good for gold, and vice versa.
Do we get a blow-off top in equities? Looks like that's what is happening. If you want to go short, you have to stand aside at times like this. Wait for the market to show some weakness. Which, in case you were wondering, it isn't showing right now. I was stopped out long ago and now I'm just watching patiently. My time will come, but its definitely not now.