PM Daily Market Commentary – 8/18/2014
Gold closed down -7.10 to 1298.40 on light volume, while silver was up +0.03 to 19.58 also on light volume. It appears that the "safe haven" (positive gold, negative silver) trade unwound just a little bit on Monday, with silver finally finding some kind of a bid, albeit at low volume.
The USD was well bid, up +0.16 to 81.62. The buck remains within its trading range, looking for direction but with a slight upward bias.
GDX rallied modestly, up +0.63% on light volume, while GDXJ was up +0.09% on very light volume. There was not much activity today, but what there was looked all right. The senior miners opened lower, but had a steady bid all day long into the close. The miners still look positive – rising once again on a day when gold dropped in price. If anyone can remember as far back as a year ago…that sort of thing just never happened. Last year whenever gold dropped, the GDX would simply crater. Now its the opposite.
SPX was the big news, rallying +17 to close at 1972, launching through its 50 MA and moving up to within 18 points of another new all time high. The hint I got was in the close on Friday – the market initially sold off on all the news from Ukraine, but traders felt confident enough that they bid up SPX right into the close, erasing all the geopolitically driven losses of the day. Traders signaled you that they were ok to hold equities into the weekend. When that happens, its generally a bullish sign. Regardless what you or I think "should be happening", a whole lot of other people get a vote.
Long term treasuries (TLT) sold off fairly hard, down -0.99%, off the highs from Friday.
Oil was down – Brent was hit hard, off a big -1.93 to 101.60, while WTIC was off a more modest -0.64 to 96.60. Perhaps the Kurds retaking that dam with US air support took some more air out of the geopolitical unrest premium. Saudis pumping record amounts, Libya sending oil cargos again, and the US increasing daily production by another 100k barrels/day probably didn't hurt either.