Tag Archives for " gdxj "
Panic Hits Gold, and It’s Not Pretty
Yesterday, I talked about the seemingly key $125-ish level on GLD. I wish I had the guts to get in short because this morning, GLD has slammed straight through $125 all the way to $121.86. The ever-volatile gold miners (GDX) and junior miners (GDXJ) are dropping -7.5% and -8.4%, respectively. This has a whiff of panic selling. Earlier today, the Fed’s Lacker and Mester swung their mighty hawk hammers, which has traders chattering about coming rate hikes. And of course, we have the big September NFP report on Friday, which comes on the heels of a decent rebound in US economic data. Interestingly, gold is gapping down towards its interim bottom on June 24. That of course was the date of the big Brexit surprise, featuring a monumental gap up in gold: Gold options are also very active today. GLD puts are trading at 7.4 times the normal volume for this time of day, according to Thinkorswim. However, there appears to be some dip buyers poking around GDX, since call options are actually quite active in that ETF. Precious metals have had a huge year. Even with today’s dip, GLD is still up 20.8% year-to-date and GDX is up 74.3%. So I guess it makes sense that traders are rushing to lock in profits — or get short — ahead of the big jobs report Friday. A huge beat could mean more downside, but either way, I think gold is officially the market’s funnest battleground.
Continue Reading -->Clinton Victory Means a Peso Victory
1) Mexican Peso Jumps The big post-election meme on Wall Street today is the jump in the Mexican peso. It’s up 1.2% against the US dollar today on Hillary Clinton’s strong showing in last night’s debate. Donald Trump is not viewed as peso-friendly, to say the least. But keep in mind that over the past few months, broader equity markets haven’t shown a tendency to favor one candidate over the other. That may change as we get closer to the finish line, especially around the second debate on Sunday, October 9. 2) Biotech Is Fine Biotech (IBB) is doing well this morning. In recent history, biotech has done better when Trump was favored, so this is an interesting development — especially since Gilead (GILD) was downgraded. 3) Gold Sinks Gold is taking a big hit this morning, and some of that is attributed to Clinton’s win. Trump’s wild-card nature is seen as more favorable for gold, even though gold’s status as a safety asset is in question. Chinese gold imports from Hong Kong also hit a 7-month low. However, keep in mind that the junior miners (GDXJ) are actually slightly outperforming the metal. GDXJ is essentially a high-octane way to play the metal, so I’m surprised it’s not doing worse. Stay on the lookout for a possible bounce higher in gold. 4) Crude Games It seems like oil bulls keep getting carried away on chatter about production freezes/cuts, and they always end up getting burned. I’m starting to think we should ignore all oil headlines until we get official word on the outcome of the meeting in Algiers. For now, the chances of a production freeze or cut look pretty slim. 5) Economic Data Today, we saw in-line S&P home data, a Markit Services PMI beat, a consumer confidence beat, and a miss on the Richond Fed. Overall, the economic data trend is still down. As you can see in this chart of the Citi US Economic Surprise Index, economic data strength relative to expectations is right around Brexit levels. The difference between now and then is that the market had more or less price rate hikes out. Now it’s pretty much 50-50 as to whether the Fed will move in Deceember. If the data trend continues to weaken, we could very well see the dollar dip and gold rip. We have Durable Goods on Wednesday, GDP on Thursday, and Personal Income/Spending plus the PCE Deflator Friday. So we could see some real fireworks!
Continue Reading -->The Point of Gold Recognition?
A few days ago we offered that GDXJ/GLD were at inflection points and that the next leg up to 1425/1450 in gold may be here. Yesterday may have been the first step. The behavior on the first pullback will be key to observe with subsequent follow through. If GDXJ offsets $49-50, which from a bearish perspective is a right shoulder of an H&S top, that should confirm the idea of a new leg up because fast moves come from failed patterns. A failed Head & Shoulders top implies new highs in GDXJ. Moreover, new swing highs in gold will be a point of recognition for those bearish of gold who believe this years rally was a bear market rally. New highs could create a vacuum as the perception that a bull market in gold is underway takes hold. Click here to learn more about Jeff Cooper’s Daily Market Report.
Continue Reading -->Gold Screams Afters Yellen Fails to Move the Needle
Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got. At her highly-awaited Jackson Hole speech, FOMC Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials. Initially, the market moved as we expected — the US dollar spiked, and gold and US Treasuries collapsed. However, the moves were very quickly retraced. Here’s the dollar index: Here is gold (GLD): The junior gold miners (GDXJ): TLT: Crude oil is also on FIRE: So we are getting the ‘sell the news’ scenario I presented in today’s Morning Hammer column. (not that I bet on it…) Since Yellen delivered exactly what the market expected, the hawk trades (gold down, Treasuries down) aren’t getting any additional follow-through. In fact, rate hike expectations have actually FALLEN since the speech. Earlier today, Fed Funds futures were pricing in a 57% chance of a December rate hike. That number is down to 55% so Yellen did not move the needle. Biotech (IBB) also ripped off morning lows and is up 1.5%. The VIX is down 8.4%. Meanwhile, SPX fell about 5 points before extending higher above 2187. We’ve gone 34 days without a 1% move in the SPX. That streak may indeed break today. Next step: let’s see if these counter-reactions hold. Fed says often see multiple dramatic moves before the closing bell hits.
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