This is a sample entry from Drew Rathgeber’s newsletter, The Rath Overlay, published on Friday, September 26, 2014.
Gold is currently trading at $1,218.40 (Z4) per troy oz., -$18.60 lower at the same time last Friday. Silver is currently sitting at $17.51 (Z4) per troy oz. down another -$1.50 from last Friday; both markets are at or below major support and still looking very weak. The indices had a volatile week, with the ES trading at 1963.25 (Z4), indicating some bearish divergence, same applies to the YM, & NQ. Please note a ‘new’ bearish death cross has formed on the daily chart for the mini Russell. The grains sector still showing downside action, with Corn making a new lows at $3.26bu (Z4), Soybeans $9.17bu (X4), and Wheat at $4.71bu (Z4), please note, these market seem to always go where you least expect it and combined with record crop yield and feeling very deflationary as trading well below last week’s prices. The energy sector is showing some signs of weakness, watching Natural Gas rebound a bit to $3.98 (X4) mmBtu, and Crude Oil holding at $92.23 (Z4), overall trend is still down, need a break above $95.00 to bring the bulls back.
On the economic news front we had disappointing existing homes sales report of 5.05M units falling back 1.8%, which means real estate inventory is probably building and home prices will fall. Then on the flipside, new home builders had a much better than expected forecast of 504K, surging 18%! This report is typically volatile. Jobless claims came within range of 293K, no surprises here. Coming up next is GDP at 8:30AM ET.
Metals Market Commentary: Watch here
In The News
Equity Futures Unchanged As Dollar Surges To Fresh 4 Year Highs
It has been a relatively subdued session, with not much action in either stocks or bonds – European stocks rise for the second day on US market momentum from yesterday; Asian stocks are mixed advance while metals decline with Brent, WTI crude, U.S. equity index futures. The biggest highlight in overnight action, however, was once again the Dollar whick climbed to a fresh 4-year high, on pace to strengthen for 2 straight months for first time since March. The reason: ongoing sentiment that there will be a major dispersion between central banks, with the USD tightening just as other central banks join the liquidity fray. To wit, ECB data showed that lending decline in Europe slowed to -1.5% y/y in Aug. vs -1.6% in July and the latest statement from Draghi who said in Lithuania that economic reform possible without devaluing currency. (more)
IMO: I’ve been watching the U.S. Dollar closely, and it amazes me how easily people forget the dollar traded well above 120.00 on the index for a long period of time. Before the Euro was created, the Dollar was king.
GRAINS – Wheat up for second day as four-year-low prices spur demand
SINGAPORE, Sept 25 (Reuters) – Chicago wheat rose for the second consecutive session on Thursday as signs of increased demand for U.S. supplies lent support to the market after prices dropped to a four-year low earlier in the week. (more)
PRECIOUS-Gold steadies above 9-month low as dollar edges off 4-yr peak
LONDON, Sept 25 (Reuters) – Gold steadied off nine-month lows on Thursday while platinum edged up from its weakest since June last year, after softer than expected U.S. data pulled the dollar from an earlier four-year high against a currency basket. (more)
IMO: I would expect to see some reprieve in the precious metals sector, however yet to see any as it continues to make new lows. Market sentiment being overly bearish has me concerned somewhat.
In The Markets
Emini S&P (ES)
Market Comments: Starting to feel like 2008, with the volatility really starting to increase between the bulls and bears. However, daily and weekly charts still hold the upward trend.
Market Comments: Still making new lows, will $1,200 hold? Good question.
U.S. Dollar (DX-M)
Market Comments: Still making new highs! I would expect some back n’ fill action.
The Week Ahead
- 9/29 – Pending Home Sales Index 10:00AM ET
- 10/1 – ADP Employment 8:15AM ET
- 10/1 – ISM Mfg Index 10:00AM ET
- 10/2 – Jobless Claims 8:30AM ET
- 10/2 – Factory Order 10:00AM ET
- 10/3 – Employment Situation 8:30AM ET
- 10/3 – International Trade
*IMO – In My Opinion
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