Gold and Silver Current Thoughts 1-29-2015

From the Trading Desk

Yesterday, the FOMC left gold longs feeling exposed and vulnerable.  Gold had moved up over $100 on the year and with it failing to maintain momentum over $1,300, the FOMC provided reason enough for traders to exit long positions.  The Fed said the US economy is expanding at a “solid pace” and the expectation is that rates could rise as soon as June.  Gold began to slip in the overnight session and then was hit even harder in the NY session with volume on the electronic exchange exceeding 230,000 lots (23,000,000 ounces).  Gold has now traded lower in four of the past five trading sessions and has found temporary support at the 50 day moving average of $1,252.50.  In the absence of bullish headlines, which have largely fueled gold’s rise this year, the yellow metal is looking weaker and should consolidate around these levels.

Silver was consolidating nicely around $18 for the past week but collapsed as gold sold off today.  It finished the day down over 5.75% and finally managed to find bids ahead of its 50 day moving average at $16.62.

JDST was again the star of the day for mining ETFs and by the end of the day started to reverse its course. It finished up 9.08% and JNUG down 10.54%. A trade long in JDST once it broke to a higher high would have netted you a nice gain. Because we had a reversal with the big drop in gold and silver, the rebound has already started after hours with gold up $6 and silver up 17 cents to $16.94, just below the psychological resistance number of $17. A trade over $17 by morning might be worth a long. For gold I wouldn’t be too much of a fan until it broke about above $1,270 which seemed to be earlier resistance today. Below $1,256.70 and JDST should be worth a shot. Play the higher high in the triple leveraged mining stocks tomorrow and watch for reversals.

UGAZ had another bad supply report come out today and sunk to another new 52 week low, closing at $2.89. DGAZ moved up to $7.84. I lean for a bounce in UGAZ at this point. It was down 16% at one point and closed down $12.42%.

UWTI managed a small gain of 4 cents on a non-eventful day. While it may be trying to find a bottom, it is still weak along with USO.

TNA and TZA each were up at one point but by the end of the day, TNA resumed another march towards $80, closing up 3.21 at $77.65. The low of the day was $73.32 and a buy at $75.47, the break of the high of the day could have got you a nice couple of points.

I brought up yesterday RUSS, the Russia Bear triple leveraged ETF as a possible play. It opened at $21.93 and shot up to $23.82 before closing at $22.79. Not a bad day and hopefully someone took it for 1 or 2 points. RUSL tried to break below that $15 number, coming close at $15.08. Keep an eye of a break below $15 to play another leg down in RUSS, it’s opposite. It could get you a couple more points at least.

Next report will be Sunday before Superbowl, but I may wait till Monday afternoon to write it. I don’t expect a lot of action Monday in the markets as people sleep off the American once a year tradition that the whole world also seems to follow. Enjoy!

 

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