The Chinese equity market fell 2 percent. The offshore dollar/yuan rose a hair. Gold in yuan rose a percent to a new all-timer, as it did in most major foreign currencies.
Elsewhere in Asia, Hong Kong fell 2 percent. Japanese equities fell nearly 3 percent. JGB yields fell 3 bps to 1.66%. The dol/yen fell a touch.
European equity markets were of half a percent this morning. German 10yr yields fell 3 bps to 2.60%. The eur/dol rose a touch.
Over in the US, the equity futures were off half a percent ahead of the open after it turned out that the US/China trade war didn’t in fact end with a Trump tweet over the weekend. The dollar was mixed vs. other colored paper. Gold was flat after being up $80 at one point overnight to a new all-timer, and yields were lower.
The S&Ps opened down about half a percent, and after a brief plunge back to Friday’s low, we quickly found our low for the day and began to bounce.
From that low, a rally then began, and we proceeded to work our way up into slightly positive territory, where we would chop sideways near the highs up until the final hour.
With a little less than an hour to go, the S&Ps were still on the highs, but a Trump tweet threatening to end some trade with China altogether, including “cooking oil,” then hit the tape. The S&Ps responded by plunging back to the mid-levels of the day and into negative territory. The dollar interestingly didn’t move, but gold and silver both took it on the chin as well. Copper and platinum also weakened, while yields barely moved.
For the close, the S&Ps would go out near the mid-levels of the day with a loss of just a touch.
PowPow would also do a Q&A session during the day, but he said nothing new. More importantly, there was zero reaction to what he said.
Volume was light once again. Breadth was 2 to 1 positive on the NYSE and nearly 2 to 1 positive on the NASDAQ. New highs edged out new lows on the NYSE (85 to 63), and new highs edged out new lows on the NASDAQ (232 to 116).
Stocks Were Mixed:
Stocks were mixed, with the large caps being on the heavy side while the small and midcaps fared a little better.
The XHB homebuilding ETF bounced 3 percent, and BLDR bounced 6 percent.
Positions: Short XHB and BLDR.
Commodities Were Lower:
Brent crude fell 2 percent. Natural gas fell 2 percent too. The oil stocks were lower, with the oil and gas ETFs all losing less than a percent. The uranium equities were higher, with the URNM picking up 5 percent to a new all-timer. The rare earth “concept” stocks also ripped again.
Copper fell over 2 percent. Other base metals were also lower, with the DBB base metals ETF losing over a percent. The copper stocks slipped again, with the COPX losing 3 percent. The steel stocks were higher, with the SLX picking up less than a percent and still well shy of last week’s high. The XME metals and mining ETF rose a percent to a new all-timer and continues to go parabolic.
Palladium rose over 3 percent to a new 52-week high. Platinum failed just shy of last week’s high once again and reversed to end down a percent.
Silver rallied with gold overnight to a new all-timer and as high as nearly $54 before a sudden selloff hit in conjunction with the one that hit gold that would reverse all those gains and set up silver to open down over 3 percent in the US. Once the US session began, however, buyers appeared, and the metal would rebound back up to around $52 and a loss of over a percent before eventually tumbling on Trump’s tweet to end the day back near the mid-levels of the day with a loss of over a percent and a half. The backwardation spread between spot and the Dec futures also notably narrowed once again to roughly $1, which suggests that the squeeze in the physical market continues to abate.
The silver/gold ratio attacked its downtrend since 2021 again but then reversed to end down over 2 percent.
The CCI equal-weighted commodity index ETF (GCC) fell half a percent. The energy-heavy DBC commodity ETF fell over a percent. The Bloomberg Commodity Index (DJP) fell half a percent.
Gold Soared To Another New High But Stumbled On The Way:
Spot gold rallied overnight up to as high as $4180 and then collapsed about $90 in less than an hour into negative territory and to as low as $4090 to mark the overnight lows.
From that low, the metal would then recover back up to around $4144 before eventually retesting $4100 on the US open.
When $4100 held, the metal then rebounded once again back up to as high as $4150 before Trump’s tweet sent the metal careening lower in the final hour of the equity session to send the metal out closer to $4142 for a gain of over half a percent to a new all-timer.
Gold Stocks Slipped:
The GDX opened down near yesterday’s low and quickly tested the 5 dma and then bounced. After rebounding back up to near yesterday’s highs, the GDX then slumped in the afternoon and slipped a little further when Trump’s tweet hit, but it would still go out off the opening lows with a loss of only just over a percent and once again above the 5 dma for a second day, which once again statistically leaves the bulls in charge.
However, I would remind readers once again that this is merely a statistical tendency and not a hard and fast rule, especially when we see the GDX move from below to above this average so many times within a few sessions.
The GDX/GLD ratio fell 2 percent and may have traced out a small H&S top.
The silver stocks weak inline with the gold names. The SIL fell a freckle. The SILJ fell a percent, and the GDXJ fell over a percent.
Real yields were higher, but nominal yields were lower. The yield curve flattened a little per the 2/10 spread. The dollar was mixed vs. other colored paper, but gold appeared to be oblivious to moves in the dollar.
Last night’s rip to the upside that suddenly collapsed in gold and silver had all the hallmarks of upside exhaustion. However, we’ll need to see if more downside appears tomorrow or not. Because if it doesn’t, then the parabolic move is likely to resume with new highs. That’s just where this market is at the moment. Either we exhaust and slump into a correction, or the meltup continues with an even greater frenzy to the upside. There’s not much in between.
I find it interesting that the backwardation in silver continues to abate. The cost to borrow SLV shares also fell for the first time today since the squeeze began. That along with the price action suggests that the squeeze is losing steam, which is another reason to think that a correction may show up soon.
Gold, however, couldn’t even close down today, so there’s not much to complain about there other than the sudden selloff overnight for no particular reason, which is exactly how an exhaustion-type high will be set.
We’ll just have to see what happens tonight and tomorrow. The gold stocks, however, certainly appear to be less enthused by gold’s new high than prior pushes of late.
My gold model remained on a Trifecta SELL, which at minimum has been good for a pullback lately especially when it goes on for more than one day.
Positions: I added some more SLV 44 puts for Wed for 10 cents to drop my average down to 11 cents. I also added some SLV 45 puts for 8 cents. Long GDXD.
As always, I post all of these trades as Intraday Comments for subscribers in real time.
The Dollar Was Mixed:
The dollar was mixed vs. other paper. The dollar index slipped a touch but may be flagging before another push higher. Above 100 on the dollar index, and the dollar will start to cause some problems I suspect since virtually everyone’s trades are currently based on it weakening.
"The" BTC ETF (IBIT) fell another 3 percent. MSTR, COIN, RIOT and other BTC derivatives were mixed.
Positions: Long IBIT (last add was to double the position on April 4th at 47.03).
Treasury Yields Fell:
Treasury yields fell 3 bps in the long end, which left the 10yr yield at 4.03%.
The 2/10 spread narrowed a little.
Yields in the Fed sensitive 2yr fell 4 bps to 3.49%. Junk debt bounced, with the HYG picking up a touch. LQD, which is the investment grade corp bond ETF, rose a touch. MUB, the muni ETF, fell a freckle.
To Sum Things Up:
We tested Friday’s lows today and held them in the S&Ps, but I doubt that will be the case on another test, which I still believe is coming. Is that a H&S top forming on the S&Ps?
REMAIN FLEXIBLE
