The Chinese equity market rose over a percent overnight. The offshore Gold in yuan rose nearly a percent, but like gold in every other major currency, it has a ways to go before it challenges its December high.

Elsewhere in Asia, Hong Kong rose over a perecnt. Japanese equities rose over a percent. JGB yields rose 2 bps to 2.13% and a new multiyear high. The dol/yen rose a touch.

European equity markets were mostly a little higher this morning. German 10yr yields fell 4 bps to 2.84%. The eur/dol fell a touch.

Over in the US, the equity futures were up a touch ahead of the open. The dollar was firmer vs. other colored paper for no particular reason. Gold was off 20 bucks, while silver was up about 3 percent. Yields were little changed.

The S&Ps opened up a touch and quickly lurched up to a new all-timer by about half a percent. Following a pullback, the S&Ps surged again to new highs for the day in the afternoon to go out on the best levels of the session with a gain of over half a percent.

Volume was light. Breadth was nearly 2 to 1 positive on the NYSE and nearly 2 to 1 positive on the NASDAQ. New highs swamped new lows on the NYSE (226 to 39), and new highs swamped new lows on the NASDAQ (374 to 53).

Stocks Were Higher:

Stocks were mostly higher in no particular pattern.

Positions: Short XHB and BLDR, and short SPY, QQQ, IWM, and MDY.

Commodities Were Higher:

Don’t forget that we have a big commodity index rebalancing on Thursday.

Brent crude fell 2 percent to give back all of yesterday’s Venezuela bounce. Natural gas fell 2 percent. The oil stocks were lower, with the oil and gas ETFs all losing 1 to 3 percent, which also reversed most of yesterday’s Venezuela bounce. The uranium equities bounced, with the URNM picking up half a percent. Rare earth trash popped, with the REMX ETF jumping 5 percent to a new 52-week high.

Copper rose over a percent to a new all-timer because it was “Tuesday.” Other base metals were also higher, with the DBB base metals ETF adding 2 percent. The copper stocks were higher, with the COPX adding 2 percent to a new 52-week high. The steel stocks were higher, with the SLX adding 2 percent to a new 52-week high. The XME metals and mining ETF popped 4 percent to a new 52-week high.

Palladium jumped 7 percent, but like all metals ex-copper, it has a ways to go in order to recover its December high. Platinum jumped 7 percent.

Silver surged over 6 percent to a new all-time closing high but still has a ways to go to challenge its intraday December blowoff high.

The silver/gold ratio rose 5 percent to a multiyear closing high but also has a ways to go until it reaches its December high.

The CCI equal-weighted commodity index ETF (GCC) rose over a percent to a new 52-week high. The energy-heavy DBC commodity ETF fell a hair. The Bloomberg Commodity Index (DJP) rose over a percent to a new 52-week high.

Gold Rallied Again:

Spot gold dipped barely into negative territory overnight to as low as $4442 before then turning and rallying into the US open to open up about 20 bucks. After a surge to as high as $4490 despite a rally in the dollar, the yellow metal pulled back to $4477 or so before then slingshotting higher into the equity close to go out on the best levels of the day at $4495 for a gain of over a percent.

Gold Stocks Popped:

The GDX surged 4 percent to a new all-timer after taking out its December high by a nose. Volume was on the light side, but the GDX did close above the 5 dma for a second session, which leaves the bulls statistically in charge.

The GDX/GLD ratio rose over 3 percent to a new 52-week high.

The silver stocks were higher inline with the gold names. The SIL rose over 4 percent. The SILJ rose nearly 6, and the GDXJ rose 4 percent.

Real yields were higher, and nominal yields were a little higher too. The yield curve was little changed per the 2/10 spread, but note it has made new multiyear highs in late December. The dollar was firmerd vs other colored paper again, but that didn’t seem to bother metals. Or at least not yet.

The metals and the miners are now a little extended relative to their 5 dma, and we have some bearish RSI divergences on the daily charts across the board. Now, those divergences can simply go away if the rally continues again tomorrow, but that would also imply that prices become even more stretched above the 5 dma.

I’m not exactly sure why the dollar is rallying, but it shouldn’t be. It’s possible that the market is anticipating a Warsh FOMC chair announcement from Trump, which would likely be seen as a less dovish choice that Hassett (they’re neck and neck on Polymarket). That announcement is still expected in early January.

I’m on guard for a failure in gold and silver that occurs shy of their December highs and leads to a continuation of the correction that began from the December peak. Likewise, the GDX and other mining indices may be double topping.

If that’s not the case, then we should know relatively quickly because we’ll see new highs across the board.

Thursday is also a big commodity index rebalancing, but typically this gets hedged out in the days leading up to it. With silver and gold both expected to see selling due to their huge moves up last year, tomorrow’s action may be interesting.

You will notice that I didn’t mention Venezuela, because it frankly doesn’t matter to gold and the metals. Although, it was certainly foreseeable that it would serve as an excuse for the metals to rally after the US navy had been parked offshore in Venezuela for months.

My gold model moved to a Tier 1 SELL.

Positions: I sold my GDXU in the last hour on the surge back to the highs of the day, and I bought SLV 69 puts for tomorrow for 22 cents as well as GLD 393 puts for Friday for 21 cents. If the metals and miners surge again tomorrow, I obviously won’t be adding to these, as I alluded to above.

As always, I post all of my trades as Intraday Comments for subscribers in real time.

The Dollar Was Firmer:

The dollar was firmer vs. other paper. The dollar index rose a touch. Note the 50 dma has crossed the 200 dma quietly to the upside with nearly nobody talking about it. Again, I don’t know why the dollar isn’t going down, but the fact that it isn’t is catching my attention.

"The" BTC ETF (IBIT) fell 2 percent to give back yesterday’s Venezuela pop. 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 Were Little Changed:

Treasury yields rose 1 bp in the long end, which left the 10yr yield at 4.17%.

The 2/10 spread narrowed a little.

Yields in the Fed sensitive 2yr rose 1 bp to 3.47%. Junk debt bounced, with the HYG adding a hair but still remaining well below its September high. LQD, which is the investment grade corp bond ETF, was flat. MUB, the muni ETF, rose a freckle.

To Sum Things Up:

Tomorrow we’ll get the ADP employment report and the ISM services index, but now that we’re back to getting jobs data again (to be served this Friday), I doubt the ADP report will illicit much more than a yawn.

REMAIN FLEXIBLE