Crude jumped another couple percent overnight, and that appeared to be the proximate cause for the S&Ps to be a little heavy ahead of the open.
We opened down about a third of a percent and then slumped to a loss of over a percent when the Treasury announced that it was only buying $6 bln in securities tomorrow (recall this is just a shift in duration from the long end to the short end and not an actual retirement of any debt).
I guess people were expecting more, because the reaction was to pop the dollar and yields. The S&Ps slumped as I mentioned above, and gold and silver gave back a big chunk of their gains.
The S&Ps would recover a little off the lows, but we still went out near the lower levels of the day with a loss of half a percent.
The dollar began the day weaker and flirting with the August lows per the DXY, but the DXY then firmed up in the wake of the Treasury announcement to leave the dollar index virtually unchanged.
Yields rose both before the Treasury announcement and after it, with the 10yr yield adding 5 bps to a new 52-week high.
Commodities were mostly higher, with copper rallying over a percent to a new all-timer. Platinum rose over 4 percent and tested its high for the move since low before backing off. And crude popped nearly 3 percent to a new high for the move since its low.
Gold rallied to as high as $4430 ahead of the Treasury announcement but then weakened to under $4380 in the wake of the announcement as the dollar took off. From that low a bounce appeared that took the metal back up over $4420 before it slipped again to go out back at nearly $4400 on the nose for a gain of nearly a percent.
Silver performed even better than gold and popped to over $68 and a new high for the move since last week's low before then slumping on the Treasury announcement to nearly $66.50. Like gold, silver then firmed back up and even made it back to the highs of the day before rolling over again and sliding back to a little over $67 for the close for a gain of over 2 percent.
The GDX traded up to just shy of last week's high and failed and then dumped back to below the 5 dma as everything slumped on the Treasury announcement. Following a bounce, the GDX faded again back to near the lows of the day for the close but did manage to close above the 5 dma once again and picked up over a percent.
Despite today's stumble on the Treasury announcement, the metals and miners still managed to close with gains with both silver and GDX ending above the 5 dma, which leaves the bulls in charge.
With that said, I was personally expecting a little more strength today, and I found the action to be a little disappointing, especially since I doubt tomorrow's PPI and Friday's CPI are going to come in super cool and save the day.
I still doubt the Fed will hike next week, but if the fed funds futures point to a 63%+ chance next Wed morning, I'm going to be a wrong. If I am wrong though, I suspect it's a "one and done."
So, if by chance today's pop in the metals and miners was a "B wave" that gives way to a "C wave" that takes out last week's lows, that's still probably a buy sometime ahead of the FOMC.
Let's see how the kiddies react to the PPI tomorrow...
My gold model remained at neutral.
Positions: Short SPY, QQQ, MDY, and IWM. Long IBIT, DBA, and STRC.
Metals: Long GDXU and AGQ. I sold my 61.5 SLV calls for today's expir for 12 cents, which was profitably but not a great sale. I also bought the SLV 58 and 57 puts for Friday as a hedge against my GDXU and AGQ for 10 and 9 cents respectively.
