As we discussed last week...
1. a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
But, wait a second, I thought CNBS told me that everything was great. So great that The Fed stands ready to raise rates, which they only do when they need the economy to cool off. What's this about a recession?
Well, first it was the negative GDP print for Q1 and now it appears Q2 is headed that way as well. After today's utterly dismal retail sales and import prices numbers...well, as they say, "ball don't lie". Check these charts from ZH and NotJimCramer:
And into this recession the Fed is going to raise the Fed Funds rate in June or September?? Rrrrriiiggghhhtttt....
And the "market" is beginning to figure this out, apparently. The Pig is getting crushed and, conversely, the euro AND the yen are rallying today. As I type, gold is at its high of the day near $1214 and silver is $17.15. Pretty cool and definitely NOT sub $1150 and sub $15...as some "analysts" were shrieking just two weeks ago.
Furthermore, this isn't just another short squeeze. No doubt there are a lot of new longs being added today, too, on the back of the terrible macro data. Remember that bullish CoT from last Friday? Well, there you go.
Truly, though, this is all about that Pig. Just yesterday, I reminded you that any weekly close sub-94 would clear the decks for a sustained drop, perhaps as low as 90. Well, we may be about to find out if that's true because I've got a last of 93.72.
And lest you think that gold has suddenly been unshackled today and is finally trading on physical fundamentals...check the chart below and think again. As mentioned above, for once the diving Pig is causing yen strength, not just euro strength.
But, whatever. We'll take what we can get, at this stage. And check the charts below. Gold has broken through the downtrend from early April and is poised again to challenge the top side of the general $1180-1220 range. Can it break through this time? Given how lousy the macro data is AND given that The Pig could fall all the way to 90 AND given how bullish the CoT structure was a week ago...it might. It should! For now, just watch $1220 very closely. A close above there would be a significant step forward and don't forget that the 200-day MA is nearby, too, at $1222.
As you might expect, silver is stout today, too, and well above its downtrend line. This is nice. However, the key levels are between $17.20 and $17.40 and the 200-day for the front month July contract is $17.23. Only IF silver can best all of these levels and close above them sometime can we get excited about a possible extension toward $17.70 and then $18+.
I just checked prices and I see that, as I've typed, gold rallied to $1218 before backing off. Not surprisingly, $1218 marked an almost exact 2% move on the day...so you know what happened next...we're back to $1213. Whatever, I'll take it regardless. Let's just see what the rest of the week brings. The continuation of the lousy data should keep The Pig falling and gold rallying.
Please be sure to check back later for a full podcast summary and review.