(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
OVERALL CONSUMER INFLATION RUNS HOT BUT CORE SUBDUED
March 15, 2013
Consumer Price Index (CPI) came at 0.7% vs. 0.5% consensus. However Core CPI came at 0.2% vs. 0.2% consensus.
Gold and silver attempted to stage a rally but have failed so far.
The stock market continues to be overbought.
Gold futures are at $1591, silver futures are at $28.77, and oil futures are $93.6.
S&P 500 resistance levels are 1565, 1570, and 1575; support levels are 1558, 1550, and 1537.
DJIA futures are up 2 points.
GOLD FALLS ON GOOD EMPLOYMENT AND INFLATION DATA
March 14, 2013
As our long time subscribers know, our models focus on leading economic indicators. New data was released this morning on two leading indicators that currently have heavy weight in our models. Weekly Initial Jobless Claims fell to 332K vs 350K consensus; this shows that the employment picture is getting much better.
February Core Producer Price Index (PPI) rose 0.2% vs consensus of 0.2%; this shows that inflation is likely to stay under control in the near future.
Gold and silver fell on the two pieces of economic data described above.
The momo crowd continues to buy gold and silver, but their buying is being met with selling by Smart Money.
Stocks take encouragement from the good data and are moving higher.
1565 in S&P 500 is like a magnet and short-term traders are likely to push S&P to this level at least intraday. Once this level is approached, there may be some selling. The character of the selling will determine very short-term direction of the stock market.
From a long-term investment perspective, it is best to maintain a cautious stance and keep some powder dry.
Gold futures are at $1579, silver futures are at $28.57, and oil futures are $92.49.
S&P 500 resistance levels are 1565, 1570, and 1575; support levels are 1550, 1537, and 1530.
DJIA futures are up 20 points.
AMERICAN CONSUMERS SPEND TWICE AS MUCH AS EXPECTATIONS, GOLD FALLS ON THE NEWS
March 13, 2013
February Retail Sales ex-auto were 1.0% vs. consensus of 0.5%. In our models we exclude autos because autos are very volatile and distort the results.
This is indeed good news and proves the skeptics on the American consumer wrong. Due to the rise in the payroll tax, even astute market watchers were concerned that the consumer would pull back. The numbers prove the old adage once again, ‘never bet against the American consumer.’
Gold futures were up to $1595-$1596 right before the Retail Sales number came out. Within milliseconds of the release of the good number, Smart Money was seen selling gold. Gold was sold down to $1589, then the momo crowd stepped in to buy and the momo crowd is trying to run up gold again as of this writing.
The presumption behind Smart Money selling was that the momo crowd would consider good retail numbers as bad news for gold because it lessens the need for QE.
In our experience, the momo crowd is very unpredictable and does a very poor job of analysis. Since gold and silver remain under the control of the momo crowd and the momo crowd is unpredictable there is a high risk in precious metals. At this time they are suitable for traders but not for investors. Please keep in mind that the situation can change rapidly and there will come a time when it will make sense to start nibbling on gold and silver for long-term investment.
Gold futures are at $1595, silver futures are at $29.07, and oil futures are $92.90.
S&P 500 resistance levels are 1558, 1570, and 1575; support levels are 1550, 1537, and 1530.
DJIA futures are up 1 point.
GOLD RUNS UP ON LOWER INFLATION STATEMENT BY WEIDMANN
March 12, 2013
Jens Weidmann of the European Central Bank said that inflation is easing. Traditionally low inflation is bad for gold but the momo crowd behaves differently. The momo crowd seized on Weidmann’s statement to start buying gold and silver aggressively. The thinking is that if inflation is easing, then the ECB is likely to print more money.
Stock market remains overbought.
Gold futures are at $1592, silver futures are at $29.15, and oil futures are $93.11.
S&P 500 resistance levels are 1558, 1570, and 1575; support levels are 1550, 1537, and 1530.
DJIA futures are down 12 points.
INFLATION HEATS UP IN CHINA, MIXED FOR GOLD
March 11, 2013
Inflation rate in China hit a 10 month high in February. Inflation in China is a hot topic. China’s economy is based on rapid growth. If inflation heats up the central bank will have to tighten monetary policy and this will dampen growth.
This is mixed news for gold. Traditionalists would say that inflation is good for gold, however, inflation means tighter monetary policy. A tighter monetary policy undercuts the argument for gold based on printing presses printing fiat currencies at a rapid rate across the world.
Expect a sluggish morning for stocks in the United State. The market is overbought and vulnerable.
Gold futures are at $1579, silver futures are at $28.80, and oil futures are $91.40.
S&P 500 resistance levels are 1558, 1570, and 1575; support levels are 1550, 1537, and 1530.
DJIA futures are up 4 points.
