WEEKLY MARKET DIGEST: GERMANY AUCTIONS BONDS AT NEGATIVE YIELD, CHINESE AGGRESSIVELY BUY GOLD $GLD $SLV $USO $DIA $SPY $QQQ $TBF $TBT

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(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. ) 

A SIGH OF RELIEF ON BETTER GDP, MASSIVE CHINESE BUYING OF GOLD CONTINUES

There is a sigh of relief as revised GDP came at 2.2% vs. consensus of 2.1%, and more importantly whisper numbers of less than 2.0%.  This means the American economy is staying strong.

Massive buying of gold in China continues.  Overnight premium over international prices in Shanghai was still about $4.  Part of the explanation of massive buying of gold by Chinese is that Chinese currency is weakening, so wealthy Chinese are buying gold to hedge currency risk.

Oil and interest rates are range bound.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1215, silver futures are at $16.57, and oil futures are $49.17.

S&P 500 resistance level is 2150; support levels are 2063, 2038, and 2017.

DJIA futures are down 9 points.

CORE CPI SLIGHTLY HOTTER, CHINESE GOLD BUYING CONTINUES

Core CPI came at 0.2% vs. 0.1% consensus.  This is good news because it will calm fears  that the U. S. is slipping into deflation.

Massive Chinese buying of gold continued overnight. However premium over international price fell to $4 from $6 the day before.  This indicates that supply is increasing in China to meet the demand.

After DOE inventory data release, yesterday, gasoline and heating oil rallied.  Oil rallied in sympathy.  However, this morning oil has given up a big part of its gains.

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After release of hotter than consensus CPI, interest rates are beginning to move up.

The stock market is overbought in the very, very short-term.

Our very, very short-term early stock market indicator is negative.

Gold futures are at $1213, silver futures are at $16.70, and oil futures are $49.64.

S&P 500 resistance level is 2150; support levels are 2100, 2063, and 2038.

DJIA futures are down 8 points.

GERMANY AUCTIONS BONDS AT NEGATIVE YIELD, CHINESE AGGRESSIVELY BUY GOLD

For the first time in history, Germany auctioned 3.8 billion euros worth of five-year bonds at a yield of minus 0.08%.  In other words, investors are paying interest to Germany to lend money to Germany.

For the first time in history, the yield on five-year Irish bonds fall below 1%.

The flash HSBC PMI came at 50.1 vs. consensus of 49.7.  This contributed to Chinese heavily buying gold in Shanghai after their return from Lunar New Year celebrations.  Gold premium in Shanghai rose to $6 over the international price compared to an average price of $3 to $4.  This is an indication of heavy demand.

In our analysis, slight strength in HSBC PMI is likely an anomaly due to Lunar New Year distortions.

Yellen will give her testimony in front of the House today starting at 10:00 am ET.  Q&A may bring market moving news.

Interest rates are range bound after falling yesterday.

Oil is range bound.

Our very, very short-term  early stock market indicator is mild negative.

Gold futures are at $1208, silver futures are at $16.59, and oil futures are $49.27.

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S&P 500 resistance level is 2150; support levels are 2100, 2063, and 2038.

DJIA futures are down 3 points.

GREEK PLAN ACCEPTED

European Commission accepts Greek plan.

Home prices in 20 U. S. cities climbed faster than the consensus.

Gold is having difficulty maintaining $1200 level.

Interest rates are range bound.

Oil has rallied above $50.

Our very, very short-term early stock market indicator is neutral with a positive bias.

Gold futures are at $1197, silver futures are at $16.27, and oil futures are $50.14.

S&P 500 resistance level is 2150; support levels are 2100, 2063, and 2038.

DJIA futures are up 21  points.

GOLD AND OIL UNDER PRESSURE, YELLEN TESTIMONY AHEAD

Gold and oil are under pressure this morning.  Right after 4:00 am ET, gold traded at $1191 but has since bounced.

Brent oil broke under $60 and WTI has broken under $50.

Fed Chair, Yellen, will testify in front of Congress Tuesday and Wednesday of this week.  Q&A may move the markets.

Interest rates are range bound.

Our very, very short-term early stock market indicator is neutral.

Gold futures are at $1201, silver futures are at $16.39, and oil futures are $48.93.

S&P 500 resistance level is 2150; support levels are 2063, 2038, and 2017.

DJIA futures are down 43 points.

 

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