Market Summary: The long & short of it. Stock markets rallied strongly again today, shrugging off the disappointing August ISM Manufacturing (PMI)* data from yesterday. The PMI for August was the lowest seen since August 2016. The S&P 500 finished with a healthy gain of 1.08% to close at 2,937.78, while the New York Composite (NYA) gained 1.05% to close at 12,796.32.
The precious metals rallied strongly in early morning trading. Gold hit a high of $1566 only to fall back and close at $1552 for a -0.52% loss on the day. Silver had a similar trading pattern for the day, hitting its high midday at $19.75 and falling back to close at $19.46 for a +0.04 gain for the session.
Gold and Silver have had tremendous gains since the end of May 2019, Gold with a +21% gain while touching a six-year high and Silver with a stealthy 33% gain and touching a three high. We believe the precious metals could reach all-time highs over the next few years, but just like everything else in the market, they do not move in a straight line up or down. Our research indicates that both Gold and Silver may take a breather in the not too distant future. One of our most reliable indicators is beginning to hit extremes and normally this suggests a pull-back may be imminent. The Commitments of Traders (COT) report*, published by the U.S. Commodity Futures Trading Commission is suggesting just that.
Crude Oil rallied strongly from yesterday’s low of $54 to finish at $56.29. Bitcoin started the week positively surging past the $10,000 mark and closing today at 10,524, up about 8% since Monday’s open. Treasuries rallied again with the 10-year yield falling below 1.45%. While the fear gauge ie. the VIX collapsed -11.85% amidst all the exuberance in the markets.
Glossary:
* What does ISM PMI stand for?
One of the most reliable leading indicators for assessing the state of the U.S. economy is the PMI, formerly known as the Purchasing Managers’ Index. The PMI is compiled and released monthly by the Institute for Supply Management (ISM).
*What is the Commitments of Traders (COT) report?
The Commitments of Traders is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) enumerating the holdings of participants in various futures markets in the United States. It is collated by the CFTC from submissions from traders in the market and covers positions in futures on grains, cattle, financial instruments, metals, petroleum, and other commodities. The exchanges that trade futures are primarily based in Chicago and New York. (https://en.wikipedia.org/wiki/Commitments_of_Traders)