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INTRA-DAY NEWSLETTER ~ April 13 2015
Wall Street Reacts To China's Shocking Trade Data
Submitted by Tyler Durden on 04/13/2015
Everyone was shocked by yesterday's Chinese March trade update which showed that while imports slid largely as expected, it was the 15% drop in exports, the largest in over a year, that prompted many to wonder just how big the global trade slump really is, masked by what has now become pervasive, global QE. This was the worst performance, exports and imports combined, since late 2009.
China Stocks Soar To 7 Year High After Collapse In Exports;
Submitted by Tyler Durden on 04/13/2015
If there was any doubt that global trade is stalling, it was promptly wiped out following the latest abysmal Chinese trade data which saw exports tumble by 15% - the most in over a year - on expectations of a 8% rebound, with the trade surplus coming in at CNY18.2 billion, far below the lowest estimate. While unnecessary, with the Chinese GDP growth rate this Wednesday already expect to print at a record low, this was further evidence of weak demand both at home and abroad. Weakness was seen in most key markets, and the strength of China's currency was partly to blame, which again brings up China's CNY devaluation and ultimately QE, which as we wrote some time ago, is the ultimate endgame in the global reflation trade which, at least for now until the CBs begin active money paradropping to everyone not just the 0.01%, is only leading to inflation in stocks and deflation in everything else
Proxy War Escalates: Russia Lifts Ban On Selling Anti-Aircraft Missiles To Iran
Submitted by Tyler Durden on 04/13/2015
UPDATE: *RUSSIA WILL SUPPLY S-300 TO IRAN QUICKLY: INTERFAX
We showed yesterday the web of interconnected rifts and relationships among The Middle East's local and proxy war members and it seems this morning tensions are escalating once again. As Bloomberg reports, Russian President Vladimir Putin signed a decree on Monday lifting a ban on the delivery of S-300 anti-missile rocket systems to Iran. The ban was introduced by former President Dmitry Medvedev in 2010 under pressure from the West following UN sanctions imposed on Iran over its nuclear program.
(Thanks to www.zerohedge.com for the above headlines)
The dollar is negative for gold
The U.S. dollar, the world's reserve currency, is the pricing mechanism for all of the precious metals around the world. So far in 2015, gold has done well in most major currencies, with the exception of the dollar. The dollar has moved higher, and gold is virtually unchanged on the year. When the value of the U.S. currency strengthens, the value of all commodities tends to fall - there is a strong negative correlation between commodity prices and the value of the U.S. dollar. The dollar has rallied over 26% since last May - gold is only down 6.2% over the same period. It has been a great performance for gold in light of the strong dollar. Consider the price action of other commodities - crude oil more than halved in value since last May, copper is down around 12% and grains have plummeted, just as a few examples.
The strong dollar has not yet had a serious impact on the price of gold. The operative word is "yet." Perhaps low interest rates around the globe are keeping the yellow metal at current levels, providing support to its price. This is quite possible. However, when the U.S. Federal Reserve does eventually decide to commence raising rates, the party could end quickly for gold, and all of these divergences could correct very quickly. The current level and path of the U.S. currency, as well as the inevitability of higher short-term interest rates in the U.S. is a negative for the price of gold on a short to intermediate term. On a medium term basis, higher rates are what is needed for the gold bull to resume. But upon first rate increases, the spin masters will be selling gold to wipe out the remaining bulls.
The longer term picture on the chart below is the bottom line. If gold loses support in the 1140-1160 area then the next wave down for gold should be underway towards the 1000 area. We are at make or break levels here and after hanging around for five months here, gold is soon to make a decision. At the moment, the odds are stronger that there is one final wave down this year in gold. If the current seasonal move higher from the lows in March fails, odds are gold will trade down towards 1000.
Gold Chart short term
Resistance as listed on the daily update last night at the website was 1209-1212 and that remains the case thru today as the high has been 1210. Support is back to the 1188-1192 area today as price is back below 1200.
We sound like a broken record but until the 1225 area is taken out in gold, the downside still has potential. If we lose 1192 then look for 1172-1182 as the next support level.
Cycles
The next cycle is due April 18th (plus or minus 72 hours). That means that the window for a turn opens on Wednesday. The problem is we still don’t know whether it turns out to be a low or high yet. As long as we remain in the 1175-1225 range, things can go either way. IF GOLD SELLS OFF THIS WEEK, then look for a low to rebound into early May. IF we move higher this week, then a peak is due and a pullback into the beginning of May.
Resistance is that 1225 area, but also the 200 day at 1234 will be resistance that gold will have to deal with also. The bottom line is until we close above that black dotted dual resistance line near 1225, the downside can still play out on this cycle. Any close below 1192 should favor prices move back to 1172-1182 and potentially 1158-1163. That’s what we have to work with at the moment.
Silver
Silver is even weaker than gold and support is now 1575-1605 with resistance at 1677-1697 and 1720-1750. A close below 1636 favors a test of above listed support. It’s a waiting game here too, but odds favor a decision is coming soon.
 
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