A smaller-than-expected trade gap followed by surging exports gave global investors the flavor of the day and the newest excuse for the bull run is for real, the markets are recovering, and nothing to see here….’these are not the droids you are looking for.’ So what did the markets do on these numbers without any real investigation of them?
Stocks are currently up about 160pts or 1.3% with the S&P up 17pts or 1.28%. Why? It simply eased concerns about a weakening labor market and gave a needed boost of optimism for corporate earnings coming up. But here is the skinny of it:
- The US trade deficit declined to $46B from $52.2B in January.
- Most of the improvement was a sharp decline in real goods and imports which were down 3.9% (m.o.m.).
- Keep in mind February was Chinese New Year holidays with business activity and exports likely down massively.
- Yet, real goods exports also declined 1%.
Bottom line is, analysts are looking for any sign of hope and this gave them it.
Across the pond, Spanish and Italian bond yields dipped a tiny bit helping underpin the euro today. Also keep in mind the only positive results in the bond auction was in the Italian 3-year bonds, which sold decently, but with rising yields, suggesting the market is still concerned about the debt issues in the region.
Gold and silver were the big winners today as QE rumors were abound which would ultimately send the precious metals higher. Gold just breached $1678 on the day, up over $25 while silver just passed $32.50 on the day, up over $1 or 3%.
Silver – About To Clear Major Hurdle
After being hemmed in by the daily 20ema and dynamic resistance since the beginning of March, the shiny metal has surged from the $31.50 intraday base which propped up the pair for the last 5 days. If the metal can hold onto the current gains and close above the daily 20ema, this will be the largest gain on an open-to-close basis over the last two months.
There has been a pattern that every time the pair closed above the daily 20ema, it was met with strong selling after, so watch for this on the next day. But, unless the precious metal is met with heavy selling to end the week, we suspect technical models will now be buying with the floor in place at $31.50. Watch for price action triggers off the intraday support at $31.78 for opportunities to get long as dips should be considered buying opportunities.