PM Daily Market Commentary - 9/22/2016

By davefairtex on Fri, Sep 23, 2016 - 1:47am

Gold rose +1.70 to 1340.70 on moderate volume, and silver rose +0.03 to 19.95 on moderately heavy volume.  Both gold and silver attempted to follow through from yesterday's rally, but a reversal in the dollar made life difficult for PM.

As the dollar sold off early in Asia, gold rallied fairly strongly, hitting a high of 1345, but then the dollar reversed, and then gold sold off, falling into the close.

On the chart, we see that gold's rally took it up close to the downtrend line but could not move above it.  Today's candle print is a high wave, which is innocuous enough - code doesn't see this as any sort of disaster.  However, if the dollar really starts to rally here, it will encourage the shorts to load up, and at the same time it will discourage the buyers.

Gold open interest at COMEX rose by 17,310 contracts.

Silver poked through its downtrend line, but was unable to close above it.  The dollar rebound (and likely some short selling by the commercials) managed to push price back below the line by end of day.   Candle print was a high wave similar to gold; just a 15% chance of forming a top here.  We'll need confirmation before calling today's action bearish.  It could just be a pause before another move higher.

Miners gapped up at the open again, but sold off for most of the day - the mining shares were under some selling pressure.  GDX closed down -0.57% on moderate volume, while GDXJ dropped -1.92% on heavy volume.  Candle print today was just a long black candle; candle code shows nothing too bearish.  A down day is sometimes just what happens after a 7 or 8% rally - as long as the volume isn't too high, its generally ok.  Another day of selling and we might have something to worry about.

Platinum rose +0.72%, palladium climbed +2.42%, and copper moved up +0.93% to 2.19.  Copper's rally should help silver; copper is now convincingly above its 50 MA, and is in a medium term uptrend.

The buck continued falling in Asia, following through from yesterday's do-nothing FOMC hitting bottom at 94.95 just after the US market opened.  It then rallied for the remainder of the day, closing down -0.28 to 95.37.  The 0.40 rebound caused the buck to print a "takuri line" candle, which gives the buck a 25-32% chance of making a low here.  That's not too bad for a single-candle pattern.  The snap-back in the buck was not kind to silver - gold continued to rally but eventually it too topped out under the pressure of the rebounding buck.  If price confirms the rebound in the buck tomorrow, gold might find itself under some more selling pressure.

Crude rallied again today, up +0.46 [+1.01%] to 46.08.  Like gold, staged a decent rally but then found itself under pressure from the rebounding dollar.  Candle print was an opening white marubozu, which the code suggests isn't particularly bearish.  Like with gold, if the dollar rallies further, crude might find it difficult to move higher.

SPX continued higher, rising +14.06 [+0.65%] to 2177.18, led by consumer staples (XLP:+0.88%) while energy (XLE:+0.12%) brought up the rear.  SPX ended the day above its 50 MA; it is not so far from its all time high at 2194.   VIX plummeted again, down -1.28 to 12.02.

TLT rallied again today, up +0.79%, moving higher right alongside SPX.  This looks like rate-rise relief to me.

JNK jumped +0.38%, nearing an all-time high.  Reach for yield continues.

CRB rose up +0.79%; PM, industrial metals, and energy all rose.  CRB is slowing moving back into an uptrend.

No real change in technicals for PM; if the buck continues lower, this will have just been a day of rest after a big rally.  Of course if today marks the low for the dollar, then the gold and silver downtrend lines will probably hold, and the longer term PM downtrend will remain in place.  It would surprise me if the buck continues to rally, given the slim prospects for any rate-positive news out of the Fed.

It will be interesting to see what the traders want to take home this weekend.  Rally in SPX seems to be about commodities and yield-chasing; the normally-sedate utility fund XLU is up 6% over the past few weeks.  That's two years worth of dividends!

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Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 381

Just giving up the ghost.  Lol can't hold gains recently.  Looks like it's going to be a good while for the wind to fill the sails again.

davefairtex's picture
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Joined: Sep 3 2008
Posts: 5693


Silver didn't look all that dreadful.  It seemed to find support on the 50, down about 20 cents, and the volume didn't look all that severe.  Gold hung tough too.  The miners did get shellacked; they didn't look great at all.  Which one do we believe?

I'll have to look at how it all hangs together once the data updates.

Part of it could just be concerns about the weekend.  Its September, OPEC could say anything, I dunno.  Market just looked jittery today.  It was oil that really got clocked today, down almost 4%.  Silver probably didn't like that too much.

It could all reverse on Monday.  I've seen it happen.  Nothing happens, and we're off to the races again.


Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 381
Good Points

Good points, Dave.  Crude got hammered.  Will the Fed raise rates before the Saudis and Iran do a deal to stabilize prices?  Lots of jawboning on both fronts, but there is never any action.  And the market is still efficiently manipulated through this process.  Unlikely either will happen in a meaningful way.

Re the miners, they have looked for any excuse to sell off over the last couple of months.  Guess that's what happens when you start the year with massive gains across the board. :)

Have a good weekend, sir!

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