PM Daily Market Commentary - 10/31/2016

By davefairtex on Tue, Nov 1, 2016 - 1:21am

Gold rose +1.80 to 1277.80 on moderately light volume, while silver climbed +0.15 to 17.91 on moderate volume also.  A modest dollar rally didn't seem to hurt PM today, silver outperformed gold, and the miners did well also.

Gold continued its slow move higher.  Today gold resisted selling off during a dollar rally, which looked positive, but the trading range was narrow and really not all that much happened.  Gold remains in a shallow uptrend, and is now using both the 9 EMA and 200 MA as support.  Its just steady, slow improvement.

The December rate-rise projection rose to 73%.

Gold open interest at COMEX rose by 3,504 contracts.

Silver did a little better than gold today, moving up to meet its upper trend line.  A breakout above the trend line would be bullish, and could cause a short covering rally; managed money has enough short positions right now for this to happen, even if they aren't fully loaded just yet.  I'm thinking the copper rally might be encouraging silver, at least a little.

The miners did quite well today, rallying from the open right through to the close, ending the day right at the highs.  GDX was up +2.98% on moderate volume, and GDXJ rose +2.70% on moderately heavy volume.  GDX printed a decent two-candle swing low today, which the code tells us is a 49-57% chance of marking the bottom.  That's a pretty good swing low.  Buyers definitely showed up for the miners today; I think the danger of a break below the 200 is now past.

Platinum rose +0.31%, palladium moved up +0.27%, and copper climbed +0.46%.  Copper is on a roll - today was the 6th straight up day for copper.  It is two cents away from breaking above its previous high, and it has already broken through the downtrend line.  Maybe that's helping silver to outperform.

USD tried to rally today but mostly failed, ending up +0.07 to 98.36.  The dollar actually was up fairly strongly until just before mid-day; there was some news item released around 11:57 that caused the buck to sell off hard, and it just continued lower right into the close.  Clinton?  Trump?  I don't know.  Whatever it was, it didn't seem to affect much else, just the currencies.

Crude was hammered, dropping a big -1.90 [-3.90%] to 46.76, smashing through its 50 MA.  The reason assigned by the news was that non-OPEC oil exporters met this weekend and were unable to reach an agreement on production cuts.  Maybe, but since only about 35 cents of that loss happened at the open, it just felt to me like this was just follow-through from last week's selling.  Crude's "long black" candle is not a reversal bar.  Crude is starting to become oversold, but I wouldn't be a buyer until I saw some sign that buyers had actually started showing up.  Which - so far - they haven't.

SPX was largely unchanged, down -0.26 [-0.01%] to 2126.15.  Utilities (XLU:+2.00%) did very well, printing one of those rare "strong line" candles, while energy (XLE:-1.08%) dropped, leaving the market overall unchanged.  I'm not sure what got XLU buyers all excited today.  XLE is holding up pretty well, given the big drop in crude.  VIX rose +0.87 to 17.06.

TLT rose +0.61%, printing a swing low.  TLT remains in a strong downtrend.  Does this mark the low for bonds?  It doesn't look all that exciting to me.

JNK fell -0.30%, now conclusively below its 50 MA.  This is 5 straight days of selling for JNK!  Risk off!

CRB was hammered, down -1.55%, today's fall being almost entirely about the big move lower in oil.  CRB is now in a short term downtrend.

Equities still look unhappy, with SPX hovering relatively near 2120 support, and JNK is reinforcing this by signaling risk off.  The steadily climbing VIX agrees.

The market may be starting to price in the possibility of a Trump win.  According to Nate Silver at 538, he gives Trump a 26.8% chance of a win as of this writing.  Today, the election boils down to Florida and North Carolina.  Silver has those as blue right now, but Florida is 51/49 and North Carolina is 55/45 Clinton, with many polls ending prior to the Mother of All October Surprises (courtesy FBI Director Comey).  I believe both of those states will turn red in the near future.  Trump should give one of those Medals of Freedom to Julian Assange if he gets into the Oval.

If things continue along their current path, Clinton is toast.  Seriously.  Go to 538, do the math, and project the trend.  Then run over to the UK betting site and take the 5:2 odds on Trump. 

My sense is the VIX will continue to rise into the election, and we might well see a support break relatively soon in SPX.  Market doesn't like uncertainty, and this crazy election cycle has that in spades.

But so far at least, all this is gold-positive.  Even with the climbing rate increase chances, gold is continuing to hold its own, miners printed a decent-looking swing low today, and silver is close to a breakout. We might actually get to see that Trump Gold Rally.  That's what prices are hinting at right now.

One potential short-term wrinkle: FOMC meeting starts tomorrow, with an announcement on Wednesday at 14:00.  I'm not sure what they'd say that would trump Trump - but you never know.  Its run by Clinton-supporters at the moment, and they may put their oar into the water in some sort of sneaky way.

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Cold Rain's picture
Cold Rain
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Posts: 380

Looks like some pretty good hedging going on, with the VIX and PMs up.  Last week, Week 2 SPY options spiked.  A couple of days later, the FBI reopened the investigation.  Big money usually knows.  Same thing happening now.  Wonder if new info is about to come out?  Watch for more bad press for Clinton to emerge and for continued tightening in the polls.  Market feels pretty heavy.  A Trump surprise will create a nice trade opportunity if you're correctly positioned.

davefairtex's picture
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Posts: 5683

I agree with everything you said.  Big money usually knows somehow.  Mainstream press is now having to cover a bunch of things they didn't really want to cover.  The wikileaks are really amazing.  Politico reporters "clearing" their stories with Podesta, groveling, and calling him "sir."  God only knows what remains in the last 15,000 messages.

SPX looks like it will break below 2120 support today.  We could get a big drop tomorrow or the next day.  JNK selling off again.  Buck is tanking too.  Money fleeing risk US assets.

Whoops, there goes SPX.

Key test for gold is "gold in Euros" cracking the 50 MA.  Its right up against it now.

davefairtex's picture
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Posts: 5683
hillary clinton & victimhood

Good article by a Republican commentator at The Hill.

Good in that he pretty well summarizes my own feelings on the matter.

Hillary Clinton is not the victim. End of story.

Yet for the Democrats, the idea of Hillary’s victimhood reveals itself to be the go-to response for both the WikiLeaks scandal and the latest bombshell announcement from FBI director James Comey.

The strategy is fairly straightforward: 1. Ignore the substance; 2. Attack the messenger; 3. Paint the candidate as the victim.

[... but ...]

If we gave any voter the task of listing one-hundred words which describe our greatest presidents, “victim” would not be on it.

Strategy seems ill-advised.  Plus, the whole mess is one of their own making.  Hubris, rules don't apply, plus the desire to milk as much money as possible from the whole affair.  Extreme cupidity.  Really appalling.  You don't get to meet with Sec State Clinton unless you've contributed to the CGI.

Did I mention really appalling?  And low class, too.

Heaven only knows what the next 15,000 emails contains.

Nate's picture
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Posts: 605
drain the cesspool

Here is Marco Rubio's preemptive strike against WikiLeaks:



"Today it is the Democrats. Tomorrow, it could be us," Rubio said in a statement.

"I will not discuss any issue that has become public solely on the basis of WikiLeaks," added Rubio, who is up for re-election. "As our intelligence agencies have said, these leaks are an effort by a foreign government to interfere with our electoral process, and I will not indulge in it."

The only arrogant asshole full enough of himself to expose both the Republicans and Democrats is Donald Trump. Sad, sad state of affairs.

Cold Rain's picture
Cold Rain
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Posts: 380

What this election comes down to is very simple:  Status quo vs. change.  I highly doubt most voters are well-versed enough in politics, economics, trade policy, tax policy, environmental policy, etc. to effectively decide much of anything.  The more the system is exposed as corrupt (which is happening ever more frequently and rapidly now), the more people are going to gravitate to an effective VOICE for change (notice I said VOICE, not AGENT for the RIGHT kind of change).  Trump has done a good job advocating for this, and America might just be ready to try something, anything because it's different.  This can be dangerous.  But in the end, what it comes down to is the fact that we know what we're getting with Hillary.  Trump might be better.  But he also might be worse.  Are you willing to take the chance?

lambertad's picture
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Posts: 184
Are you willing to take the chance?

Take the chance of change over the status quo?

Like CAF said in a recent Greg Hunter interview, just throw a Molotov Cocktail (Trump) at the system. 

It's somewhat comical, but I'm doing a rotation with a self described socialist, not upon asking mind you, but he just told me one day. Even he knows the system is broken. Even a socialist who works at the most socialist healthcare system in the country admitted to me that the system is broken. He admitted to me that the union at this healthcare system is broken, the benefits system is broken, and he stated that he would "keep paying his taxes" with a chagrined look on his face. Oh, and even he recognizes that 60% of Medicare funds are paid during the last 1 year of life and that something needs to be done to cut costs! Just throw a Molotov Cocktail at this thing already. 

newsbuoy's picture
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Posts: 324
You Reep What You Sow

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