PM Daily Market Commentary - 11/8/2016

davefairtex
By davefairtex on Wed, Nov 9, 2016 - 5:22am

Gold fell -6.10 to 1275.90 on heavy volume, while silver rose +0.19 to 18.36 on heavy volume.  The metals moved in opposite direction during the trading day, as traders sorted out what their positions would be ahead of the US presidential election.

While gold fell during the trading day in anticipation of a Clinton victory, the move reversed starting a bit after 9pm Eastern.  Gold rocketed higher as it became clearer that Trump was going to prevail, topping out around midnight at 1338.  I thought it was cool that gold was able to pick the winner long before Nate Silver, CNN, or Fox News.  Prices win again.  On the chart below, I've drawn in the trading range so far for gold in the yellow bar, with a line pointing to the current price which is 1301 as of 0330 Eastern.

The December rate-rise projection remains at 76%.

Gold open interest at COMEX fell by -11,040 contracts.

Silver rallied today, hitting a peak of 18.72 before falling back down to close up just +0.19.  Still, silver outperformed gold - I suspect that had to do with copper's massive rally, up +3.05%.  Once it became clear that Trump would be elected, silver jumped up along with gold, topping out right at round number 19 at midnight before falling back.  As of this writing, silver is trading at 18.58, up +0.22.

The miners dropped, with GDX down -0.50% on moderate volume, while GDXJ fell -1.18% on moderate volume also.  It appeared to me that the miners were in a bit of a holding pattern waiting for the election, with the momentum edging lower.  Had Clinton won, I suspect the miners would have made a fairly dramatic new leg down.  As it is, we'll have to wait for tomorrow to see what sort of rally we might get.

Platinum rose +0.72%, palladium jumped +1.79%, and copper rocketed up another +3.04% on huge volume.  Copper has now cleared all its previous highs dating back to October, 2015.  Volume is increasing as price rises.  This is 12 straight up days for copper.  Its starting to look a bit like a mania.

USD moved slightly higher today, up +0.05 to 97.79.  That was before the election results were known, however; once it became clear Trump would win, the buck sold off hard, touching 95.90 at its lowest point right around midnight.  However, since then it has rallied back; as of this writing the buck is back up to 97.33 - which is really a massive rebound.  Just looking at the dollar chart, it appears as though traders are buying the dip in US assets.

Crude was mostly flat today, down -0.30 to 44.83, printing a spinning top candle.  After the election results became apparent, crude sold off hard, making a new low of 43.07 before rebounding.  Right now crude is trading around 44.30, about $1.20 higher than the day low.  Its possible that oil too is having a "buy the news" sort of event.

SPX moved up +8.04 to 2140, moving higher in anticipation of a Clinton victory.  Once the results became known, the e-mini futures sold off hard along with many other things, at one point making a low at 2028 (a 5% drop!) before trading was halted right around midnight.  Once trading was resumed, price slowly started to rise, eventually moving back up almost 70 points to 2103 which is where it is right now.  What a wild day.  Here's what that looked like:

TLT fell -0.41%, making a new low.  Nobody likes US treasury bonds right now.

JNK dropped -0.17%, hovering just above its 50 MA.  Not clear if it moves back into an uptrend just yet; we'll have to see what traders think about JNK tomorrow.

CRB was mostly unchanged, up +0.03%.  CRB appears to be trying to put in a low; it is oversold, and in a medium term downtrend.

So we now have President Trump.  As expected, equities sold off along with the buck, and gold rallied.  However, it appears as though those moves are now being retraced to a fairly significant extent.  SPX and the buck are both up substantially off their lows, and gold is down $40 from the high it hit right at midnight.

Could the election be a "sell the news" event in the market?  It sure could be.

What the buck does will probably guide PM; right now the buck is down just -0.43%, which isn't even a particularly bad day, and oil has bounced back $1.30 and so has SPX.

My guess there is an amount of official intervention happening across the world to keep things from going nuts, so take these rebounds with a grain of salt.  Traders will eventually sort out where they want to be positioned, but it might take a few days for things to settle out.

That said, I do find the possibility a bit intriguing that the expected Market-Trumpocalypse might not happen after all.  Wouldn't that be interesting if it happened?

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14 Comments

davefairtex's picture
davefairtex
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crude oil low

Going into the open today, it is looking a whole lot more likely that oil printed a low last night at around midnight.  Oil is now green, trading at 45.10, and it has printed a bullish-looking takuri line candle which I'm going to guess will turn out to be a relatively high percentage reversal bar.  I think its even more bullish given the expected Market Trumpocalpyse.  This was the expected capitulation, and it resulted in a rebound.

There are other good technical signs of a low also.  There's a bullish RSI divergence on today's new low, and the market also ignored the bearish inventory build (4.4 million barrels) reported by the API yesterday at 16:30.   We'll have to see how it handles the EIA report at 10:30 to be sure.

Of course the lack of an OPEC freeze might cause trouble, but an oil rally under the current conditions seems bullish to me.  When something rallies on bad news - that's good.

Now back to Trumpocalpyse.

davefairtex's picture
davefairtex
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Is this for real?

Well...this is either an incredibly pissed-off Scott Foval, or an awesome plant.

You simply have to go read some of these.  If I were James Comey, I'd send a couple dozen agents to drag this guy in, offer him a decent deal, and get him to roll on everyone.

Assuming this is real, of course, Mr Foval better avoid weight lifting, light plane flights, etc.  Although without the prospect of the White House, does HRC still have the power to kill with impunity?  Will anyone care what she wants or says?

https://twitter.com/scott_foval

Would it shock you if the same people who incited violence at Trump events were the same people starting riots to exploit #blacklivesmatter?

davefairtex's picture
davefairtex
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silver in the ground

Two silver mining companies, SSRI and AG, reported earnings today; they are both doing very well, earning about $1 for every $10 in revenues.  And that's with silver at $18.

SSRI: +14%, AG: +15%

Who says earnings don't matter?

I look forward to seeing how they'll do with $50 silver.  :)

cmartenson's picture
cmartenson
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Buy the rumor, buy the news

Well, I certainly hope we can all appreciate and agree that a PPT is alive and well.

The ""markets"" bought the news of the FBI backing off Hillary on this past Sunday, and then the ""markets"" bought the news of Trump's win...beginning immediately after the lifting of the trading halt there right before midnight last night.

Alternatively...that turnaround was brought to you by the same ""market"" forces that brought the post-Brexit rebound.  That is, a veritable wall of fresh liquidity that we cannot trace back to the source, but we can certainly detect in the Dow having gone green today after a rousing 1,000 point "rebound" off the lows.

What that means is still open for debate, but it might simply mean nothing more elegant that the same people who might have used a big drop in the stock ""market"" to signal disapproval of a trump victory suddenly realized that they are the only people who actually hold stocks so, screw it, might as well boost them back up.

Or something like that.

Cold Rain's picture
Cold Rain
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Gold Sinking

After being up, (what, about $60?), gold continues to slide back toward even for the session.  Just no momentum for gold right now at all.  Silver at $50 seems like a pipe dream anytime soon.  Would be nice, though. :) 

davefairtex's picture
davefairtex
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which one is intervention?

So I'm seeing:

  • A huge dollar rally
  • A huge Euro sell-off.
  • A huge bond sell-off.
  • A huge sell-off in utilities
  • A huge rally in healthcare & financials
  • A probable low in oil
  • A strong rally in oil equities
  • A strong rally in SPX back to its starting point and now beyond.
  • A nice rally in silver
  • Gold back to its starting point.
  • A nice rally in the mining shares

Which one of these moves is intervention?  Just so I know.

 

Cold Rain's picture
Cold Rain
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My Guess

Rally in stocks was probably kick-started, like Chris said.

davefairtex's picture
davefairtex
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sure, but...

Of course I'd buy that low too, if I had all those billions lying around.  And I'm also pretty sure the commercials went heavily short on gold's spike last night.

But what caused all the rest of it?  There is a LOT more money flying around than just a few thousand e-mini contracts.  The bonds alone...and the buck on top of it.  Huge moves.  Big money.

The e-minis are just a sideshow.  Its like complaining about a skinned knee when you have a gunshot wound to the chest.

Sometimes I think we focus overmuch on "manipulation" as the explanation for everything, and that makes us lazy thinkers.  A whole bunch of things happen, but we just focus on one item.  This can keep us from looking to see if there is something interesting in the overall pattern.

So...what about all the other moves.  The ones where the e-minis aren't involved.

cmartenson's picture
cmartenson
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Yes, and....

Here's my thinking...it's the same as post-Brexit. 

Authorities freak out and want to 'stabilize' the ""markets.""

So the answer, as always, is "dump a bunch of money in, stat!"

Where and how that liquidity creates eddies and circulation patterns can result in some oddities, but the general thrust is "higher" for risk-on assets and lower for risk-off assets.  Stawks up, bonds and gold down.

Same as ever.  Limit down is precisely what the PPT was built for.  To me it's absolutely an article of faith that 'they' were in the ""markets"" last night.

I'm not sure that they meant to engineer a rousing ""market"" endorsement for Trump, but that's what happened.  I wonder if they aren't parsing the entrails right now and noticing that perhaps they over did it on the liquidity rescue measures...and are sending a signal they didn't mean to send?

dryam2000's picture
dryam2000
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Trump is setup to take the blame for crashing markets/economy

The Fed/Elites do not want the system to crash until Obama is clearly out & Trump is in.

 The PPT went into hyper-drive right near the time Trump was declared winner.  No man, no matter how great (and I clearly do not think Trump is an economic magic man), can overcome the economic/financial problems the US has.  These problems & shenanigans have been brewing for 40+ years, and there has been a Herculean effort in propping up of the markets the past 8 years.  There's a lot of pressure that needs to come out of the system.  The Elites have their fall guy, and an excuse for the crashing of the markets.  The system has needed to crash, and the propping efforts have been failing.  All of the Elites have motives for the crash including the establishment Republicans who do not want outsiders like Trump to ever infringe on their territory.  They will try to use this as a tool to redirect the out of line populist.

I fully expect a rate hike in Dec. with the election being over & the Fed huffing and puffing for such a very long time about raising rates such a tiny amount.  PM's will likely not do well until sometime early next year when the Elites start removing their intervention & allow the system to start crashing.

Just my simple opinion.  I have no facts to support this.  Take it for what it is.  I'm not interested in arguing with anyone to prove I'm more right than they are.  

dryam2000's picture
dryam2000
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Bond yields

Anyone have any thoughts on bond yields spiking 10% in just the past 12 hours!....Yes, 10% in 12 hours!  That's completely unheard of.  Saudi selling?  China?  What are the implications of this?  Seems much more significant than anything else going in the 'markets' today.

davefairtex's picture
davefairtex
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900 pound gorillas

dryam-

Perfect comment.  That's what I'm talking about.  If we focus on e-mini moves and chalk all of it up to "manipulation" we might just miss the 900 pound gorilla playing havoc with the bond market.

So, we have a massive move lower in bonds today.  They are cratering.  TLT is down -4.4%.  Why?  Huge, huge money here.  And I think there is zero chance the Fed is "manipulating bond prices lower."  Nor do I think it has to do with over-stimulating SPX with e-mini buying.

It could be foreigners dumping bonds (China, Saudi Arabia, etc) but that is contradicted by the strongly rising dollar.

A friend of mine suggested the following:

Trump wants to raise spending, and cut taxes.  What does that imply?

A whole lot of new bond supply.

Armstrong always says that markets move in anticipation of events.  In this case, a substantially higher deficit.

Anyone else have any thoughts?

dryam2000's picture
dryam2000
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Cornelius999's picture
Cornelius999
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Posts: 379
I'm wondering how soon do

I'm wondering how soon do Presidents elect get briefed? Will Obama whisper anything tomorrow when they meet. Maybe something he hasn't been allowed say by the PTB? Trump may not see the need for keeping some secrets secret.  A whole lot of people with security badges and need-to-know Joes will have much to worry about. I see 2016 as the last year where a semblence of normality can be kept up. Didn't that previous Presidential Advisor quip that it was the bond markets that called the shots? 

Things are working as they should.  Armstrong is right.

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