PM Daily Market Commentary - 11/14/2016

davefairtex
By davefairtex on Tue, Nov 15, 2016 - 1:04am

Gold fell -6.40 to 1221.00 on heavy volume, and silver dropped a big -0.45 to 16.91 on very heavy volume. The selling largely continued in PM, aided by a huge dollar rally that saw the buck break to new highs, closing up +1.07 to 100.06 on the day.

The large currency moves continued today, with the Euro dropping -1.08% while the Yen plummeted -1.59%. It seemed to me to a story of “exporters experiencing trouble”. The dollar's rally looks quite striking on the daily chart; it broke higher above the previous high at 99, and zoomed up to round number 100 where it ran into a bit of resistance. The 10-year previous high (set back in early 2015) is at 100.72, which is not far away at this pace. The buck is overbought right now, but my sense is that traders really are worried about a sea change in US trade policy and what it means for the exporter economies and their currencies.  Resistance might matter - and then again, it might not.

Gold did not appreciate the dollar rally; it fell to a new low of 1211 before bouncing back, printing a “spinning top” candle which the new candle code thinks might be a low 31% of the time. Volume was fairly high, and the RSI7 of 18 says gold is oversold – those are positive signs for this being a low. If the dollar tops out here, I bet gold would probably rally. I'm just not certain we'll see the dollar stop just yet. We might have to wait for 100.72 and see what happens then. If the buck breaks above 100.72, all bets are off for gold holding 1200 support.

Rate rise chances have risen 5% to 86%.

Gold open interest at COMEX fell a huge -18,655 contracts.  Looks like the commercials are covering.

Silver fell much more than gold today, dropping to a low of 16.62 before rebounding weakly. The candle print is just a “long black” candle,. A big drop, with a weak rebound on heavy volume doesn't look like a low to me. It looks to me as though PM weakness is overwhelming the Trump inflation trade for silver anyway. Gold might be nearing a low, but I do not think silver is, at least not yet.

The miners opened lower, but then staged a relatively decent rally triggered by gold's rebound. GDX ended up +0.96% on heavy volume, while GDXJ climbed +2.10% on moderately heavy volume. Miners were up more than this intraday, but gold's inability to hold all of its rebound gains caused the miners to weaken into the close. Candle print was either “spinning top” or “thrusting”, take your pick, with the candle code assigning a 52% chance of this being a low. GDX is now down 35% from its high set back in August. The miners are only somewhat oversold; the selling in the miners might not be all finished yet. Of course if the buck breaks 100.72, the miners probably have another leg down.

Platinum fell -1.38%, palladium rose +1.90%, and copper was up +0.50%, printing a large doji on the day. Copper may be putting in a top here, but there still seem to be a fair number of traders willing to buy at these levels.

Crude starting selling off in Asia, eventually plunging through 43 support down to a low of 42.20 just before mid-day in the US, before bouncing back and closing up +0.68 [+1.58%] to 43.80. Candle print was a “spinning top”, which looks to me a whole lot like a hammer. Candle code is bullish, giving it a 52% chance of marking a low. That's pretty high. Oil equities also rallied today, with services doing especially well. I'm not going to say “this looks like it could be a low” since I've said that so many times its getting old, but...no. I won't say it. I do always like to see support breaks that rally back above support by end of day. API inventory report tomorrow after market close.

SPX was almost flat, down -0.25 to 2164.20. This lack of movement in the overall market obscured some strong sector rotation; financials rose (XLF:+2.45%) while tech fell (XLK:-1.52%). Also diverging are small caps: RUT +1.26%.  Financials are up 10% over the past week alone. Still, SPX appears to be chopping sideways right now, basically going nowhere over the past three days. VIX rose +0.31 to 14.48.

TLT sold off again today, dropping -0.60%, which brings the 20 year treasury yield up to 2.65%. TLT is quite oversold (RSI7=11) but traders continue to bail out, even after a 40 basis point move in just four days.  The candle code is not optimistic of this being a low for TLT - its sub-10%.

JNK rallied, closing up +0.74%, printing a bullish engulfing candle that looks relatively strong (57% chance of a low here). Perhaps this is another vote for a low in oil?

CRB fell -0.27%, dropping substantially more but rallying back to print a doji-looking candle on the day. Still, today's drop took CRB below its 200 MA for the first time in months; that's a bearish sign.

Tea leaves today are telling me that traders would really like to buy the dip in gold and especially the miners, but the strong dollar makes them nervous. Silver is still experiencing some heavy selling. I can't tell you when the dollar rally runs out of steam; it will at some point, that's all I know. Whether this happens before or after 100.72, we can't be sure.  "Reply hazy, try again later."  Oil is looking more bullish, but the positive candle print today could be upended by a bearish oil inventory tomorrow, or some news out of OPEC that suggests no freeze is in the cards.

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3 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
Rules for Rulers (followup)

CGP Grey gives us an explanation why we've seen Bush I & II, and now Clinton I & II.  It also suggests Chelsea is most likely queued up for a run at something, somewhere.

A Rules for Rulers followup: Death and Dynasties.

If you haven't yet seen the original, "Rules For Rulers", you should.  Its literally the Best Video Ever.  Well, it was for me anyway.  Breaking down basic practical political structures in 20 minutes - in a really funny way - is simply a work of genius.  It also helps provide a lens to understand candidates: to predict what a candidate will do once elected, all you need to do is figure out who the candidate's Keys to Power are.

Thanks to the original poster who recommended we see this one.

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 2032
Best Video Ever

I agree DaveF,

Rule for Rulers explains a HUGE amount of the foundational principles for how a ruler holds power and maintains sufficient loyalty.

It is agnostic to Right-Left, Trump-Clinton, Meme, Gender, Religion.  Very easy to take for any political persuasion.

Incisive!!  Highly recommended.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
So about that low in oil

Boom!  Low in oil today!  :)  Crude up +2.41 [+5.59%] to 45.74.  It's a swing low if we close anywhere close to the current price.

It looks to me like the shorts are fleeing crude right now.  More OPEC rumors - they look more intent on getting a deal done this time around.

API report out at 16:30 today.

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