PM Daily Market Commentary - 11/28/2016

davefairtex
By davefairtex on Tue, Nov 29, 2016 - 8:38am

 

Gold rose +10.30 to 1196.40 on heavy volume, while silver rose +0.09 to 16.67 on very heavy volume. The buck sold off hard in Asia right after the open, and this sharp drop caused a relatively strong PM rally; however once the buck rebounded, silver faded, while gold managed to hold onto most of its gains into the close.

Gold printed a swing low today, which the candle code thinks is a 47% chance of a low; that's not a very good rating for a two-candle swing low pattern. Still, I like the fact that gold managed to keep most of its gains into the close even though the dollar staged a strong rebound. Gold remains well below its 9 EMA.  Looking just at the gold chart, I'm cautiously optimistic.

Rate rise chances remain at 94%

Gold open interest at COMEX fell -8,068 contracts.

 

Silver had a failed rally today; the candle print was a “spinning top” which looked a whole lot like a shooting star. Silver under-performed gold; the gold/silver ratio rose +0.25 to 71.11. Traders still don't want to take silver home overnight.  Silver doesn't look so hot right now.

 

The miners rallied from the open to the close, with GDX up +3.83% on heavy volume, while GDXJ rose +4.11% on heavy volume also. Miners printed a swing low, and rallied right up to the 9 EMA, closing right near the highs of the day. Candle code doesn't have much to say, since it doesn't recognize swing low patterns that extend beyond two days; all it saw was a “closing white marubozu” which it found to be mildly bullish. I think if the miners can manage a close above the 9, that would mark the start of a real rebound. In the best of all worlds, if GDX can close above 22.25, it will print a double bottom pattern, which are generally fairly bullish.

Platinum rose +1.96%, palladium climbed +2.03%, and copper fell -1.26%. Copper printed a bearish-looking “shooting star”, which given how overbought copper is, could well mark a top. Candle code gives it a 58% chance of marking the high, which is a very high rating for a single-candle pattern.

The USD fell -0.17 to 101.28; it sank early in the Asian trading session, making a low of 100.67 before rebounding and recovering most of its losses. While stockcharts merges the price action for Thursday and Friday, my charts split them out; so for me, I'm showing a “swing high” for the buck today. Today's big sell-off and substantial recovery resulted in a “high wave” single-day candle print, which looks actually more bullish than bearish: the long lower shadow indicates a whole lot of buyers showing up, and that's usually fairly bullish. to my eye, this isn't a particularly compelling swing high for the dollar.

Crude opened a buck lower than the Friday close, but then proceeded to rally all day long, rising +0.94 to 46.90. Crude recovered about half of Friday's losses, printing a high-rated “thrusting” candle pattern, which candle code gives a 77% chance of marking a low. All of the movement is driven by the back-and-forth expectations of what will happen at the upcoming OPEC meeting scheduled for Nov 30, two days from now. My sense? I think its more likely than not that OPEC will come to some kind of agreement, but it certainly isn't guaranteed. However if they don't, we'll see oil down in the 30s almost instantly. That's the popular belief anyway and on this one, I'll go along with the group.

SPX fell -11.63 [-0.53%] to 2201.72, printing a two-candle swing high (medium-rated; 62% chance of a top). RUT also printed a swing high. Today's drop was all about energy (XLE:-1.39%) and financials (XLF:-1.16%), while utilities (XLU:+1.93%) staged a very strong rally after three months of being in the doghouse. Utilities aren't out of the woods just yet; they remain in a pattern of lower highs and lower lows. VIX rose +0.81 to 13.15.

We might have a near term high for SPX.  It probably depends on what happens with OPEC.

TLT rose +0.74%, printing its own swing low and moving right up to its 9 EMA. It appears that the downside momentum for TLT has abated, and either shorts are covering or bargain-hunters are buying the (substantial, 20%) drop off the highs. The 20 year treasury yields 2.68% right now, up almost a full percentage point since last July.

JNK rose +0.08%, hovering just below its 50 MA. JNK is on the cusp of returning to an uptrend; it still needs one decent day to pop above the previous high.

CRB climbed +1.09%, recovering all its losses from last Friday and then some. CRB remains in a consolidation above its 50 week MA; the 50-week MA is slowly starting to bend upwards.

As has been the case a while now, gold's future depends on the buck, which continues to hang tough after rallying more than 4% over the last three weeks. Although the miners rallied strongly, and gold moved up also, today's swing high for the buck isn't all that compelling, which does not bode well for a sustained bounce for PM. There are still a whole lot of buyers out there for the dollar; if gold does end up putting in a low in the near future, it appears as though it will probably be a “process” rather than a one-day event.

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