PM Daily Market Commentary - 1/3/2017

davefairtex
By davefairtex on Wed, Jan 4, 2017 - 5:30am

Gold rose +7.40 to 1159.40 on moderately heavy volume, while silver climbed +0.39 to 16.35 on heavy volume. In spite of a very strong move in the buck, both gold and silver rallied nicely today, with silver doing particularly well. Gold in Euros was up more than 2% as a result.

The rally in the buck today was very strong – at one point the buck actually made a new multi-decade high to 103.81 – but even that huge move was only enough to push gold gently into negative territory. As the buck retreated from its new high, gold recovered nicely, eventually retracing most of the losses suffered on the last trading day of 2016. On the chart, gold printed a “long white” candle which does not appear to mark either a low or a high. Gold remains above its 9 EMA and in fact seems to be using it as support, which is bullish.

Rate rise chances (May 2017) rose to 33%.

Silver's intraday price track followed gold, but silver performed much more strongly, rising +2.44% to gold's +0.64%. Silver printed a very strong “bullish tasuki line” candle pattern, which is a 94% chance of marking a low. At the same time, the gold/silver ratio fell a big -1.27 to 70.91. That's bullish too. Silver has also moved back above its 9 EMA, which is a positive sign, and it has made a new high for this still-new cycle. The real test for silver will be the 50 MA, which has proved troublesome for the metal all during the current downtrend.

Miners had a great day, with GDX up +4.02% on moderately heavy volume while GDXJ rose +6.62% on heavy volume. Candle print for GDX was a “closing white marubozu”, which the candle code believes is bullish. Today's rally stopped right at the 50 MA; a conclusive move above the 50 is required for the miners to shake off their longer term downtrend. I believe if gold rallies tomorrow, the miners are highly likely to break out above the 50, which would be a strong bullish sign.

Platinum rallied +3.81%, palladium rose +3.9%, while copper fell -0.86%. Rallies in platinum and palladium were quite strong, while copper printed a “shooting star” candle which appears bearish (43% of a top here). Platinum's rally also stopped at the 50 MA.

USD climbed a big +0.91 to 103.19, which sounds great until you hear that it topped out at 103.80, which starts to look more than a little like a failed rally. Candle print was a “spinning top”, which the candle code finds mildly (15%) bearish. The buck is back across its 9 EMA once move, but today's move felt a little bit more bearish than anything else, and as a result my sense is that the buck could go either way.

Crude had a wild day, ending down -1.27 [-2.36%] to 52.62, after first breaking out to a new 18-month high of 55.39. Crude was able to hold above 55 for about six hours, but then a wall of selling hit crude after the US market opened, pushing the price down almost $3 in just two hours. I didn't see any oil-specific news that would have caused this move. Candle print for the day was a “bear strong long”, which the candle code finds to be only somewhat bearish: just an 11% chance of marking the top. I'm not sure I believe that rating – it looks pretty bearish to me. Price is now back below the 9 EMA.

Crude's cousin, natgas, was absolutely crushed, falling -0.43 [-11.50%] to 3.31. The massive “opening black marubozu” candle print might actually mark a low (33%) - but I suspect there will be follow-through tomorrow.

With all the disaster in the energy commodities, energy equities actually rallied, with XLE +1.23%. So you tell me – which one do you believe? Lots of new money appeared in retirement accounts around the country today, and both people and funds are trying to figure out where to put it. Some of them liked energy equities, from what I can tell.

SPX rose +19.00 to 2257.83, which moved SPX back above its 9 EMA, and printed a “bullish tasuki line” candle pattern which just might be a reversal (47% chance). Sickcare was the leading sector (XLV:+1.35%), while utilities did worst (XLU:-0.29%). Not only is there new cash appearing, but money is also moving from sector to sector also. VIX fell -1.19 to 12.85.

TLT rose +0.43%, continuing its slow recovery. TLT remains above its 9 EMA, and while its too soon to call it an uptrend, it certainly does seem that the downtrend is over. At least for now anyways.

JNK rallied +0.49%, jumping back above its 9 EMA. JNK's move brings it back into an uptrend; it is not far from making a new high for this cycle.

CRB fell -1.23%, which has pulled it below its 9 EMA once more. The move was mostly about energy, but the livestock and industrial metals groups also fell on the day.

The ability of gold to hold on during today's big move higher in the buck is a very positive sign, as is silver outperforming gold, as are the miners outperforming the metal.  Even platinum has decided to join the party.  Everything is looking good right now for a continued move higher for PM.

Crude - we might have a top in crude.  The petroleum status report will be especially important this week, I think.

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