PM Daily Market Commentary - 2/8/2017

davefairtex
By davefairtex on Thu, Feb 9, 2017 - 4:28am

 

Gold rose +7.60 to 1243.10 on moderate volume, and silver climbed +0.08 to 17.78 on moderately heavy volume. Gold continued its slow-but-steady move higher today followed by silver, which is slightly under-performing gold at this point.

Gold climbed in fits and starts today, eventually making a new high of 1246.60. Candle print was just a “long white” candle, which confirmed the NR7 from yesterday; code says that's more bullish than bearish. Gold is right at the 1245-1250 resistance zone now, and since its also overbought (RSI7=79) that is a cause for concern. If the selling pressure from resistance coincides with the turn in the buck, gold could run into some trouble. Gold may need to take a rest prior to moving through this zone.

Open interest at COMEX for GC rose by +10,776 contracts.

Rate rise chances (May 2017) fell to 25%.  The chances of a rate increase by May continue to slowly decline.  That's gold-positive.

Silver rallied along with gold, but a bit more weakly, making a new high to 17.87. Candle print was a spinning top, which doesn't provide any information as to where we go next. Like gold, silver is also overbought, but not by quite as much: RSI7=74. Silver is slowly approaching the 200 MA, where I would expect sellers to appear. The 200 MA acted as support on the way down, and so I suspect it could also act as resistance on the way back up. The gold/silver ratio rose by +0.11 to 69.92, which is slightly bearish.

Miners rallied also, with GDX up +1.11% on very light volume, while GDXJ was up +0.67% on moderately light volume. Candle print for GDX was a “northern doji”, which the candle code assigns a 30% chance of marking a top. That's somewhat bearish, and strongly bearish for a usually-boring doji. GDX is also overbought, with RSI7=80. If GDX sells off tomorrow, that will confirm the northern doji (and it would also be a swing high) and both of those candle prints are usually quite bearish.

Platinum rose +1.18%, palladium was up +0.89%, and copper rose +1.08%. Metals are all doing well, and platinum is back above its 200 MA.

USD moved up slightly today, closing +0.02 to 10.22. The buck traded in a reasonably large range, with the candle print being a “spinning top”. Candle code says that's slightly more bullish than bearish. The buck is above its 9 EMA, and appears to be in the process of changing trend. MACD has executed a bullish crossover – and in recent months, the MACD has been a fairly reliable trend change indicator, as has the 9 EMA. At this point, it is probably time for a dollar rally. While gold and the buck can rally together, that doesn't happen very often.

Crude rallied today, rising +0.69 to 52.57. This outcome was a surprise, since the EIA's petroleum status report showed a huge +13.8 million barrel crude inventory build. This largely confirmed the API report from yesterday, and – my guess – would have led to a big sell-off under normal circumstances. However, in today's market it did not, it led to a rally instead. After some back and forth, crude oil buyers emerged to push prices well above 52. I'm guessing that's managed money at work again. There continues to be a massive bid underneath crude right now, and not even a hugely bearish inventory report is able to push prices lower. This was particularly impactful for oil services (OIH:-0.18%), which printed a very bullish “takuri line” candle – an 87% chance of marking the low.  When bearish news gets bought ... that's a very bullish sign.  In this case, it indicates an extremely strong bid under the market.

In spite of the excitement in crude, SPX was largely unchanged: up +1.59 to 2294.67. Utilities did especially well (XLU:+0.98%) breaking up and out of a long consolidation zone, while financials dropped (XLF:-0.68%). XLE printed a very bullish-looking spinning top candle, which has a 55% chance of marking the low. Energy equities may have put in a bottom here after a long 9-week decline. It also appears that rate-sensitive issues are also making a comeback.  VIX rose +0.16 to 11.45.

TLT screamed higher up +1.36%, gapping up at the open, rallying during the day and closing at the highs. That means a “white marubozu” which very seldom marks a top. IEF (the 10-year ETF) looks even stronger. Bonds are back. It probably helps that there are a large number of traders short bonds, which provides a great deal of fuel for a rally. The TLT rally suggests risk off, and/or possibly a return to “reach for yield.”

JNK fell -0.03%, continuing a slow-motion move lower. JNK is close to printing a lower low, which would be the second sign of a downtrend. So far, however, the whole thing has been very sedate. Still hints of risk off from JNK.

CRB bounced back +0.47%, moving back up to its 50 MA. 4 of 5 commodity groups rallied today.

If energy equities really have put in a low here, its hard to see how SPX could materially correct – and looking at the chart, SPX just seems to chew steadily higher without ever really becoming overbought. Gold on the other hand is currently overbought, the dollar appears to be changing trend, and the miners may have put in a top.

Tomorrow should be the key. If the buck continues higher and GDX prints a swing high, then gold probably corrects for a time. Miners lead metal, and silver (typically) leads gold.

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4 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 382
Selloff

I was a day early with my prediction, apparently.  Nice move up in equities and move down in PMs and miners.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
bombing raid...

http://www.silverdoctors.com/silver/silver-news/gone-in-60-seconds-11-to...

At 9:54 am EST, 11.1 tonnes of paper gold which hit the Comex trading floor and electronic trading system in a 60 second window.  It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute…

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 382
Yep

Yep, time for them to short.  You could see it coming a mile away.  We'll finish below $1220 tomorrow.  Straight down.

vadim_75's picture
vadim_75
Status: Bronze Member (Offline)
Joined: Oct 18 2015
Posts: 48
all about yen again.

Only Trump could save PM tomorrow playing the golf with Abe.

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