PM Daily Market Commentary - 3/15/2017

By davefairtex on Thu, Mar 16, 2017 - 6:38am


Gold shot up +21.10 to 1219.60 on moderately heavy volume, while silver rallied +0.48 to 17.36 on moderately heavy volume also. Today was entirely about the FOMC; both Yellen's comments at the press conference as well as the Fed announcement itself was perceived by the market as more dovish than expected. This drove the buck down hard, losing a full -1.00 on the day.

So what did dovish look like? At one point, a reporter asked Yellen about the possibility of reducing the size of the Fed's balance sheet, and the conditions under which that might happen.   This is something I suspect the market was actually quite concerned about.  Her response summed to: “its not going to happen anytime soon.”

As of result of all this, the buck fell -1.00 [-0.98%] to 100.58, making a new low and printing an evil-looking “opening black marubozu” which the candle code finds to be bearish. So much for yesterday's bullish outlook. As I said, things could turn on a dime if the market gets surprised by the Fed.

In the Netherlands, the PVV did not do as well as expected, apparently because the party currently in power decided to adopt some parts of the PVV's platform, especially the parts about immigration. Is this Euro-positive? I think it probably is, in the short term.  (XEU:+1.15% just today).  Longer term, I'm not sure how “free movement of peoples” within the EU aligns with the rising anti-immigrant sentiment, but for now, the "Netherlands election" can was kicked successfully down the road.  Next stop: France and its presidential election.  First round: April 23, second round: May 7th.

Gold traded sideways into the FOMC meeting announcement, and shot higher immediately after the announcement was released, moving up steadily during the rest of the day, and finally closing up +1.76%. The falling dollar and the more-dovish-than-expected commentary from Yellen provided gold all it needed to move higher.  Candle print for gold was a simple “long white candle” which the code found to be very bullish. Gold also printed a swing low, is now above both 9 EMA and 50 MA, all of which adds up to a probable resumption of the uptrend for gold. This week's volume pattern is also showing some bullish signs – low volume down days, higher volume up-days.  Its all pretty much good news.

Open interest at COMEX for GC rose +7,552 contracts.

Rate rise chances (June 2017) are at 50%.

Silver traded mostly sideways into FOMC, then rallied alongside gold on the announcement, jumping 20 cents initially and then moving steadily higher through the end of the day, finally closing up +2.81%. Silver closed at or near the highs for the day, printing a “closing white marubozu” which the candle code asserts is very bullish. Silver did not print a swing low today as it made a new low in the hours leading up to FOMC. Silver is now just barely above its 9 EMA, but remains below the 50, an artifact of the much steeper decline that silver endured over the past few weeks.

The gold/silver ratio plunged -0.73 to 70.27.

Miners rallied steadily into the FOMC meeting; GDX was already up 2% at the time of the announcement. Once the announcement hit, miners jumped higher, and the buying (and/or short-covering) didn't stop until the market closed. GDX ended the day up +7.69% on extremely heavy volume, while GDXJ was up an absurd +11.53% on the highest volume in months. Yesterday's strong downdraft turned out to be a headfake – it was completely wiped out, and then some by today's move. On the chart, GDX printed a relatively rare “strong line” candle, which the code found to be very bullish. GDXJ printed “only” a closing black marubozu, which was still quite bullish, but not quite as strong as GDX.

What happened with the miners today shows the limits of TA in a news driven market. Still, had you been wrong about the miners going into today, there was plenty of time to buy after the report hit at 14:00. Buy the breakout, put your stop underneath the opening candle, and hope for the best.


Platinum rose +1.77%, palladium jumped up +2.60%, and copper rose +0.95%. Copper is now back above its 50 MA. Just perhaps the commodity downtrend is at an end for now.

Crude rose +0.45 to 49.33, printing a spinning top candle that also happens to be a two-candle swing low. Candle code was not particularly impressed; this combination is bullish, but much less so than the doji yesterday. The EIA report confirmed the inventory draw from yesterday's API report; I expected a bit more enthusiasm, but the response to the bullish report was lukewarm. Crude did rally following the FOMC announcement, and that's what ended up causing the swing low. Oil equities did a lot better than oil, with XLE up +2.22% and OIH +3.40%. Both XLE and OIH printed swing lows today, which the candle code saw as very bullish.

SPX climbed +19.81 to 2385.26, mostly on the strength of the FOMC announcement. The sector map aligns pretty closely with what I had expected for the “dovish Fed” case with the addition of a commodity rebound; energy, REITs, utilities, and materials did well, while financials were the sole sector in the red. This was not an indiscriminate buying spree; money was selective, picking some sectors in preference to others. VIX fell -0.67 to 11.63.

Name Chart Chg (D) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Gold Miners GDX 7.69% 17.67% rising rising rising rising ema9 on 2017-03-15 2017-03-15
Energy XLE 2.22% 14.46% rising falling rising falling ema9 on 2017-03-15 2017-03-15
REIT RWR 2.12% -0.43% rising falling falling falling ema9 on 2017-03-15 2017-03-15
Telecom XTL 1.75% 28.18% rising rising rising falling ema9 on 2017-03-15 2017-03-15
Utilities XLU 1.61% 7.41% rising rising rising rising ema9 on 2017-03-13 2017-03-15
Materials XLB 1.60% 19.10% rising rising rising rising ema9 on 2017-03-15 2017-03-15
Homebuilders XHB 1.39% 15.20% rising rising rising rising ema9 on 2017-02-09 2017-03-15
Healthcare XLV 1.26% 13.91% rising rising rising rising ema9 on 2017-03-08 2017-03-15
Industrials XLI 1.14% 21.94% rising rising rising rising ema9 on 2017-03-15 2017-03-15
Cons Staples XLP 0.75% 5.31% rising rising rising rising ema9 on 2017-03-15 2017-03-15
Technology XLK 0.68% 23.96% rising rising rising rising ema9 on 2017-02-01 2017-03-15
Cons Discretionary XLY 0.53% 12.83% rising rising rising rising ema9 on 2017-03-10 2017-03-15
Financials XLF -0.16% 35.95% falling rising rising rising ema9 on 2017-03-15 2017-03-15

TLT rose +1.22%, leaping higher following the FOMC announcement. This lines up with all the other post-FOMC-announcement price moves; money is flowing back into PM and things with a yield. TLT printed a swing low today; the long white candle is seen by the candle code as fairly bullish, but not exceptionally so. This might just be short-covering, its hard to say.

JNK rallied hard also, up a massive +1.38%. Junk is now back above its 50 MA. Today, it printed a two-candle swing low, a confirmed bullish NR7, a strong line, and a bunch of other things all of which added up to something quite bullish. After the FOMC announcement, traders were rushing to buy the two-week dip in junk.

CRB rallied also, up +0.92%, printing a swing low. 4 of 5 sectors rallied, led by energy. After an 8 week decline, its possible we have a near-term low in commodities.

It looks as though the market over-reacted to the Fed's hawkish signals of the last few weeks, and is now dutifully retracing.  Round number 1200 seems to be a reasonable support level for gold.  Now we just have to watch and see how far the rally can go.  Miners should help provide us a clue.  Right now they are clearly saying "risk on" for PM.

Armstrong believes that the debt ceiling issue will be used to discredit Trump, and that this may pressure the dollar further in the near term.  If so, that pretty much has to be gold-positive.  As long as the Euro does not move beyond 113 (it's at 107 right now), the combination of a potential US default along with a rising Euro would seem to encourage people to buy gold.

I think we may have seen that low in commodities today too.

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