PM Daily Market Commentary - 3/16/2017
Gold rose +6.50 to 1226.10 on moderate volume, while silver fell -0.03 to 17.33 on moderately heavy volume. Overall, prices took a break after yesterday's strong moves that followed the FOMC announcement. The falling dollar was not a factor in today's price moves in PM.
Gold rallied in Asia and London, peaking out an hour before the US market opened, after which it sold off slowly into the close. Candle print for gold was another “long white candle” which the code found to be more bullish than bearish. Although the buck fell by approximately the same as gold rose, the moves in the buck were uncorrelated with the moves in gold. Gold has moved more convincingly above its 50 MA, but it does seem to have taken a bit of a rest after yesterday's large rally.
Open interest at COMEX for GC rose +4,677 contracts.
Rate rise chances (June 2017) rose to 51%.
Silver rallied along with gold, making a new high to 17.58 just after 8am in the US, but then it proceeded to decline for the remainder of the day. Silver printed a doji candle, which the candle code felt was somewhat bearish. Volume today was a bit heavy; looking at the intraday chart patterns, it does appear that someone could be trying to move price lower. Given the drop in the buck, the weakness in silver doesn't look positive.
The gold/silver ratio rose +0.48 to 70.75. The rising gold/silver ratio is a bearish sign too.
Miners gapped up at the open, and then sold off steadily all day long. GDX fell -0.91% on moderate volume, while GDXJ dropped -1.21% on moderately light volume. This appeared to me to be profit taking after the massive move higher yesterday; volume was relatively light (especially in comparison to yesterday), and the price drops were modest. GDX printed a “long black” candle, which the candle code says is somewhat bearish. While today's move wasn't any sort of disaster, the miners do need to avoid further selling today if they are to keep that upside momentum. Otherwise - this would end up being just a short-covering rally rather than a true trend change.
Platinum rose +0.34%, palladium climbed +0.79%, and copper was up +0.28%. That sounds good enough, except that platinum printed a very bearish shooting star candle (77% chance of a top), palladium's spinning top was also bearish (41% chance of a top), as was copper (39%). Hmm. That's not a good sign.
The buck fell, losing -0.39 to 100.19, making a new low on the day. The spinning top candle probably does not mark a low for the buck. Much of the move in the buck came late in the day in the US; the strong dollar drop did not seem to affect the prices of anything else. If the buck drops through support at (roughly) 99.50, we could see a much steeper decline in the buck – a rough head & shoulders pattern is forming now, and a drop through 99.50 would take the buck below the neckline. This would likely be gold positive.
Crude fell -0.20 to 49.13; crude made a new high in Asia to 49.98 before retreating later in the day. Candle print was a spinning top, which the code felt was more bearish than bullish. While crude is back above its 200 MA, it does not seem to be in any hurry to follow through off its recent swing low. That's not great if you are long crude, but it does align with the weak rating the candle gave the swing low from yesterday.
SPX fell -3.88 to 2381.38. Equities sold off after yesterday's good-sized move; yesterday's leading sectors were some of today's losers. Utilities did worst (XLU:-1.10%), while financials did best (XLF:+0.16%). What to make of that? XLU was really hammered; it printed a bearish harami – a very bearish harami, which the code says is a 65% chance of marking a top for XLU. XLV, another sector that plunged today after rallying yesterday, printed an even more bearish harami; a 74% chance of marking the top for XLV. Even XLF, which did best, printed a bearish-looking shooting star candle. It looks like a lot of uncertainty, which is definitely not reflected in the averages. VIX fell -0.42 to 11.21.
TLT fell -0.51%, losing a chunk off yesterday's big move higher. Candle code says that the move isn't particularly bearish, but my sense is that we may well not see a strong rally off the lows for TLT.
JNK gapped up but then sold off, dropping -0.30% on heavy volume. Candle print was a long black candle, which was somewhat bearish. For now, it looks like just profit taking after the big move yesterday.
CRB rallied slightly, moving up +0.13%, but printing a candle that appears to be a bearish belt hold. (I can't say for sure since I can't get data on CRB, so I just have to eyeball the chart). Commodities don't seem to be in any hurry to recover.
Conclusion: no follow through off the FOMC announcement, not in any sector I saw. Was yesterday's move a one-day wonder for PM? It could be. But so far things continue to look bullish for the metals. We will have to wait and see. Best case would be a sell-off today that gets bought.
Some of those equity sectors look particularly worrisome. If you're long that particular sector, of course.
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