PM Daily Market Commentary - 3/29/2017

davefairtex
By davefairtex on Thu, Mar 30, 2017 - 4:26am

 

Gold rose +1.50 to 1256.30 on moderately heavy volume, while silver rose +0.05 to 18.26 on moderate volume. Gold and silver managed to move higher right alongside a rising dollar. That's a pretty good day for the metals.

Today gold's narrow trading range resulted in a short white/NR7 candle, which the candle code felt was bullish. If gold manages to break above the 200 MA, that could lead to a nice short-covering rally. Gold chart continues to look good in Euros; I think its more likely than not we see a gold breakout in the next few days. Remember, that COT report shows a relatively low level of managed money longs right now; the COT is supportive of the gold uptrend.

Open interest at COMEX for GC fell -13,322. The front month rolled today from GCJ7 to the GCM7. Perhaps the big recent changes in OI are related to the contract roll.

Rate rise chances (June 2017) remained at 54%.

Silver tried to correct today but failed, with buyers pushing prices back up. Candle print was a “hanging man” which the candle code felt was neutral. Silver uptrend remains in place. Silver is creeping slowly up to the 18.50 resistance level. Silver is overbought (RSI-7=83), but so far it shows no signs of stopping.

The gold/silver ratio fell -0.09 to 68.80.

Miners inched higher today, with GDX up +0.44% on light volume, while GDXJ climbed +0.86% on light volume also. Given the sell-off yesterday, this relatively feeble bounce from the miners isn't significant. Candle code agrees; today's short white candle is neither bearish nor bullish, which means the current downtrend remains in place.  GDX closed right at its 9 EMA.  If the metals do correct, I'd expect the gates of hell to open up and swallow the miners.  That's the current setup anyway.  Based on how they're trading right now, risk is high for the mining shares.

Platinum fell -0.04%, palladium dropped -0.20%, while copper rose +0.13%. All the candle prints for the metals were generally somewhat bullish.  Copper's NR7 is bullish, supportive of copper's new uptrend, and there was also a medium-percentage reversal for platinum and palladium. It was generally a positive-looking day for the metals, in spite of the small moves.

The buck continued rising off yesterday's swing low, up +0.29 to 99.84. The buck is now back above its 9 EMA, which is bullish for the dollar. Candle print is just a “long white” which the code felt was more bullish than bearish. This is supportive of the new uptrend now in place. The dollar's uptrend is due mainly to the Euro, which topped out yesterday and is now dropping rapidly – down a full point in the past two days.

Crude rose +1.15 to 49.60, moving strongly higher off yesterday's swing low. Crude was helped by a bullish EIA report which showed a crude oil inventory build of +0.9 million barrels, but a -2.8 million barrel gasoline inventory draw. +0.9 crude – 2.8 gas = -1.7 million barrel net draw. Candle print was a relatively rare white marubozu, which is quite bullish: it means crude rallied all day long, and closed at the highs. Crude is now well above its 9 EMA and the 200 MA too.

SPX traded in a narrow range, closing up +2.56 to 2361.13. Candle print was a short white/NR7, which was neither bullish nor bearish. Probably, the new uptrend remains intact. Under the covers, there was a lot more variation. Energy was quite strong (XLE:+1.37%), following through on yesterday's swing low. Financials were weak (XLF:-0.67%), printing a bearish harami that is just somewhat bearish. Hmm. Financials are looking weak. No follow-through off yesterday's swing low is a bad sign, and they tend to lead the market. The other sectors were somewhere in the middle, mostly going nowhere. Without energy, we might well have been negative today.

VIX fell -0.11 to 11.42.

TLT rose +0.60%, recouping a chunk of yesterday's big loss and printing a bullish harami which the code feels is actually very bullish. This bullish print by TLT suggests risk off.

JNK inched up +0.11%, trying to rally through its 50 MA and failing. The shooting star candle was mildly bearish; 28% chance of marking a top. Even though it rallied, I'm going to say JNK is hinting at risk off too because of its candle print.  I expected more out of TLT on a day when oil rallied strongly.

CRB rallied for a second day, up +0.61%. 3 of 5 sectors rallied, with energy in the lead. CRB also has followed through from yesterday's swing low. Energy is a big driver of CRB; its hard for commodities to recover without energy doing the heavy lifting.

Yesterday's equity market bounce is looking a bit more feeble today, thanks to weakness in the financials. Gold and silver continue to inch higher, which is a good performance given the dollar's new uptrend. Miners have yet to reverse – they remain in a downtrend. One might expect them to do well when their underlying commodity is doing well, but in this case, one would be wrong.

Currently, whenever we see risk off, that seems to be good for both gold and silver. As a result, you have to like the weakness we saw today in the banks if you are long gold. In the past few years, when financials did well, gold did poorly, and vice versa.

Miners remain in caution mode.  Gold and silver are both overbought.  Any correction, even a small one, would probably lead to some dramatic selling in the mining shares.

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1 Comment

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 363
Month End Malaise

Why do PMs limp across the finish line every month end?  There must be some levels that need to not get closed above on a monthly closing basis.

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