PM Daily Market Commentary - 4/17/2017

davefairtex
By davefairtex on Tue, Apr 18, 2017 - 4:57am

Gold fell -3.80 to 1286.30 on moderate volume, while silver dropped -0.14 to 18.41 on moderately heavy volume. Both metals made new highs during trading in Asia, and then sold off for most of the rest of the day. The drop in the dollar didn't seem to help the metals much at all.

After making a new high to 1297.40 early in Asia, gold moved lower for the rest of the day. Candle print was a bearish engulfing, which the code felt was only slightly bearish. The drop in the dollar should have helped, but didn't. My sense is that the gloom felt by traders going into the 3-day weekend had receded somewhat by Monday.  Today's drop reduced gold's overbought condition somewhat: RSI-7=77, down from 85 on Friday.

Open interest at COMEX for GC rose +3,629 contracts.

Rate rise chances (June 2017) plunged to 49%. Wow. Just a week ago it was 71%. If its not one thing, its another – at this rate, we won't see another rate increase until September. This is positive for gold, longer term.

Silver also made a new high, and then like gold, also sold off for most of the rest of the day. Like gold, silver printed a bearish engulfing, which was only slightly bearish.  A drop below the 9 EMA would be more worrisome.

The gold/silver ratio rose +0.30 to 69.87.

The bifurcation between junior and senior miners remains in place.  GDX mostly moved sideways, while the junior miners sold off for most of the day, bouncing back sharply in the last 30 minutes.   By the close, GDX was off just -0.29% on moderately light volume, while GDXJ fell -1.53% on moderately heavy volume. Candle print for GDX was a spinning top, which the code felt was slightly bearish. Print for GDXJ was a spinning top also, but the code felt that was actually somewhat bullish.  Candle code likes it when something sells off, and then bounces back.

Platinum rose +1.12%, palladium fell -0.92%, while copper rallied +1.52%. Palladium printed a two-candle swing high today that looks quite bearish, while platinum broke sharply above its 50 MA and made a new high. Copper is now back above its 9 EMA. Its a mixed bag today in the metals.

The buck fell -0.27 to 100.16. It was down more heavily earlier on, but managed to recover perhaps half its losses by end of day. Candle print was a spinning top, which the code felt was somewhat bullish.

Crude fell -0.04 to 53.14, printing a spinning top on the day. Candle code felt the print was neutral. Oil appears to have run into resistance at 54, and is having trouble moving higher, at least for now. Tomorrow we get the API report after market close.  Perhaps that will break something loose.

SPX rallied strongly, up +20.06 to 2349.01. Candle print was a white marubozu, which says that SPX rallied all day long, closing at the highs. SPX also printed a swing low, which the code felt was bullish – although the rating it assigned to this swing low was not all that impressive. Financials led (XLF:+1.75%) while energy trailed (XLE:+0.22%); all sectors moved higher today. The relative gloom has receded for now, but SPX remains in a longer-term downtrend – the lower highs & lower lows pattern remains in place. In a downtrend, the idea is to sell the rallies rather than buy the dips. Concept: wait for the momentum to run out of the rally, and then go short.

VIX plunged -1.30 to 14.66.

TLT fell -0.31%, a mild drop that ties in with the rally in SPX. The long black candle was neutral. TLT remains near its recent highs and in an uptrend; today's selling was relatively mild compared with the strong rally in equities.

JNK rose +0.33%, closing above its 50 MA. JNK remains within a narrow trading range, and it looks neutral right now.

CRB fell -0.20%, a mild move lower; only 2 of 5 sectors fell. CRB remains in a short term uptrend.

News over the weekend: Erdogan got his referendum passed by a slim margin: 51.4%-48.6%.  Most likely, there was some amount of election-rigging that pushed him over the top.

Also, a story from India about gold import volumes. Executive summary: Modi's cash ban has driven people into gold in a big way.  Can't get cash?  Indians buy gold instead.   http://oilprice.com/Metals/Gold/Gold-Prices-Rise-As-Demand-In-This-No1-Gold-Market-Soars.html

My sense is that the bounce in SPX today was a relief rally in a downtrend.  "World didn't end, so I'll cover my short positions."  At the same time, TLT and gold remained relatively strong, and coupled with that drop in rate-rise expectations, suggests to me that we're still in a longer term risk off mode.

And that should keep a bid under gold.

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