PM Daily Market Commentary - 5/10/2017

davefairtex
By davefairtex on Thu, May 11, 2017 - 2:57am

 

Gold fell -2.20 to 1219.10 on moderately heavy volume, while silver rose +0.01 to 16.19 on moderately heavy volume also.  It was a relatively quiet day; trading ranges for PM components and currencies were narrow.  Not much happened.

In Asia, gold made a few attempts to climb, but they all failed, and gold eventually drifted lower into the close. As I said, it was one of those narrow trading-range days where nothing much happened. The candle print for gold was a short black/spinning top which the code found to be neutral. Gold's RSI7 is now 14.7; gold is moving slowly deeper into oversold territory. Gold in Euros continues to chop sideways.

Open interest at COMEX for GC fell -5,405 contracts.  Commercials: ka-ching!

Rate rise chances (June 2017) rose to 88%.

Silver spiked sharply higher at around 7am Eastern, but could not hold onto its gains. Candle print was a doji/NR7, which the code found to be neutral. I suppose its a matter for some small celebration that silver managed to rise. It was probably also good news that today's failed rally wasn't seen as all that bearish by the candle code.  Silver's RSI7 rose slightly to 6.69, which is still horribly oversold.  Any day now, we could reverse.

Open interest at COMEX for SI rose +5,850 contracts.

The gold/silver ratio fell -0.16 to 75.30.  That's a good sign too.

Miners gapped up sharply at the open, rallied modestly, and then moved sideways for the rest of the day. It was a nice gain, but a narrow intraday trading range. GDX rose +1.91% on moderately light volume, while GDXJ climbed +2.42% on moderate volume. Candle print for GDX was a spinning top/NR7, which the code found to be neutral. Print for GDXJ was also a spinning top, but the candle code found this one to be bearish, with a 52% chance of marking a high. I don't know what that's about. GDX has now moved above its 9 EMA, while GDXJ remains below its own 9 EMA. The GDX:$GOLD ratio shot dramatically higher today, which is bullish. Even GDXJ:GDX has started turning higher, which is a good sign.

Platinum rallied +0.76%, palladium fell -0.05%, while copper edged up +0.04%. All of today's prints for the other metals were more or less neutral.

The buck moved up just +0.01 to 99.46 today; trading range was narrow, and the short white candle was neutral.  Buck remains in an uptrend though.

Crude rallied sharply following the EIA report today, closing up +1.16 [+2.50%] to 47.48. The report showed inventory draws across the board, which was more bullish than the API report that came out yesterday after market close. Crude's good-sized move resulted in a swing low, which is bullish. The code felt today's pattern (a confirmed bull spinning top) had a 94% chance of marking the low here. Crude was just able to close above its 9 EMA, which is another bullish sign. There are a lot of new managed money shorts that entered during the recent downturn; they are helping to provide the fuel for the current rally. So far at least, it looks like those pesky commercials were right again. Recipe is: ignore news, watch prices and the COT report.

SPX inched higher, moving up +2.71 to 2399.63. SPX appears poised to break out above 2400 any day now. Todays very modest rally was led by energy (XLE:+1.32%), while cyclicals fell (XLY:-0.34%). Yesterday's bearish engulfing has not yet been invalidated, but if energy prices continue to rise, market probably breaks out to new highs.

VIX rose +0.25 to 10.21.

TLT inched lower, dropping -0.12%. TLT had opened higher, but a weak 10 year bond auction at 1pm dragged prices down. Still, code felt today's long black candle was somewhat bullish.

JNK rallied strongly, up +0.38%. JNK is now back above its 9 EMA, and is looking quite strong. Risk on.

CRB rallied +1.25%, a strong performance where 3 of 5 sectors moved higher, but energy totally dominated the move. CRB printed a swing low today, and was able to close above its 9 EMA for the first time in 4 weeks. We may have a turn in commodity prices, at least for now.

We still have seen no reversals for gold or silver just yet. The pace of the decline in silver has slowed, but no swing low just yet. Today's spike higher in silver would have resulted in a swing low if the gains had held through to the close. They didn't. It's not quite ready yet, but I think we're getting closer. Maybe tomorrow.

Miners are suggesting that the low for the metals is in. I especially liked the good performance today from GDXJ relative to GDX.

A commodities rebound would probably help PM, and especially silver. Crude oil is the most important commodity in the complex, and its recovery is key to moving commodity prices higher.

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8 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
Comey: potential black swan

SPX looks a bit unhappy this morning, so far the rallies are being sold.  Gold is up +8, SPX down -14.

Acting FBI Director McCabe testifying before Congress this AM.  There is talk of a special prosecutor.

What's the black swan?

  • no infrastructure spending
  • no tax reform
  • Trump administration embroiled in scandal
  • flood of expected money may not happen

The market has rallied quite a distance in anticipation of all the new money.  If it doesn't happen, the unwind could be pretty dramatic.

My belief is the Republicans would absolutely love to ditch Trump - he's not one of them - and swap in Old Reliable Mike Pence.   They just can't be seen to do it without a really good cause.

https://www.bloomberg.com/politics/articles/2017-05-11/comey-firing-distracts-trump-white-house-putting-agenda-at-risk

“The West Wing isn’t a huge operation and it can only handle so much,” said Doug Holtz-Eakin, president of the conservative advocacy group American Action Forum. When Holtz-Eakin was chief economist for President George W. Bush’s Council of Economic Advisers, he recalled that work ground to a halt when Bush abruptly fired his Treasury secretary, Paul O’Neill. 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 327
Rally Hat

Here comes the rally.  Can't stand to see that S&P off by double digits!

Good points above, Dave.  We'll see if the impact is anything other than short lived.  The excuses to move higher have overwhelmed any excuses to move lower for a long time now.  Even when there's no real excuse, they just change the orientation of the thing they're attributing the market move to.  For example, Trump = Bad (market declines briefly in anticipation) --> Trump = Good (market run).

So in today's terminology it would be:

Uh oh, Special prosecutor + no tax reform + no stimulus = Bad (market declines briefly in anticipation) -->  Hooray, Special prosecutor + no tax reform + no stimulus = Good (market runs) -- we didn't like Trump or need that stuff anyway.  Pence will be much better!

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
rally hats

Maybe.  The gold move is sticking, so far.  The bullish engulfing a few days back still is in play.

SPX bounced off 2380 support.  Its still below the 9.  If the market stops believing in Trump Money, we could be in for some trouble anyway.

Remember, its just when everyone finally thinks it can't possibly happen...then it happens.

Market always acts to hose the maximum number of people.

You have to be happy with the miners today, yes?  GDX:GLD and GDXJ:GDX looking good.  And...SIL:SLV!  Silver miners are the stealth winners...

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 327
Miners

Oh yeah man, very happy.  I just didn't want to jinx it.  Still plenty of time for the rug tug.  But, even though silver isn't moving much, the fact that the miners are moving is a pretty good sign for the metal...unless it's just a dead cat, which is very possible.

As far as the market goes, I'm still skeptical we get anything resembling a sizable correction, but we'll see.  As a matter of fact, we've already gained about 100 points on the DOW as we continue our steep ascent.  Bet we finish green.  Interesting times indeed.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 327
Almost green

This market is so easy.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
Easy ""markets""
Cold Rain wrote:

This market is so easy.

Step 1:  Stop high volume ""market"" sell-off with instant nipple bottom (requires tick-level resolution to spot the precise moment)

Step 2:  Walk it back up with ruler straight precision on low volume

Step 3:  Dust off old articles that read "Investors were cheered by..."

Steps 4, 5, and 6:  Sell gold at every chance.

All I can say is, I hope that the SNB officials know about Skype so they can explain to their fellow countrymen - from a safe distance - that they lost over 100% of the SWI GDP on their APPL gambling addiction.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 327
Everything Is Awesome

Chris,

That made me lol because I said something similar to a coworker just the other day...kind of outlining similar steps.  At least gold hung in there today, so we got a little reprieve there.  It's going to be really interesting to see what happens when market forces finally do overwhelm the intervention, if they can.

On another note, I asked for Prosper as a birthday present, and I really want to say how much I am enjoying reading it.  It's an easy read, and it's really right on point in terms of the situation we find ourselves in and how to endure and overcome the challenges that lie ahead.  I find that the main concepts align very well with my thinking, so I don't really have to work at it, i.e. overcome personal objections.  I'm also glad that I found this community last year and really look forward to visiting the site and reviewing the resources here daily.  Anyway, I just wanted to share that, in case you check back in here again today.  I am hopeful to be able to sign up for a full membership at some point soon.  I hope you all have a good rest of the day.

MJB's picture
MJB
Status: Silver Member (Offline)
Joined: Jan 5 2016
Posts: 117
Easy markets.

They are literally as easy as clicking a mouse button in the basement of the US Treasury. See it's easy once they have seats on every exchange, control the interest rate and can create money. Analyzing this market is pointless. For those that do, be prepared for continued confusion. 

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