PM Daily Market Commentary - 5/30/2017

By davefairtex on Wed, May 31, 2017 - 5:07am


Gold fell -3.10 to 1258.80 on very heavy volume, while silver rose +0.05 to 17.39 on moderate volume. Gold popped to a new high briefly in Asia, and then spent the remainder of the day selling off. Silver sold off too, but buyers pulled prices back up to slightly above even. A small move down in the buck was not enough to rescue gold from the selling pressure today.

Gold sold off until it hit the top of the former ascending triangle resistance level and found support there. Often, a breakout will end up re-testing the former resistance level before moving higher, so today's price action is not bearish from that standpoint. The candle code agrees: today's candle print was a long black candle, which the code felt was just very mildly bearish. If gold breaks back below its 50 MA, however, that could lead to a lot of selling.

Open interest at COMEX for GC fell -30,528 contracts.

Rate rise chances were not available today - the CME's tool isn't working right now.

Silver made a new high today, rising right up to its 50 MA before running out of gas. Candle print was a spinning top, which the code felt was neutral.  Silver continues to outperform, as it has for the past 3 weeks or so.

Open interest at COMEX for SI rose +365 contracts.

The gold/silver ratio fell -0.47 to 72.78. Silver is continuing to look stronger than gold.

Miners gapped down at the open, tried rallying, and then failed, ending up selling off into the close. GDX fell -1.53% on light volume, and GDXJ dropped -1.38% on light volume also. GDX printed a spinning top, which the code felt was bearish. GDXJ's spinning top was seen as neutral. It was not a great day for the miners. GDX is now below all 3 moving averages, along with GDXJ. The miners just look bad right now. The GDX:$GOLD ratio continues to drop, which is bearish. No buyers for the miners.

Platinum plunged a big -2.27%, palladium rose +1.91%, and copper edged up +0.04%. Palladium is now clearly back in an uptrend, above its 50 MA and looking strong, while platinum printed a nasty-looking swing high on big volume, dropping below all 3 moving averages, and closing at the low. Copper's doji looked somewhat bullish. I'm not sure what to make of platinum's big smash; I'm just glad it didn't happen to gold.

The buck opened higher, and then sold off all day long, ending down -0.16 to to 97.05. Candle was just a long black candle, but the code felt it was bearish. I'd guess the buck will move down to retest its low.

Crude had a fairly large trading range, ending the day down -0.22 to 49.65. Crude is trying to figure out where to go after the OPEC meeting ended up disappointing the oil traders who had expected them to solve the oil oversupply problem. Oil equities continue to sell off.

SPX fell -2.97 to 2412.91, inching lower. Trading range was extremely narrow, with the candle print being a short white/spinning top, which the code felt was bullish. Tech rallied (XLK:+0.43%) while energy led the market lower (XLE:-1.34%). Banks appear to be tipping over again (XLF:-0.68%) which suggests the overall market may be going lower soon.  Rallies generally don't happen without the financials, and they don't look very good.

VIX rose +0.57 to 10.38 – it is now back above single digits once again.

TLT rose +0.49%, making a new high and looking generally pretty strong. While the spinning top candle was just neutral, the breakout to new highs is a positive chart pattern and it also suggests that all is not quite well with equities right now.

JNK rose +0.19%, rising to a new closing high. It yields 6.29%. That's a risk on signal from JNK.

CRB fell -0.37%, with 4 of 5 groups falling, led by agriculture.

The one market-moving news item came yesterday from the UK, where a new poll suggests that support for the Tories which appeared to be solid just weeks ago has now dropped to the point where the Tories might actually lose their 17 seat majority. The pound is now off about 2% from its highs. Is the "YouGov" poll accurate? Nobody really knows.  UK election is next Thursday, June 8th.

We also had a successful intercept by a US GMD interceptor vs a test ICBM fired from the Pacific Ocean towards the US mainland. That's noteworthy because the tests have not been all that successful in the past, with about a 50% success rate since 1999.

Gold appears set to continue moving higher - that's my current guess anyway.  The weak dollar should help, as should the falling gold/silver ratio.  Heaven only knows why the miners are so pathetic right now.

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Penny551's picture
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 154
Candle Code

Hey Dave,

Love the analysis!

 Often, a breakout will end up re-testing the former resistance level before moving higher, so today's price action is not bearish from that standpoint. The candle code agrees

Does candle code account for volume levels.  I would agree w/ the above statement, but would really like to a low-volume pullback/test of new support.

Thx again!


Steve Penny

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687

Yeah, the candle code does know about volume, but it doesn't know about pullbacks to support.  That's just me.

I'm guessing that the lower shadow + high volume = happy candle code.

Candle code knows about lower shadows too.  Also size of candles, how today's volume compares to the average over the recent time period, above or below various moving averages, RSI levels, etc.

It seemed to work out, regardless.  Perhaps that was just good fortune!  That and the weak dollar.


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