PM Daily Market Commentary - 6/5/2017

davefairtex
By davefairtex on Tue, Jun 6, 2017 - 1:56am

Gold rose +0.40 to 1281.90 on moderately light volume, while silver was unchanged at 17.55 on moderately light volume also. Gold tried rallying but was unable to hold on into the close. While the buck rose slightly, it did not seem to be a major factor today.

Gold managed to make a new high to 1286 today, but it was just a brief spike higher that was quickly met with selling. In truth the trading range was narrow, the volume light; gold printed a northern doji/NR7, which the code felt is just mildly bearish. Usually the doji reversal bars come with high volume, so this one probably isn't too much to worry about. On the daily chart, we see that after the two recent breakouts, gold has needed a couple of days to consolidate before moving higher. Perhaps that's what we're seeing now.

Open interest at COMEX for GC rose +5,077 contracts.

Rate rise chances (June 2017) is at 95%.

Silver made a new high today to 17.65, briefly touching the 200 MA, but it too was unable to hold that into the close. Silver also printed a doji – a bearish doji star – which the code felt was substantially more bearish, with a 55% chance of marking the top here. I'm not sure why the code was more alarmed at silver's doji – it could be as simple as the fact silver remains below its 200 MA, which suggests that silver remains in its longer term downtrend, while gold is well above all 3 moving averages, which is a lot more bullish.

Open interest at COMEX for SI fell -708 contracts.

The gold/silver ratio rose +0.02 to 73.06.

Miners were mixed today, with GDX down -0.09% on very light volume, while GDXJ rose by +0.63% on very light volume also. Both ETFs opened up, sold off for the first half of the day, and came back in the afternoon, with GDXJ's comeback looking slightly better than GDX. Candle print for GDX was a hammer which the code felt was quite bullish, while GDXJ printed a doji which the code felt was only somewhat bullish. Still, both miner candle prints are hinting that buyers are starting to return to the shares, at least a little bit.

Platinum fell -0.09%, palladium rose +0.20%, and copper dropped -0.66%. Code felt both platinum and palladium's candles (northern doji, spinning top) looked somewhat bearish, while copper looked slightly bullish.

The buck tried to rally today but largely failed, but still managed to close up +0.08%. Candle print was a spinning top which the code felt was somewhat bearish. Dollar remains below all 3 moving averages and quite near its recent yearly low.

Crude fell again today, dropping -0.33 to 47.43. It tried rallying in Asia, sold off in London, and then came back a bit during the US session. Candle print for the day was a spinning top, which the code felt was slightly bearish. Crude narrowly avoided making a new low. Tomorrow we have the weekly API report. Will it say something bullish enough to pull crude out of its downtrend? There's also the diplomatic row between Qatar and the rest of the gulf states; if it ends up going too far, that will be bullish rather than bearish. Sometimes I wonder what would happen if the oil ran out, and we left them all to their own devices.

SPX fell slightly today, dropping -2.97 to 2436.10. Curiously, energy did best (XLE:+0.18%), while industrials led the market lower (XLI:-0.35%). Energy's rally was curious because crude continued moving lower; it suggests big money might be buying energy equities at what it thinks are the (relative) lows. This might signal that the move down in crude is nearing an end. Candle print for SPX was a bearish harami, which the code felt was neutral.

VIX rose +0.32 to 10.07.

TLT fell hard, dropping -0.62%, printing a swing high/NR7 which the code felt is a 47% chance of marking the top here. I'm not sure what caused the sell-off; perhaps just traders taking profits after the big move up on Friday. Today's drop took TLT just below its 200 MA.

JNK fell -0.05%, printing a spinning top/NR7 which was faintly bearish. JNK is down off its highs, but today's move didn't give us any real clues where it goes next.

CRB fell yet again, down -0.38%. 3 of 5 groups dropped, with energy and industrial metals leading the groups lower. CRB is quite close to the previous low set in early May.

I'm going to cheat a little today; I'm watching gold break through the 1280 resistance area right now while trading in Asia, but in exchange for cheating I'll show you what that might signify longer term - courtesy of a post made earlier this weekend by a new contributor. The chart below shows a long term downtrend line that dates back to the secondary high in 2012. A close above this line is a bullish sign, assuming we can hold on to the gains made intraday. Likewise, a close above the recent previous high of 1297 (basically a close above 1300) would be even more bullish.  It does line up with all the fuss & bother happening politically right now in the UK, in the US, potentially in Italy, and even in the Gulf.

One more thing.  12 trading days ago, gold's 50 MA crossed over its 200 MA, a so-called "golden cross" which is generally regarded as a long term bullish trading signal.

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6 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 378
Breakout

Or false breakout?  Not too bad of a day in the PM space.  Even the *gasp* miners had a good day.  surprise

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Parallel lines

Dave,

I believe the starting place for this resistance line is circled in yellow. I think you will find it makes more sense? For example there was a close recently above resistance in your chart without a breakout. I don't believe that would have happened.

http://i.imgur.com/EZQcBpe.png

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Hmm, looks like $1,296 would

Hmm, looks like $1,296 would be a good place to top. $1,335 would be a stretch now

https://i.imgur.com/nyB7BuF.png

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
no over-thinking

I'd take the days as they come, rather than over-thinking the whole affair and imagining that the football is about to snatched away yet again.  :)

When the miners behave badly, that's bad.  When they behave well, that's good.

Otherwise you run the risk of being paralyzed and left behind when the buyers actually return.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
confirmation

Peak-

I think TLT is confirming the breakout in gold, as did the miners.  The colossal move in GDXJ today is telling you that the buyers have returned.  When juniors lead seniors, and miners lead metal, that's bullish.  Silver is a fly in the ointment, but in a safe haven move (which is what it looks like we have now) that seems to be how it plays out.

Comey's testimony, the UK election, and rumors of an early election in Italy has everyone on edge.

I kind of get the sense now that you're drawing lines at new points hoping that they'll somehow stop price from moving higher.  :)  If I might suggest: wait for prices to actually confirm your thesis?  I use the candle prints to do this.  So far, gold's prints have been either neutral, or bullish.

If Thursday passes, and the Tories do well in the UK, and Comey says nothing exciting, the trade could all unravel quite rapidly.  If not...prices are telling us right now that we probably shoot higher.

Last point: Commercials added about 84 tons of paper gold today; 27k contracts.  Gold still did very well.  During BRExit, they added 50k in one day.  From this, I conclude that the bid under gold right now is quite strong.

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
It's clearly not going to

It's clearly not going to $1,335 by friday and back down, so yes, I may have been a little to generous on the candle wick a couple days ago, and I'm not looking for a closer/logical top.

Gold looks to be struggling by the way ;)

https://i.imgur.com/mNMVgrj.png

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