PM Daily Market Commentary - 6/20/2017

davefairtex
By davefairtex on Wed, Jun 21, 2017 - 6:04am

 

Gold fell -1.00 to 1244.10 on moderate volume, while silver fell -0.04 to 16.43 on moderate volume also. Both metals tried to rally and failed, but it all happened in a relatively narrow range. The buck made a new high, which didn't help, and the other metals (except palladium, of course) had bad days also.

Gold continued falling today, albeit not by very much. It made a new low to 1242.40, but the entire day's trading range was $7 – which makes today a short black candle.  The forecaster moved into slightly less bearish territory – but is still pretty unhappy at -0.60. It appears that gold's downtrend remains in place.

Gold did seem to find support at a previous weekly close: EUR @ 1244, and CNY @ 1242.  Those other-currency support levels really do seem to work - at least in providing a momentary stopping point on the way downhill!

Note that I've recalibrated the forecasters so that they provide (roughly) similar ratings for each item given a similar move.  Before, silver's ratings were higher (and lower) than gold's ratings, since it was more volatile.

Open interest at COMEX for GC rose +4,641 contracts.

Rate rise chances (Dec 2017) jumped to 44%.

Silver fell also, making a new low to 16.36, bouncing back a few pennies by the end of day. It was a somewhat larger trading range for silver, but the forecaster wasn't so impressed, ticking up just 2 points resulting in a still-bearish rating of -0.61. No reversal yet for silver. Support remains at 16.20. Silver has now fallen for 9 of the last 10 days, giving it an RSI-7 of 20. Silver is oversold.

It also turns out that there are 3 different immediately-prior weekly closes at the same price for silver: EUR, JPY, and CNY.  Close today for silver?  16.43.  That's another vote of confidence for the other-currency support levels.

Open interest at COMEX for SI rose +1,619 contracts.

The gold/silver ratio rose +0.10 to 75.74. That's just slightly bearish.

Miners ticked lower, with GDX off -0.59% on light volume, while GDXJ edged down -0.15% on very light volume. Both miner ETF's made new lows today. GDX's closing black marubozu candle looks unpleasant; the forecaster didn't like it much, dropping -0.18 giving GDX a bearish rating of -0.48. No relief from the downtrend in sight yet. GDXJ looks much the same.  There is a support area not far away at around GDX 21, which would be another 5% drop for the miners, unfortunately.

The GDXJ:GDX ratio ticked higher, which is bullish, while the GDX:$GOLD ratio moved lower, and that's bearish. Junior miners continue to outperform.

Platinum fell -0.41%, palladium rallied +1.62%, while copper dropped -1.30%. A drop below the 50 for copper would drag it back into a downtrend. For the past few months it has been moving slowly higher; that may be at an end.

The buck popped higher, up +0.15 to 97.41, making a new high and breaking more convincingly out of its congestion area. The forecaster for the buck is bullish at +0.46, although in recent months the buck has been pretty choppy; it could all change tomorrow with some political black swan. The Euro has pretty clearly topped out two weeks back, and appears to be in a slow-but-steady retreat, falling -0.15% today. GBP is in a more brisk retreat, down -0.82% today, and about 4% down from the peak - all due to that surprise election that probably shouldn't have been called. I think they call that an own-goal over there in Europe.  All of this basically causes the buck to rally.

Crude took another big leg down today, falling -0.95 to 43.36, while making a new low to 42.94. The API report after market close revealed what should have been a bullish inventory draw of 2.75 million barrels, but other than a brief spike, the market appeared to ignore the news. Crude's RSI-7 is at 19, which makes crude oversold. The forecaster for crude remains bearish, with a rating of -0.57. Now the focus is on the EIA report tomorrow at 10:30.  Maybe we'll get some good news.  If not - its probably another $1.50 down on the 5 minute bar at 10:30.

SPX sold off today, dropping -16.43 to 2437.03. SPX printed a swing high, which the candle code said is a 57% chance of marking the top.  Energy equities (XLE:-1.28%) led the market lower, with cyclicals and industrials not far behind. Only sickcare rallied (XLV:+0.33%). That's probably all the sickcare cartel owners getting excited about the "repeal & replace" harvesting exercise taking place in the Senate.  Bill is being written in secret.  Any bets the authors are in close contact with their friends at the cartel?  But you don't need to read the bill to know what's going to happen. Insiders have already done this, and have projected that it will be bullish for XLV, and almost certainly, bearish for America.  Just look at the chart for XLV and you'll see what I mean.

VIX rose +0.49 to 10.86.

TLT rocketed higher, up +0.90% breaking out to a new multi-month high. 20 year bond yields are down almost 50 basis points since their high set back in March; they are now at 2.49%. That translated into a 10% gain for the holders of TLT over 3 months. Anyone remember all the commentary about the 30 year bond bull market coming to an end?

JNK fell -0.30%; its not a new low, but it does bring JNK down to the 50 MA. Overall, JNK's chart pattern is somewhat bearish, a short term pattern of lower highs, with JNK right at support. JNK is saying risk off.

CRB fell -0.95%, making still another new low. RSI-7 of CRB is now 14, which is very oversold. Commodities appear to be heading for a retest of their lows set back in early 2016. All groups fell today, led by energy. Its hard for gold to rally amidst a general commodity decline.

From what the technical tools say, the gold and silver downtrends remain in place, with no real hints of a rebound.

It is possible that equities could start selling off more seriously, and that would probably see the metals put in a low.  TLT is awfully strong right now.  I give it an outside chance.  Gold and silver are oversold, and so a bounce certainly could happen here - and we are at those foreign currency support levels.  We'll have to see what tomorrow brings.

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5 Comments

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

Silver broke above $16.60. Good news for the longs! Perhaps a blue hammer candle by close Friday on the weekly?

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

So I'm working on an adjunct to the trend-following forecaster, which I call the reversal detector.  All it does is trigger when it thinks it sees a near-term high or low.  (I split detection into a "high detector" and a "low detector.")

So far, the reversal detector is coming up with some interesting results.  The "top" reversal detector has a lot of false alarms, while the "bottom" detector seems to have a better hit rate.

The bottom detector triggered today in silver.  Real signal or false alarm?

Chart below: red = sell, blue = buy.  Work in progress.

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Dave I love that. I guess I

Dave I love that. I guess I want to see the probability strength of each reversal signal. Is it based off probability?

 

 

Mohammed Mast's picture
Mohammed Mast
Status: Silver Member (Offline)
Joined: May 17 2017
Posts: 198
When?

So when does gold go up significantly? Is now a good time to buy short term? Long term?

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

Well, theoretically the intensity of the color of the circle embodies the probability given to the reversal, but right now things seem to end up at either 100% or 0%.  I'm working on a finer granularity.  :)

 

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