PM Daily Market Commentary - 6/21/2017

davefairtex
By davefairtex on Thu, Jun 22, 2017 - 2:48am

Gold rose +3.40 to 1247.50 on moderate volume, while silver climbed +0.05 to 16.48 on heavy volume. A drop in the buck helped the metals to move up slightly today.  Is the plunge over?  Executive summary: Maybe.

Gold seemed to continue finding support at its 200 MA today; well maybe it was the 200 MA, maybe it was the support levels from gold traded in other currencies, perhaps it was the falling dollar. Regardless, even though gold managed to make a new low to 1241.70 just before the NY market opened, buyers showed up and gold ended the day clearly in the green. The forecaster liked what it saw, but the move wasn't enough to turn it bullish just yet; it ticked up +0.27 to a still-bearish reading of -0.34. Gold didn't print a swing low, but the short white candle was relatively bullish. Although today was positive, we don't have a reversal for gold just yet.

Open interest at COMEX for GC rose +5,266 contracts.

Rate rise chances (Dec 2017) fell to 41%.

Silver avoided making a new low, but like gold, it didn't manage to print a swing low either. The doji candle didn't make a new low, so the new candle code has no comment on where it goes next. The forecaster ticked up just +0.08 and remains bearish at a rating of -0.51. In early trading in Asia, silver has broken sharply higher – but as always, we should probably wait for the close to see if it can hang onto its gains.

I do have hints from some other, even newer code I'm working on that silver may have reversed today, but that code likes to give off false alarms.  I'm still trying to work through it.

Open interest at COMEX for SI rose +2,205 contracts.

The gold/silver ratio fell -0.02 to 75.70. That's just slightly bullish.

Miners had a decent day, with GDX up +1.42% on moderately light volume, while GDXJ climbed +1.60% on light volume. Both miner ETF's printed swing lows today, with GDX looking particularly bullish – a 72% chance of a low here according to the candle code. Forecaster confirms, with GDX moving up +0.48 to show a very slightly bullish rating. GDXJ did well also, but did not quite make it into its forecaster's bullish territory. Let's call today a possible low for the miners.

The GDXJ:GDX ratio rose, as did the GDXJ:GDX ratio. Both are good signs.

Platinum climbed +0.84%, palladium rallied +1.33%, and even copper moved up +1.48%. Platinum is starting to reverse (but remains slightly bearish), copper which has been chopping sideways for the past six months is back to bullish, and palladium is outright bullish once again.

The buck fell -0.20 to 97.22; it wasn't a dramatic move, but it eliminated the gains from yesterday's rally. The buck seems to be having trouble figuring out where it is headed next. Forecast remains bullish but has dropped sharply from yesterday, down -0.23 to +0.28. 

Crude fell yet again today, dropping -0.83 [-1.91%] to 42.53. Once again, modestly bullish news from EIA was not enough to save the market from further drops in price. An oil inventory draw of -2.5 million barrels (and a gasoline draw of -0.6 million barrels) caused a 20 minute rally that was then sold hard, eventually making a new low for crude to 42.05. Oil did manage to bounce a bit by end of day, but it wasn't enough to yield any sort of bullish-looking candle. Forecaster plunged another -0.29 to a very bearish reading of -0.89. RSI-7 for crude is now 16, which is oversold.

SPX fell slightly, off -1.42 to 2435.61. Sickcare led again (yay secret Senate healthcare changes) with XLV:+1.27%, while energy lost the most (XLE:-1.61%), with materials (XLB:-1.05%) and financials (XLF:-0.82%) doing poorly also. The market was more red than green, with most sectors dropping.

XLV is starting to go vertical, with the RSI7=91. The IBB (biotech specialty index) broke out sharply over the past 3 days, and is up around 8%. If you look around in the room and you can't spot the sucker?  Its you.

VIX fell, down -0.11 to 10.75.

TLT moved up +0.20%, making yet another new high. Forecaster for TLT ticked higher, TLT is currently in a strong clear uptrend, and it is signaling risk off.

JNK cratered, dropping -0.60% and making a dramatic new low. How much of this is oil-related, and how much is a strong general risk-off signal? Its hard to say. Maybe 50-50? JNK is now far below its 50 MA, and looks very bearish. When junk starts to sell off, it can go for quite a while, and if this is a larger sign that a more general correction is upon us...we should see days of selling in JNK. It's our coal mine canary, and right now it appears to be feeling faint.

CRB fell -1.32%, plunging to yet another new low. RSI7 for CRB is now at 10, which is very oversold. Only 2 of 5 sectors fell – but when energy has a bad day, it drags the CRB lower because of its heavy weighting in the index. Long ago, the CRB gave all commodities equal weighting; orange juice had the same weighting as crude oil, for instance. That's not the case anymore, and that's why even if everything else rallies, if energy drops significantly, the CRB ends up down on the day.

It appears as though the miners might be the tell for where we go next. The sharp move lower in JNK, the ongoing rally in TLT, and the hints of decline in the equity market are all gold positive. The buck also doesn't seem to be charging higher. The one divergence is the plunging commodity market. Oil is positively correlated with the price of gold, and its continued plunge isn't helpful overall.

All said, I'm cautiously optimistic. While the metals are just starting to show signs of recovery, the miners are hinting that it may be time to buy.

That big move today in JNK really has my attention.  If it keeps dropping, its probably time to buy puts once again.

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9 Comments

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 149
Gold:Oil, New Normal? Interesting Chart

sc?s=%24GOLD%3A%24WTIC&p=M&st=1980-01-01&en=today&i=p24231062141&a=523216940&r=1498136931032&r=1498137074648

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 149
CRB vs SPY...

sc?s=%24CRB%3A%24SPX&p=M&st=1975-01-01&en=today&i=p26600131765&a=530798447&r=1498137679795&r=1498137813192

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
No team today

$16.61 or $16.53. I could not pick a team to join today. Unfortunately this pennant might not be decided until way after the NY market is closed. Will have to get a position tomorrow...

http://i.imgur.com/7FyXmwu.png

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Looks like the longs won!

Looking forward to the pop! Looking for a couple more candles retesting the support line, then we should get some significant moves north....

http://i.imgur.com/RhRm6Nx.png

 

http://i.imgur.com/Tny9hKt.png

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

Nevermind! Support broke, and is now resistance again! What a nutty week! Can't wait to see what tomorrow looks like! 

EDIT:

Ok, all is good in the world... north we go!

http://i.imgur.com/2cOer9u.png

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 323
Lol

Peak, I love ya man, but you're back and forth more than I am!

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5063
here's the HUI - reversals - with probability

And when I say probability, I really mean "expected ROI from this reversal" measured on a sliding scale that depends on the ATR at the time of the prediction, between 0..1, using a tanh function to bound the upside.  I'm using ATR now - if I weren't, the silver ratings would be much higher than the gold ratings, since silver moves more violently.

So as input to the training session: a max-ROI-5-ATR move over 16 time units = tanh(5 * 0.2) = 0.75.

So when you see a rating of 0.75, it means the code expects a 5-ATR move out of the reversal.  But there is also probability mixed in there too, so maybe its really a 50% chance of a 10-ATR move.  I don't really know myself.

Green spikes are for blue (low) reversals.  Gold spikes are for the red (high) reversals.  Note that I really don't have enough data for any of these timeseries to give me huge confidence, but it seems to be working ok.  For whatever reason, its easier to train the computer to spot the blue (low) reversals than the red (high) ones.  And not every series trains up well.

Here's the HUI, which seems pretty solid.

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

Dave that's looking pretty good! Bottoms are easier to identify then tops based on previous resistance, so maybe it is expected that blue would be more accurate? The color strength definitely helps get rid of some of the chaff. 

Cold Rain: I would have liked to have seen cheaper prices, but I'm just happy to see direction now. It looked to me like this week could have gone either way with silver failing to break above $16.60 in the earlier part of this week. It was fun to watch all the action, but now I'm ready to trade gain

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Didn't "pop" last night

It didn't pop really last night the way I expected, so that to me means I had the pattern wrong. The bounce off $16.79 confirmed the flag setup below. I'm going back to "neutral" feelings (haha)...

Watching $16.65 closely...

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