PM Daily Market Commentary - 6/22/2017

davefairtex
By davefairtex on Fri, Jun 23, 2017 - 2:21am

 

Gold rose +3.70 to 1251.20 on moderate volume, while silver climbed +0.09 to 16.57 on very heavy volume. A small dollar rally caused some trouble, but was not enough to derail the move higher in gold and silver.

Gold followed through off yesterday's rally, printing a two-candle swing low pattern - a 54% chance of marking the low, according to the candle code. The rally started in Asia where gold jumped over $7 in the first few hours, but then ran into some fairly heavy selling in the hour before the US market opened. The selling wave seemed to act to cap the move higher. Still, the forecaster was happy with the move; according to the forecaster, gold is now in bullish territory, having moved up +0.44 after the rally.

Open interest at COMEX for GC rose +10,364 contracts. This is a big increase, which is unusual at this stage in the cycle. Its possible the commercials don't feel its time yet for a gold rally, and are actively leaning against the market right now. It is something to watch closely, since if they put enough money in, they can alter the trajectory.

Mines produce 6 tons of gold a day, worldwide. Today someone created 32 tons of paper gold at COMEX. The scale of the increase has my attention. I don't have access to solid OI data for the entire GC timeseries, otherwise I'd toss it into the mix.

Rate rise chances (Dec 2017) remains at 41%.

Silver also rallied sharply in Asia, up as much as 25 cents before running into selling. While silver was not quite able to print a swing low, the confirmation off yesterday's NR7 candle was seen as bullish; a 52% chance of marking a low here. And the forecaster jumped +0.66 points, moving silver easily into bullish territory. Volume in silver was quite heavy. I think some of the same sort of selling was happening in silver that occurred in gold. We will have to see how it plays out.

Open interest at COMEX for SI rose +6,114 contracts – a big change and unusual for this phase of the cycle, just as it was in gold.

The gold/silver ratio fell -0.19 to 75.51. That's bullish.

Miners did ok, with GDX up +1.13% on moderately light volume, while GDXJ climbed +2.06% on light volume. Most of the gains today came from the gap up at the open; GDX printed a doji, and GDXJ a short white candle, neither of which looked bearish. Forecaster moved higher into bullish territory; for GDX, it moved up +0.14 to 0.16, while GDXJ shot up +0.30. GDXJ is now back above both the 9 and 50 MA lines, while GDX is back above its 9. GDX's candle print was a doji, which the candle code felt was neutral.  So far so good.

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

Platinum fell -0.38%, palladium ticked down -0.03%, while copper fell -0.21%. No major changes in the other metals; they are all in varying states of being bullish.

The buck rose +0.09 to 97.30. It remains in a mildly bullish slow move higher, above the 9 EMA, but it has only moved up about 1% over the past 3 weeks. As long as this continues, gold will probably do all right. Forecast is still bullish, but retreating, down -0.16 even with today's rally.

Gold in Euros now shows a small bounce off the previous support level at 1110.

Crude actually managed to rally today, up +0.25 to 42.78. It had looked to rise more dramatically, but selling pressure cut short a move through 43. Does this mark the low for crude? Candle print was a bullish harami, which the code gives a 44% chance of marking the low. That's not bad. Forecaster saw a +0.16 point jump, but remains at a bearish -0.73. So we might have a low, but the trend has not yet changed. Sentiment is very bearish right now; I read articles on oilprice that say things like, “is there still hope for higher oil prices?” http://oilprice.com/Energy/Oil-Prices/Is-There-Still-Hope-For-Higher-Oil-Prices.html

One comment, at the bottom, said it best:

'This is like a falling knife right now, I genuinely haven't seen sentiment this bad ever,” Amrita Sen, the co-founder and chief oil analyst at Energy Aspects, told CNBC on Wednesday. “We have had clients emailing saying they have been trading this for 20 or 30 years and they have never seen something like this.”

So this is exactly the kind of thing you are dying to hear as a contrarian; it marks capitulation lows.  What's more, this is a once-in-30-years opportunity.  But those sorts of indicators are never precise. We could still see a move down into the 30s before all those managed money longs all finally bail out.  And market is still selling off on what appears to be good news.  So while it is exciting from a longer term view, the technicals have yet to turn around.

SPX fell slightly again today, off -1.11 to 2434.50. Sickcare led once more (can it possibly get any better for those guys? RSI-7=93) with XLV:+1.04%, while consumer staples did worst (XLP:-0.66%), with financials close behind (XLF:-0.62%). SPX forecaster, while it isn't a very reliable trading indicator, is bearish and falling. Its interesting; while I can get trend forecasters to work for the commodities, they do not work so well for equities. I don't know why this is.  Maybe Chris could tell you.  :)

VIX fell, down -0.27 to 10.48.

TLT continued rising, up +0.22%. Bonds just keep steadily climbing higher. TLT's RSI-7 is now 81; TLT is now overbought. Forecaster for TLT moved even higher into bullish territory. TLT is signaling risk off.

JNK bounced back somewhat after yesterday's big drop, rising +0.24%. Today's bullish harami pattern has a 75% chance of marking the low here. Could this drop just be a one-off? JNK has a lot of work ahead of it to pull it back into bullish territory, but at least it isn't showing a waterfall sell-off. Call JNK neutral for today.

CRB continued dropping, down -0.55%, making yet another new low. Today it was agriculture and livestock both dropping hard; only 2 of 5 sectors fell, but they were both hammered, down at least -1.5% each. RSI-7 for CRB is now 9; it is heavily oversold, almost to capitulation levels.

The “miner-as-a-tell” guess worked out for PM today; yesterday's miner rally seemed to lead to a general move higher in PM. It wasn't very strong, but it did move the trend forecasters back into a bullish mode. If it weren't for the big buildup of open interest, I'd be all systems go for launch here. Even so, if equity market keeps moving south, gold will probably do relatively well.

We might even get a rally in crude prices, if we're lucky. Really what we need is a general turn higher in commodities overall. If China really is entering a recession, that might be difficult to manage; all we might get is a bounce.

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7 Comments

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Netdania has some ugly data showing

Doesn't look good for silver!

http://i.imgur.com/yh9XMZh.png

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5569
Again...

With the CFTC reporting that JPM has NEVER lost a single dime being short silver, all I can say is, have fun analyzing these strange, mysterious bear raids as if they represented some deeper truth about "investors" or sentiment.

From my perspective, they represent the scorch marks of illegal activities by a reprehensible and long-running criminal enterprise that is protected by a captured, revolving-door "regulatory" apparatus that exists in the same fashion as the corrupt police of Chicago that busted open some barrels of whiskey while taking money for somehow 'not seeing' the rest.

Again, being net short silver for a decade and never once losing money tells you everything you need to know about JPM and their ilk.

Now, on the plus side, this sort of manipulation has to end in tears.  We can only hope that it ends in the proper sort of tears where the manipulators have their heads handed to them.  But we have to mentally be prepared for the idea of a sudden, last-minute "rule change" that protects the evil manipulators from the consequences of their actions.  That's just how the world works...or has worked for the past few decades.

Who knows?  Maybe that all blows up this time.  Maybe not.

In the meantime, I have every faith that broken price signals always end in broken markets.  Silver is an amazing substance in increasingly short supply compared to its uses.   While the big boyz play their games, no more silver is being magically created in the crust and known ore grades are rather quietly being depleted.  

That's the fundamental view, and I'm sticking to it.  :)

 

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Online)
Joined: Jul 26 2016
Posts: 324
Question

I don't understand how we're bearish on silver below $16.20 but bullish above $16.60 but bearish at $16.62 but bullish at $16.50 but bearish at $16.65, etc.  What was the closing price today?  Kitco shows $16.71.  Another chart I looked at showed $16.67.  Another chart showed $16.65.  All of these numbers are higher than yesterday's close, a price at which we were bullish.  I'm missing something, obviously.

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

This is what Netdania is showing on their 3 minute chart.

 

In the last few minutes before 5pm EST, silver dropped 6 cents. This is the kind of move you would expect to see when the market decides on a direction after a flag formation (It certainly looked like we were in a flag as per my last chart here ) breaks in either direction...

Why does Kitco show a different closing price?...It doesn't look like Kitco presents "after-market" prices. When the market closed today, silver was at $16.68

Whether is was manipulation, bad data, or just the natural market... I obviously don't know. All I know is that it looks like a perfect bearish flag setup.  I'm very curious to see what happens on Sunday because maybe this move does not matter. It looks bad technically though.

Cold Rain's picture
Cold Rain
Status: Gold Member (Online)
Joined: Jul 26 2016
Posts: 324
Good Deal
PeakGold wrote:

This is what Netdania is showing on their 3 minute chart.

 

In the last few minutes before 5pm EST, silver dropped 6 cents. This is the kind of move you would expect to see when the market decides on a direction after a flag formation (It certainly looked like we were in a flag as per my last chart here ) breaks in either direction...

Why does Kitco show a different closing price?...It doesn't look like Kitco presents "after-market" prices. When the market closed today, silver was at $16.68

Whether is was manipulation, bad data, or just the natural market... I obviously don't know. All I know is that it looks like a perfect bearish flag setup.  I'm very curious to see what happens on Sunday because maybe this move does not matter. It looks bad technically though.

Thanks, Peak.  I get what you're saying now.  I won't worry too much unless we see a major slice down on Monday.  But good info anyway.  Thanks for clarifying for me.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5063
last-minute silver drop?

My trading app shows a closing price of 16.67.  Last 5-minute bar of the week was red, but it was all of two cents (high:16.69, low:16.67) with volume of exactly 76 contracts.

I don't think I'm going to get exercised about it.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1428
Clearly the manipulators not

Clearly the manipulators not only feed HFT computers but also Chartistas.   Look at the bubble in Bitcoin!  Charts look great until not.

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