PM Daily Market Commentary - 6/26/2017

davefairtex
By davefairtex on Tue, Jun 27, 2017 - 2:23am

 

Gold fell -12.50 [-0.99%] to 1245.30 on moderately heavy volume, while silver fell -0.06 [-0.63%] on very heavy volume. There was a small dollar rally today, but the entire impulse behind the move in PM was a massive spike assault that happened at 04:00 eastern. “Someone” decided to sell a huge number of GC contracts, gold immediately spiked down $20 to 1236.50, and that set the tone for the remainder of the day.

Gold did manage to bounce back after the big assault, with most of the rebound happening almost immediately. Two subsequent attempts to force price lower were met with buying; there seemed to be good support for gold intraday at around 1240. We are coming up on first notice day for gold and silver (June 30th) and perhaps that's one reason for the assault.

The mainstream news outlets explained away the spike as a “mistake”, a “fat-fingered trade”, and the like. Red faces all around, money lost, what a shame. The fact that the “mistake” neatly ran the stops hovering just under the previous low, just three days before First Notice Day, right after gold had reversed...suggests another story to me. The banksters don't want gold to rise just yet, for whatever reason. We also saw a surprising rise in open interest over the past few rally days too. It just feels as though someone is leaning against the rally right now, dropping in money in an attempt to restrain the move higher.

Technically, gold printed an opening black marubozu, a bearish engulfing, as well as a 2-candle swing high, which the candle code found (to my surprise) more bullish than bearish. The move pulled the 3 day forecaster substantially lower, but it remains (just barely) in bullish territory.

Open interest at COMEX for GC rose +2,051 contracts.

Rate rise chances (Dec 2017) dropped to 40%.

Silver was hit just as hard as gold, plunging to a new low of 16.28 before bouncing back. However unlike gold, silver did manage to recover most of its losses on the day. The candle print was both a dark cloud cover (neutral) as well as a hammer (bullish), which yields a bullish call from the candle code. Forecaster ticked sharply lower, but remains just barely bullish.

Open interest at COMEX for SI rose +96 contracts.

The gold/silver ratio fell -0.28 to 74.91. That's bullish. Silver distinctly outperformed gold today.

Miners gapped down at the open after the smash, then tried to rally but mostly failed. GDX was off -0.79% on moderately light volume, while GDXJ fell -1.32% on light volume. Today's candle prints were a pair of spinning tops, which the code found neutral. Forecaster dipped lower on the drop in the miners, but remains in bullish territory.

The GDXJ:GDX ratio fell, which is bearish, but the GDX:$GOLD ratio rose, which is bullish. Call it a wash.

Platinum plunged -1.44%, palladium rallied +1.45%, while copper edged up just +0.06%. Platinum made a new low today and has moved back into a downtrend. Nobody likes platinum right now, I'm not quite sure why.

The buck rose +0.17 to 97.12, popping back up over its 9 EMA. While the dollar rally seemed to make it more difficult for PM to bounce back after the big drop, it was definitely not the proximate cause of the plunge today. Forecaster remains bearish about the dollar's near term prospects, and even with today's rally it became more bearish on where the dollar is headed.

Crude was up for a third straight day, rising +0.32 to 43.49. It remains below its 9 EMA, and has not yet printed a swing low, but it is slowly recovering from last week's plunge. Tomorrow after market close we have the API report, and then Wednesday we get the EIA report, which is the number the market is fixated on these days. I believe crude is set up for a huge counter-trend spike higher, if only because managed money has jumped in heavily short over the last few weeks, and it seems to be standard practice for them to come out the loser in these sorts of things. Of course, if the numbers are bad, then we may get another leg down – perhaps even touching the high 30s. Forecaster is quite close to turning bullish on crude.

SPX rose slightly today, up +0.77 to 2439.07. SPX tried rallying (and was up 12 points at one point) but the rally failed; the spinning top was seen by the candle code as bearish. Utilities did best (XLU:+0.68%) while tech brought up the rear (XLK:-0.53%). I can't tell from this map where things are headed, but utilities leading is usually not the best sign.

VIX fell -0.12 to 9.90. We are back in the single digits with the VIX. Given the failed rally I'd have expected more from VIX but...nobody seems to want puts anymore.

TLT is showing no such indecision, jumping another +0.38%, making yet another new high. The 20 year treasury yield is down about 50 basis points over 3 months – or more than a 10% move. Plus interest! Currently you get 2.46% if you hand your money over to uncle sam for 20 years, down from 2.96% just three months ago. TLT continues to look bullish, and continues to signal risk off. Bonds usually know the score.

JNK rallied for a third straight day, up +0.13% and moving back above its 50 MA. Traders still see bargains in junk debt. Hinting at risk on now, I think. Either TLT or JNK will be right.

CRB has managed to move higher 2 days in a row now, up +0.49% and printing a swing low. Swing lows aren't all that significant for CRB, unfortunately. Only 2 of 5 groups moved higher, with livestock doing best.

So after all that, I suspect what you really want to know is, did today's gold smash change the trend?

On balance, I don't think it did, at least according to the tea leaves I'm reading. Buck remains headed lower (according to the forecaster), gold and silver both remain (barely) bullish, silver outperformed gold, and the miners did all right, with GDX outperforming gold itself.

And – cheating a little – I peeked at the prices in Asia right now, and both gold and silver are up, the Euro ticked higher, and so has JPY.

The possible-low in CRB is probably also helpful, as is the modest rally in crude.

So, although it could all change tomorrow, I say - cautiously - Buy The Dip!

The fact that I've actually already bought the dip probably influences my opinion somewhat!  But if my data had said something different, I'd be out of that trade by now.  Nice thing about futures: they trade 23.5/5.  Not quite as handy as bitcoin, but pretty good.

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8 Comments

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

Nice rise in price this morning as it broke through the trending resistance area , moving silver south this whole month. I guess it was a good day to buy the dip yesterday! I was expecting it to go the other way!

http://i.imgur.com/hgC6Uzi.png

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
Very telling open interest

...to me this is a vital clue from Dave's (always) excellent summary:

Open interest at COMEX for SI rose +96 contracts.

During a big assault, if the shorts were hoping to close out at a profit, then OI should have fallen.  It didn't.  It went up.

That means that on balance more new contracts had to be initiated than were closed to accomplish the price assault.  So, mission not accomplished.  One of these days there's going to be a stand for delivery fun-fest and the interesting part will be to see how fast and loudly the manipulators cry to the regulators for force majure relief or even a wholesale rule change/implementation.

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

PMs are leaking lower as the day wears on.  Miners haven't bit the dust yet, but that probably happens as metals continue to fade.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
It's called...
Cold Rain wrote:

PMs are leaking lower as the day wears on.  Miners haven't bit the dust yet, but that probably happens as metals continue to fade.

That "leaking" you are referring to is aka 'the US ""markets"" are open.'

Happens more often than not.

Meanwhile, mystery buy-bursts that slam out of nowhere keep showing up in the US equity ""markets.""

Y'all know my views on all of this....

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

I bailed on my silver earlier after noting that the flying Euro hadn't done much to pull prices higher.

And just looking at GLD:$XEU, I'm not so sanguine about gold either.  It just broke support pretty dramatically.

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

PMs are leaking lower as the day wears on.  Miners haven't bit the dust yet, but that probably happens as metals continue to fade.

That "leaking" you are referring to is aka 'the US ""markets"" are open.'

Happens more often than not.

Meanwhile, mystery buy-bursts that slam out of nowhere keep showing up in the US equity ""markets.""

Y'all know my views on all of this....

Yup, I agree with you.  It's going to be something to see when the tide turns in both the PM and equity markets.  I just hope we don't have to start from much lower levels from here (in PMs).  Equities are going to burn quickly when they allow it to finally happen.

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

Turned bullish on gold yesterday, so that probably means lower prices are ahead.  And FANGs aren't doing all that great today.  And the dollar is plunging (makes the move in gold look that much worse).  And bonds are losing ground.  And WTI now has a $44 handle.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
GDX possibly a tell

GDX is not so happy today - a lot of selling.  It might be a tell.

Here's a clue as to - possibly - why:

https://www.reuters.com/article/uk-global-forex-idUSKBN19I02Y

The U.S. dollar hit a more than nine-month low against the euro on Tuesday after the head of the European Central Bank opened the door to steps that might begin to reduce the central bank's emergency stimulus to the economy.

Speaking to a conference in Portugal, ECB President Mario Draghi said the ECB could adjust its policy tools of sub-zero interest rates and massive bond purchases as economic prospects improve in Europe.

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