PM Daily Market Commentary - 7/10/2017

davefairtex
By davefairtex on Tue, Jul 11, 2017 - 4:47am

 

Gold rose +1.80 to 1213.70 on heavy volume, while silver rose +0.07 to 15.63 on very heavy volume. The metals sold off hard in Asia, with gold bottoming out at 1204 and silver at 15.13, but then buyers appeared especially after the opening in New York, and prices rebounded back to even – and a little more. This wasn't just a currency move; after the 5-week move down, it appears as though there is now a bid for gold and silver once again.

Gold's plunge to a new low at 1204, and the subsequent rebound resulted in a takuri line candle print; candle code gives it a 47% chance of marking a low. Gold forecaster ticked up 0.15 points, but remains bearish at -0.55. I think we need to wait for confirmation tomorrow to be sure about this one. Gold in Euros also rallied slightly.

Open interest at COMEX for GC rose +6,329 contracts.

Rate rise chances (Dec 2017) rose to 51%.

Silver had several minor waterfall sell-offs in Asia, but once Tokyo closed, the selling stopped and later there were some sharp spikes higher – during mid-day in London and then again once New York opened. The series of spikes look as though they caused some amount of short-covering – there was more volume kicked off for the up-spikes than happened during the waterfall moves down. COT report from last week shows a large overhang of managed money shorts. If the commercials decide to get serious about pushing prices higher, it could get fairly exciting. Candle print was a high wave, but there was no new low made, so the code had no opinion on direction. Forecaster moved up +0.24, but remains deep in bearish territory with a -0.74 rating. Forecaster wants to see some confirmation tomorrow with silver too.

Open interest at COMEX for SI rose +679 contracts.

The gold/silver ratio fell -0.23 to 77.65. That's bullish.

Miners gapped down at the open, but then rallied fairly strongly for most of the day. GDX rose +1.41% on moderate volume, and GDXJ climbed +2.46% on moderate volume also. Candle print for both ETFs was a bullish engulfing; for GDX that meant a 50% chance of a low, while for GDXJ it was a 46% chance of a low. Both engulfing patterns were fairly highly rated. The GDX forecaster was impressed, popping +0.38 points to a just-somewhat-bearish -0.18 rating.

The GDXJ:GDX ratio rose, as did the GDX:$GOLD ratio. That's bullish.

Miners may be signaling a low for the metals here.

Platinum fell -0.74%, palladium rose +0.25%, and copper rose +0.13%. Platinum remains bearish, while palladium might be ready to reverse higher. Copper is in a short term downtrend, but avoided selling off further today. The “other metals” picture is mixed.

The buck didn't move much today, falling -0.02 to 95.75; trading range was narrow, and the doji candle print was neutral. Forecaster turned bearish, dropping -0.16 points to read -0.10. Buck remains below all 3 moving averages. I'm not sure it is ready to sell off just yet however. For that to happen, the Euro would have to take off, and unless Draghi really does taper, I'm not sure that's in the cards.

Crude sold off in Asia, making a new low to 43.65 before buyers appeared pushing price back into the green. Crude ended up +0.27 to 44.65, up a full buck above the lows. Candle print today was a bullish harami, but the code wasn't so impressed, giving it a neutral rating. Forecaster jumped up +0.22 points to read a still-bearish -0.53. While crude avoided selling off further, today does not look like a reversal. Tomorrow we have the API report after market close.

SPX rose +2.25 to 2427.43; today was fairly uneventful. Tech did best (XLK:+0.73%) while consumer staples brought up the rear (XLP:-0.70%). The candle print was a spinning top, which the code felt was neutral. The forecaster has been back and forth across the 0 line several times in the past week; this is a sign of a relatively trendless market, although in general things seem to be meandering lower right now. If you want to go short, its probably best to short the rallies.  Wait for JNK to pop back for a few days, and then go short.

VIX fell -0.08 to 11.11.

TLT managed to rise +0.18%, which is surely an improvement vs the two weeks of steady selling following Draghi's “I might taper” speech. Its probably too soon to say that the selling is over.

JNK rose +0.19%, printing a two-candle swing low which has a 58% chance of marking the low according to the candle code. JNK made a new low last week, and it remains in a pattern of lower highs and lower lows that always describes a downtrend. If that trend remains in place, today's swing low will be just a bounce in the context of a longer term move downhill.

CRB rose +0.11%, mostly just moving sideways. 3 of 5 groups rose, led by agriculture which was up +1.27%.

Miners looked strong today.  Is this a tell that marks the low in for PM for a while?  It could be.  Certainly I think the silver COT report is very bullish, but for that to have an effect the commercials have to decide to start pushing prices back up again to get those managed money shorts to cover.  There were some early signs of that today in silver.  I'm cautiously optimistic.  Certainly $15 silver is a pretty good price.

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5 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4456
ETH: google trends = destiny

Could anyone have predicted today's drop to 180?  I think google trends might have been able to just that.  You got the first clue 10 days ago when the search popularity fell off a cliff.  It took price 10 days to follow.

Here's a graph of the popularity of the search term "ethereum", charted against ETH/USD.

If you play in the *coin space, its probably a good idea to keep one eye on public enthusiasm for your coin.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5203
Another chart pattern to analyze

Dave,

what about this chart pattern I found on Twitter?  Anything to it?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4456
head fake

Yeah that's what we call a headfake.  :)

Or a "shorting opportunity."

Perhaps "the flipper" baited the bots into bidding the market up, and then he shorted the crap out of it at the top.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4456
silver fans

For you silver fans out there, I'm seeing more of those upside spikes today...one at 8:10, another at 8:50, another at 11:15.  They're repeated breakouts above intraday resistance levels, and they (probably) are causing a fair amount of short covering.  In my mind, that's the commercials deciding to weigh in on where things will head next.  They let managed money push prices down early in the day, and now they are striking back.

The managed money short position is about 60k contracts, literally the largest short position ever for that group.

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 332
BTFD!! :)

To be honest, it's a little overdue, but I'll take it!

 

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