PM Daily Market Commentary - 7/24/2017

By davefairtex on Tue, Jul 25, 2017 - 6:13am

Gold rose +0.70 to 1261.80 on very heavy volume, while silver fell -0.04 to 16.46 on moderate volume. Both gold and silver traded sideways, as did the buck. It was a day of indecision.

Gold traded in a fairly narrow range, making a new high to 1265.10, but it was unable to hold the gains into the close. Candle print was a northern doji, which the code felt was bearish with a 66% chance of marking a high. Gold forecaster fell -0.10 to a still-bullish +0.76. Often doji candles end up being continuations, but not today; overbought + high volume + doji = possible reversal.

Open interest at COMEX for GC fell -17,379 contracts.

Rate rise chances (Dec 2017) rose to 47%.

Silver looked just like gold, trading sideways in a narrow range. Silver printed a short spinning top, which the code felt had a 48% chance of marking the top. Silver's forecaster plunged -0.31 to +0.14; it is still bullish, but not by much. We might have a top in silver too.

Open interest at COMEX for SI rose +127 contracts.

The gold/silver ratio rose +0.20 to 76.64. That's bearish.

Miners sold off almost all day long; GDX fell -1.61% on moderately heavy volume, while GDXJ dropped -1.99% on moderate volume. GDX printed a swing high, which had a 38% chance of marking the top. That's a milder assessment from the candle code than I had expected. GDXJ also printed a swing high, which had a 48% chance of marking the high. GDX's forecaster fell -0.34 to read 0.0, while the GDXJ forecaster plunged -0.46 to read -0.34. Both miner ETFs are back below both the 9 EMA and the 50 MA, with GDXJ looking much weaker.

Miners have been weak for the past few weeks, and it appears that they are now reversing direction.

The GDXJ:GDX ratio fell, as did GDX:$GOLD ratio; that's bearish.

Platinum fell -0.48%, palladium rose +0.77%, while copper rose +0.79%. Copper remains in a strong uptrend.

The buck rallied slightly today, closing up +0.11 to 93.73. Candle print was a bullish harami, which has a 33% chance of marking a low. Forecaster rose +0.22 to a still-bearish -0.68. If the dollar manages to reverse, its probably trouble for PM.

Crude staged a reasonably strong rally, up +0.88 to 46.48. Candle print was a bullish harami, but the code felt it was more of a continuation than a reversal – not bullish. Forecaster moved up +0.07 to read a still-bearish -0.18. Energy equities did poorly, with XLE off -0.18% in spite of the rally in crude.

SPX fell -2.63 to 2469.91. Best performer were financials (XLF:+0.44%), while utilities (XLU:-0.94%) did worst. 7 of 9 sectors fell. SPX forecaster fell too, dropping -0.28 to read +0.13. While SPX has chopped sideways now for 3 days, it still remains above all 3 moving averages, and in a strong uptrend.

VIX rose +0.07 to 9.43. Sub-10 VIX means puts are ridiculously cheap.

TLT fell -0.39%, printing a swing high which has a 49% chance of marking the top. Bonds may be running into trouble after rallying for the past two weeks.

JNK rose +0.11%; it is still hovering quite near its recent high. Risk on.

CRB fell -0.24%, with 3 of 5 sectors dropping, led by livestock which has had a difficult past 6 weeks. CRB remains in a short term uptrend, but closed just below the 50 MA today. Longer term, CRB is struggling to move higher after a 6-month decline.

The miner swing highs are warning us that the recent PM uptrend might be nearing an end, along with the candle prints of the metals that seem to agree that a near-term reversal could be in the cards.  Silver looks especially weak.

Aligning with this, we have an FOMC meeting meeting starting tomorrow, with an announcement on Wednesday at 2pm.

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

You can see the lower highs and lower lows in the GDX chart you posted.  No reason to own miners right now at all.  Excellent week for gold and silver to fall as well.  It's getting about time for another $20-$40 drop in gold.

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
oil low in?

Its possible the low for oil may be in.  Saudi Arabia appears to have decided to resume its role as swing producer.

Oil equities are up today, as is oil itself: CL +1.39 to 47.74 [+3.0%], XLE: +1.69%.

At the meeting of OPEC and non-OPEC producers in St. Petersburg on Monday, Saudi Arabia announced its intention to take further action to bolster flagging oil prices. Saudi oil minister Khaled al-Falih declared Saudi oil exports would be limited to 6.6 million bpd, a decline of almost a million bpd from the country’s export level last year.

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