PM Daily Market Commentary - 8/10/2017

davefairtex
By davefairtex on Fri, Aug 11, 2017 - 3:31am

Gold rose +8.90 to 1292.10 on heavy volume, while silver climbed +0.18 to 17.11 on very heavy volume. Gold and silver continued steadily higher after yesterday's breakouts, while the buck edged lower.  Equities sold off relatively hard, with SPX off a brisk -1.45%.

Gold made another new high, this time to 1293.80; candle print was just a long white candle, which the code felt was a continuation. Forecaster shot up +0.38 to read +0.87, which is a very bullish reading. So far, the technicals are not showing a top to this move.

COMEX GC open interest shot higher; yesterday it rose by +15,670, today by +13,700. Thats 91 tons of paper gold created over the past two days. Possibly official intervention, or maybe producer hedging.

Rate rise chances (Dec 2017) plunged to 39%.

Silver rallied a bit harder than gold, with the rally seemingly running into trouble right at the 200 MA. Silver's candle print was also a long white candle, which the code felt might mark a top: 37% chance. Silver forecaster shot up +0.40 to read a very bullish +1.03 – but sometimes the forecaster reaches its apex at the highs. We will have to see what tomorrow brings.

Open interest in COMEX SI contracts fell 30 contracts over the last few days. Contrast this with what happened in gold.

The gold/silver ratio fell -0.28 to 75.52. That's bullish.

Miners gapped up at the open and then continued to move higher, with GDX up +2.12% on moderately heavy volume, and GDXJ climbed +1.55% on moderate volume. GDX managed to score a new closing high, and the spinning top candle print was a continuation, as was the spinning top for GDXJ. GDXJ was not able to print a new high, however – juniors still are lagging behind the seniors. Forecaster for GDX jumped a big +0.58 to +0.56, solidly in bullish territory now, while GDXJ climbed +0.35 to read +0.21, which is just mildly bullish. Its neat to see how the forecaster can really tell the difference between the two ETFs.

The GDXJ:GDX ratio fell, but the GDX:$GOLD ratio climbed. It feels neutral to me. I don't like it so much when the juniors lag.

Platinum rose +0.67%, palladium climbed +0.87%, while copper fell -0.85%. This marks 10 straight rally days for platinum, which remains in a strong uptrend. Palladium may break out to new highs any moment, but copper printed a swing high today, which has a 49% chance of marking the top. Copper remains above all 3 moving averages, but the swing high is a danger sign.

The buck tried to rally but failed, falling -0.13 and dropping just below its 9 EMA. The buck is clearly not a safe haven vehicle at all right now. At the same time, the currency moves don't seem to be having much effect on gold and silver – gold/EUR is continuing to move higher, which I think is a bullish sign.

Crude tried rallying today, hitting 50.22 at its peak, but the rally failed, and crude ended up selling off hard right after the high, closing down -1.19 to 48.56. Crude closed at or near the lows of the day. Candle code had no opinion on direction, but the crude forecaster fell -0.54 to read a bearish -0.17. Crude is now below its 9 EMA. This is bearish, since the 9 EMA has acted as support for several weeks now.

SPX plunged -35.81 [-1.45%] to 2438.21. Candle print was a strong line, which the code found to be a probable continuation. Forecaster plunged -0.74 to read a bearish -0.71 – the most bearish reading SPX has had in months. SPX also closed below the 50 MA, which is bearish. Utilities (XLU:+0.32%) actually rose on the day, while tech (XLK:-1.97%) led the market lower, with financials (XLU:-1.78%) a close second. When tech and financials are leading down, its a “run, don't walk” situation as these two tend to be market leaders. The sector map today is a classic bearish picture. Is this a good time to go short? Probably not – the RSI-7 is 21, which is oversold.

VIX shot up +4.16 to 16.04. Anyone want insurance? Apparently, the answer is “yes”. Puts at VIX < 10 were a good deal – in retrospect.

TLT rallied +0.85%, clearly resuming its uptrend. Money flowed from equities into bonds – this is a vote for risk off.

JNK was hit hard, dropping -0.70%.  The move down in JNK is picking up speed. JNK is now below all 3 moving averages, and its more or less screaming risk off. The candle code thinks the closing black marubozu might mark a low – 52% chance.

CRB fell -1.46%, a fairly dramatic move lower. 3 of 5 sectors fell, led by a -3.07% drop in agriculture. CRB printed a swing high today, dropping below its 9 EMA. This also suggests risk off too.

Volatility has returned with a bang. The falling JNK prices are a real danger sign. As JNK goes, so goes equities.

That said, it is (most likely) too late to buy puts, or gold, or silver, or the miners.  JNK is especially oversold, with the RSI-7=9.  Things are fairly extended.  We might get another day or two, but - my guess - that will be it for this phase.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

9 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 269
Typical Friday Data Release Dump

Looks like another typical Friday PM smash after a big data release is in the cards.  Hopefully, all the gains this week won't be given back, but who knows.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5392
Of course!
Cold Rain wrote:

Looks like another typical Friday PM smash after a big data release is in the cards.  Hopefully, all the gains this week won't be given back, but who knows.

Of course...did anybody expect anything different?  There was a sudden interest by "somebody" in buying stock futures in the pre-""market"" coincident with PM selling.  

The only question remaining for the few actual traders and investors is sort of a Dirty Harry question.  Instead of "Do ya feel lucky punk?" the question is "Do you believe the central bankers are larger than the markets?"  If you believe "yes" you'll buy and if you believe "no" you'll sell.  

That's the only question that I can see validating someone's decision to buy or sell here.  Everything else remains subject to the ebbs and flows of the massive amounts of liquidity on the loose.  

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 141
CBs for the save

We got what, a 2% pullback on the threat of a nuclear war? Now China is coming out in a state run paper and saying they won't let the US attack NK, but will allow an attack if NK attacks US or Japan. Tensions increasing and we are treated to the nipple bottom save the ""markets"" are so accustomed to. Yay Friday, be happy going into the weekend little people. 

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 4666
oversold

Ok, all of what you guys say is true, but its also the case that the equity market is fairly oversold, and so some amount of short-covering is to be expected here.

The close today will be important.  Will traders want to take SPX home over the weekend?

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5392
Not a lot of conviction here.
davefairtex wrote:

Ok, all of what you guys say is true, but its also the case that the equity market is fairly oversold, and so some amount of short-covering is to be expected here.

The close today will be important.  Will traders want to take SPX home over the weekend?

Here at 3:22, the S&P and Dow are trending down, currently ~ flat on the day.

So...not a lot of conviction here to hold over the weekend.

When you say "oversold" what's your time frame?  Doesn't look remotely oversold to me on any longer timeframe...and the RSI on the Dow never broker below 50 even on the daily chart.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Online)
Joined: Jan 2 2010
Posts: 1409
XIV?

Yesterday with VIX jumping 45% I expected to see XIV inverse 45% or more.     How does XIV work?

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 4666
oversold

I use rsi7 in the daily timeframe.  It was 21 yesterday, which is oversold,  If rsi7 is < 10, that is very oversold.

It will be interesting to see what the candle code thinks about today's events.

DJIA is quite strong.

SPX is in the middle.

RUT is weak.

Armstrong sees DJIA as "international money", SPX as a mix, and RUT as strictly domestic money.

 

Mohammed Mast's picture
Mohammed Mast
Status: Bronze Member (Offline)
Joined: May 17 2017
Posts: 74
HAHA

BTC $3658

KugsCheese's picture
KugsCheese
Status: Diamond Member (Online)
Joined: Jan 2 2010
Posts: 1409
Re: XIV?

https://sixfigureinvesting.com/2014/05/how-does-xiv-work/

This article states XIV tries to be a -1X inverse of VIX.   If so, why did its Thursday value not track close to -45%?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments