PM Daily Market Commentary - 8/17/2017

davefairtex
By davefairtex on Fri, Aug 18, 2017 - 12:47am

Gold rose +4.80 to 1293.60 on very heavy volume, while silver dropped -0.09 to 17.02 on heavy volume. The equity market sold off hard today making a new low, accompanied by some volatile currency moves; the selling in stocks mirrored a strong rally in treasury bonds. PM appeared to be more or less of a bystander.

Gold popped higher early in Asia, and spent the day chopping sideways. Candle print was a spinning top, which the code to felt was a continuation. The forecaster jumped 0.24 to read +0.16, moving gold forecaster back into an uptrend. Volume today was very heavy. There were some large high-volume down-spikes in gold, one at 10:30 (4k contracts), and another at 10:34 (5k contracts). There were no economic reports due out at that time of any significance, so I'm not sure what the spikes were about. Buyers showed up and pulled prices back up by end of day.

COMEX GC open interest rose +12,524 contracts. It appears as though somebody is loading up short.

Rate rise chances (Dec 2017) remain at 47%.

Silver chopped sideways and then sold off at 1030 following gold down, however the buyers for silver were less enthusiastic. Silver's candle print was a short black candle, which the candle code felt had a 65% chance of marking the top. Once again silver was unable to close above the 200 day moving average. The silver forecaster dropped -0.26 to read a slightly-bearish -0.05. Right now it is difficult to know where silver will go next - although if we believe the candle code, silver's next move will probably be down.

Open interest in COMEX SI contracts rose +2,472 contracts.

The gold/silver ratio rose +0.66 to 75.98. That's bearish.

The miners mostly chopped sideways today, with GDX falling -0.22% on moderate volume, while GDXJ rose +0.18% on moderately light volume. GDX printed a long black candle which the code felt was neutral, and GDXJ printed a spinning top which was also neutral. GDX forecaster dropped slightly into bearish territory; the GDXJ forecaster also dropped but remained slightly bullish. There is no clear direction right now for the mining shares.

The GDXJ:GDX ratio rose, while the GDX:$GOLD ratio fell. That's a wash - neutral.

Platinum fell -0.49%, palladium rallied +0.92% and made a new high, while copper dropped -1.08%. The spinning top in palladium might be a top (47%).  Its a mixed bag for the "other metals" today.

Buck rose +0.09 to 93.41, but today's trading range was quite large. The spinning top candle was viewed by the candle code as neutral. The dollar forecaster moved slightly higher and is still positive; according to the forecaster, the buck remains in an uptrend.  Since the Euro dropped -0.40%, gold in Euros was actually up +0.91%.  It broke out to a new high, and closed above its 50 MA for the first time since April.  It looks as though the gold buyers in Europe have returned.

Crude made a new low today to 46.46 just before the US market open, but buyers appeared, and were able to drag prices back up into the green by end of day. Crude closed up +0.15 to 47.03. Candle print was a short white candle, which the code felt had a 47% chance of marking the low. Crude forecaster agreed, jumping +0.36 points, however the crude forecaster remains in bearish territory. Crude seemed to find support at the 200 day moving average. Is this a low for crude? Maybe.  It will need a confirmation tomorrow.

SPX fell off a cliff today, dropping -38.10 to 2430.01. Mainstream media ascribes the proximate cause of the drop to a conflict between Trump and Senate Republicans over Trump's handling of the Charlottesville event.  Let's call it Nazi-gate.  For the markets, the core issue is probably the ability of Trump to get his economic plan through Congress. Tech led lower (XLK:-1.96%) along with industrials (XLI:-1.73%) and financials (XLF:-1.72%). Utilities did best, dropping “only” -0.71%. It was a very bearish day. SPX forecaster dropped sharply, losing -0.69 to read -0.38; well into bearish territory. Candle print for today was a swing high/black marubozu, which the code surprisingly felt was only modestly bearish. I think I'll believe the forecaster on this one. SPX is once again below the 50 day moving average, and just today printed a new low. A pattern of lower highs and lower lows describes a downtrend, and that's where SPX is now.  Regardless of the cause, SPX is now saying risk off.

VIX shot up +3.31 to 15.55.

TLT charged up +0.75%, making a new high. TLT forecaster jumped +0.29 points and is now back in bullish territory. The TLT rally came alongside the plunge in equities. Money is clearly moving from stocks to bonds. TLT is saying risk off.  One additional note: TLT and gold are once again strongly correlated.

JNK plunged -0.51%, dropping below its 200 MA. Candle print was a confirmed NR7, which had a 60% chance of marking a top according to the candle code. JNK is shouting risk off.

CRB rose +0.30%, climbing back above its 50 MA. 3 of 5 groups fell, led by livestock which dropped -2.12%. Both livestock and agriculture have had a difficult last six weeks. I think CRB did relatively well, especially given the selloff in equities.

Was today really about Donald Trump and Nazi-gate? It's hard to know. Certainly the SPX rally following last Thursdays big drop was a bit anemic, and I'm not surprised that it failed, but today's drop was fairly large, and when viewed intraday, was more or less of a straight line down. When bonds rally sharply, and equities drop, and junk bonds plunge, it's a pretty clear sign of risk off.

What's more, today's equity sector map definitely shows a bear market move. If you are a bull, you do not want to see tech stocks leading the market lower.

What is interesting is that gold did not rally strongly during this move into risk off. Perhaps that's because of the large number of new GC contracts being printed up by somebody. Certainly the large climb in open interest today tells us that a large number of new shorts were created.

What to make of an equity market selloff, alongside a rally in the dollar? It appears as though all of the selling was domestic. Interestingly, the Russell 2000 and has been dropping for the past four weeks. Perhaps SPX is just late to the game.

September is not far away. I think equity prices will (probably) continue to move lower. That's should be gold positive. 

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15 Comments

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5727
Ridiculous gold slam!

In the interest of fairness, here's a gold manipulating event that wen the other way.  Upwards!

The ask stack was destroyed in a single minute there right at 3:00 a.m. on the mark.  

I do wonder about the 'round number' involved there.  I don't have any other newz to support a 3:00 blast higher. So just another set of algos doing what they do...ruining price discovery by chasing out everything non-silicon based from the ""market.""

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Let me guess

An insider has acquired the gold it needs so spike it up!  That could be a dangerous game.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
short attack

After the repeated breakouts earlier in gold and silver earlier in the day, it seems as though the shorts have struck back, driving silver back below its 200 MA (17.10) as well as gold back down through round number 1300.

I suspect we will see a big increase in GC and SI open interest tonight.

Both of these levels are logical places for the shorts to come in - it will be really interesting to see just how much new open interest it took to try and stuff the breakout.

 

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 363
Short
davefairtex wrote:

After the repeated breakouts earlier in gold and silver earlier in the day, it seems as though the shorts have struck back, driving silver back below its 200 MA (17.10) as well as gold back down through round number 1300.

I suspect we will see a big increase in GC and SI open interest tonight.

Both of these levels are logical places for the shorts to come in - it will be really interesting to see just how much new open interest it took to try and stuff the breakout.

 

 

Yep, I was just about to post that, Dave.  You knew that was coming, though.  Stocks are off to the races, miners have completely reversed, as have PMs, and we're back to normal once again.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
swing low: crude

Looks like we'll probably get a swing low in crude today.  I'm not sure what caused oil to take off, but its up $1.50 off the lows.

Here's an interesting article from oilprice.com which talks about the negative free cash flow for shale companies when capex is included - something Chris has been pointing out for many years.  I guess if you wait long enough, the mainstream media will eventually pay attention.

http://oilprice.com/Energy/Oil-Prices/Are-Investors-Bailing-On-US-Shale.html

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 319
Oil Spike

Massive fire Petrol China,major refinery

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
BTC: swing high?

Looks like a swing high for bitcoin today.  While the candle code wasn't dead on in picking a near-term high two days ago, it definitely did sense weakness.  Somehow.  I'm happy when my code ends up being smarter than I am.  Assuming we close here, of course.

Perhaps it was the high-volume distribution day on Tuesday.

 

bronsuchecki's picture
bronsuchecki
Status: Bronze Member (Offline)
Joined: Apr 22 2012
Posts: 71
Upside manipulations

Manipulation down AND up is a problem as it stuffs up true price discovery. I tweeted on this article that

Gold spikes/smashed up on heavy volume "when everyone is sleeping" but word "manipulation" doesn't get a look in

and got defensive responses like

Multiple examples, too many to mention, but soars ~12 bucks this am and they use that to poo-poo manipulation claims on the downside? Silly.

As Martin Armstrong said

Many of the metals analysts with an agenda back then hated my guts. How dare I say there was a manipulation when it was at last silver was going up instead of down. ... To this crowd, a manipulation is always to the downside and never up. ... It was just that I saw the manipulations as being UNBIASED. In other words, they did not care what they manipulated as long as there was a guaranteed profit.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
both directions

Yeah I'm definitely of the opinion that this stuff happens in both directions.  They run the stops on the shorts, and then turn around and jam prices back down again.

Or maybe it is two different groups.  Its hard to say.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
btc 2017-08-18

Bitcoin's candle print today was a 2-candle swing high, which is a 54% chance of marking a top.  The forecaster also plunged by -0.81 points, dropping it into a slight downtrend.

Red dot = sell.

Note: forecaster tends to lag a bit, and it is worse than useless when the underlying item doesn't have a strong trend in place.

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 319
Martin Armstrong?

Quick question.Is this the guy that spent years in jail for ripping off investors to the tune of billions in Japan?Ponzi guy?Did he work atReppy?The Republic bank of Ny?Safra family?

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 319
Martin Armstrong?

Quick question.Is this the guy that spent years in jail for ripping off investors to the tune of billions in Japan?Ponzi guy?Did he work atReppy?The Republic bank of Ny?Safra family?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
armstrong

Same basic story, but his version of the story is a lot different than the government's version.

He spent 10 years in jail for contempt of court - the longest contempt sentence on record.

Its an interesting story.  His line is that after he made a bunch of accurate predictions (via watching capital flows), the government wanted his source code - he refused to hand it over, and so the charges they leveled at him later was just leverage they tried to use to force him to cough up the bits.

http://forecaster-movie.com/en/the-movie/

 

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 319
Loved them

I knew Yehuda and Shia well from Reppy.As a women they were the best guys.Be really,really careful...

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: Armstrong

http://www.newyorker.com/magazine/2009/10/12/the-secret-cycle

Too bad Benoit Mandelbrot (https://en.wikipedia.org/wiki/Benoit_Mandelbrot) died.   Maybe he could have warned the CB's of the danger they were creating.  

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