PM Daily Market Commentary - 8/31/2017

davefairtex
By davefairtex on Fri, Sep 1, 2017 - 2:44am

Gold rose +12.80 [+0.97%] to 1326.60 on extremely heavy volume, while silver rose +0.15 to 17.64 on moderate volume. The buck tried to rally but failed; gold responded by staging a fairly strong rally. Gold in Euros was up almost 1%, so this wasn't just about a currency move. The bid underneath the metals right now appears to be strong – when buyers show up this strongly when gold's RSI is above 70, that's a good sign.

Gold was hit early in Asia with a spike assault that took price down to 1302.30; 10k contracts changed hands in 5 minutes. However gold steadily recovered back to even though the Euro continued to fall – gold showing some impressive strength in the face of a 60c Euro rally. Once the Euro reversed at 8:30 Eastern, gold took off, climbing steadily throughout the US session and ending the day near the high. The long white candle was seen as a bullish continuation. Forecaster climbed +0.07 to read +0.71, which is quite bullish. Spike assaults happen often enough, but sometimes they just serve to demonstrate just how strong the buyers currently are, rather than changing the trend. So when you see a spike assault, think to yourself: its an opportunity for the buyers to show up. That's what happened today. And given this happened at RSI7=70 (a somewhat overbought condition), its even more impressive.

Comex GC open interest rose +16,806 contracts. Looks like a lot of shorting today.

Rate rise chances (Dec 2017) fell to 36%.

Silver seemed to follow gold's track today, but the spike down wasn't as dramatic, and neither was the rally off the Euro reversal. Silver's candle print was a spinning top, which the code felt was a bullish continuation. Forecaster agreed, moving up +0.06 to +0.64. Volume on silver today was a bit light. That's why I say silver today was a follower rather than a leader.

Open interest in COMEX SI contracts rose by +1,013 contracts.

The gold/silver ratio rose +0.09 to 75.18. That's slightly bearish.

The mining shares did quite well, with GDX rising +2.32% on moderately heavy volume, while GDXJ climbed +3.32% on moderately heavy volume also. Both miners made new closing highs, and both ended up closing at or near their day highs. GDX print was an opening white marubozu, while GDXJ printed a white marubozu – both of which could mark a top according to the candle code (about 30%) but probably will not. Both ETFs are overbought, with RSI7 around 78. That's probably why the candle code is giving an outside chance that a high might be near. Forecaster disagrees, with GDX +0.19 to +0.77, while GDXJ's forecaster rose +0.25 to +0.83. Volume on today's white candle was much stronger than on the red candles over the past two days' light selling followed by heavy buying is bullish.

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

Platinum rose +0.80%, palladium climbed +0.52%, and copper moved up +0.52%. In spite of copper's rally, it printed a shooting star candle, which the code felt had a 44% chance of marking a top. Copper's forecaster also dropped -0.22 points; it remains bullish at +0.52, but its a warning sign for copper. Platinum is looking strong – more like gold - while palladium remains near its highs, but is starting to fade.

USD tried to rally today but failed, dropping -0.21 to close at 92.44. Candle print was a spinning top, but the failed rally looked a lot like a (bearish) shooting star.  However, candle code thought it was a bullish continuation, and the forecaster agreed, jumping +0.23 to read +0.06 – squeaking back into an uptrend by a slim margin.

Crude rallied today, rising +1.12 to 47.09. Various bits of news might have driven the rally – OPEC compliance was up to 89%, and portions of the Eagle Ford area had shut in production due to the hurricane. Candle pattern was a 3-candle swing low, which the code doesn't track. That sort of pattern is usually fairly bullish. Forecaster agreed, jumping +0.34 to read -0.22; it is not quite back into uptrend territory. That suggests crude remains in a downtrend, at least for now, but the situation is improving. Volume today was extremely heavy, as it has been over the past four trading days.

SPX rose +14.06 to 2471.65, which is the third strong rally day in a row. Sector map shows that sickcare did best (XLV:+1.70%) while utilities brought up the rear (XLU:+0.02). This tells you that all sectors moved higher. What's the story with sickcare? Novartis (NVO) just had a new leukemia drug approved. Price tag: a single dose for $475,000. Its “personalized medicine” - the patient's own white blood cells are edited, and re-injected into the patient, with an 83% cure rate. The approval and the price tag boosted share prices across other biotech companies with similar (but as of yet unapproved) products. To me it looks like “rich people medicine” that medicare will now pay for, but of course I don't have leukemia that doesn't respond to standard treatment. Sickcare at 20% of GDP coming soon. https://www.statnews.com/2017/08/30/novartis-car-t-cancer-approved/

VIX fell -0.63 to 10.59.

TLT rose +0.30%, making a new closing high. TLT is in a slow, steady uptrend, with today's move causing its forecaster to rise +0.36 to +0.56. Candle code is a bit worried, however, with today's closing white marubozu print having a 43% chance of marking a top. TLT remains strongly correlated with gold (0.86 correlation).

JNK rose +0.24%; it is steadily recovering from the sell-off from two weeks ago. Risk on.

CRB sprinted higher, up +2.25%, with 4 of 5 groups rising, led by energy (+3.84%). Front month unleaded gas prices (October RBOB) vaulted up +0.14 [+8.65%], while the nearer-term September contract that settled today closed up +0.26 [+13.54%], having risen 0.54 in just 6 days. RBOB futures are projecting gasoline shortages to appear in the near term, but anticipating normalization within 3 months. That's what prices are telling us. I'll be tracking the curve until things normalize.

  • Sep: $2.14

  • Oct: $1.78

  • Nov: $1.60

  • Dec: $1.54

Oilprice.com had a story suggesting that the gasoline & pipeline situation is a bit more dire than we might hope; it also included a tidbit that explained what that 500k bbl SPR release was all about. http://oilprice.com/Energy/Gas-Prices/Looming-Gas-Shortage-Imports-Cant-Make-Up-For-This.html

Watching gold intraday, buyers stepped up to buy the dip even though the dollar was rallying at the time – and the dollar rally wasn't a small one either. Once the dollar rally fizzled and reversed, the gold buyers doubled down, causing gold to break out. Miners responded even more enthusiastically than gold. The fact this rally happened at a time when gold was in a slightly overbought condition (RSI7=70) makes it look even more bullish.

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12 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
NFP Friday

I forgot to mention - it's Nonfarm Payrolls Friday.  And it's the first trading day in September.

Could be interesting.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 382
NFP Guess

Going to guess a beat of 225 with a gold slam to start the month.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
where is...

Where is Peak Gold when you need him?  With the spider's web of lines!

I could never get him to cough up his algorithm...

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 382
Samsonite!

I was way off!

156K vs 180K.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
NFP disappoints: +156k

Gold 1334, silver 17.80, Euro +0.60.  So much for that dollar rally.

Avg Hourly Earnings: +0.1%.

Its an unpleasant-looking report.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
bitcoin update

Bitcoin remains in its strong uptrend.  Candle is a continuation.  Forecaster says "all systems go."

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 382
I hate spikes

I hate spikes up in PMs.  They almost always reverse.  I'm afraid that sets us up for a down day.

PeakGold's picture
PeakGold
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
Short-term tops

I believe gold and silver just topped out for now. I just went short silver at $17.65. Below is gold reaching what I believe is the multi-year resistance downtrend line. I believe gold will now head to $1,250 to test support there.

Silver also reached it's multi-year resistance downtrend line...

Great video by Ronnie Fattal this past weekend. He is predicting the big move up is one brief downtrend away!

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 185
More BS from the .gov

Glad to see this stuff is catcing on over at Marketwatch. Almost seeing daily articles questioning the government BS. Notice this one is listed under OPINION, aka, we don't endorse this stuff, but we kinda do since we're publishing the article. Fastest hiring in 20 years!!! 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5979
Good to see...
lambertad wrote:

Glad to see this stuff is catcing on over at Marketwatch. Almost seeing daily articles questioning the government BS. Notice this one is listed under OPINION, aka, we don't endorse this stuff, but we kinda do since we're publishing the article. Fastest hiring in 20 years!!! 

 

...and if the government persists with the auto worker fiction, then they are going to have to later admit that productivity took a big hit?

Or will they just show that somehow spiking to the better as well?

blush

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

Don't forget about Tesla. Their employee to car production ratio is very low and they nearly doubled their personnel this past year...

Perhaps what is going on in the auto industry has to do with what is going on at Tesla

Mohammed Mast's picture
Mohammed Mast
Status: Silver Member (Offline)
Joined: May 17 2017
Posts: 198
Good News Friday

BTC-$4931

ETH $392

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