PM Daily Market Commentary - 9/12/2017

By davefairtex on Wed, Sep 13, 2017 - 3:11am

Gold rose +4.30 to 1336.00 on moderately heavy volume, while silver climbed +0.11 to 17.97 on moderately light volume. Both metals fell during Asia and London alongside the Euro, but once the Euro reversed and/or the buck topped out, the metals rebounded. It appears that 92 resistance was too strong for the dollar today.

During the dollar rally, gold managed to make a new low to 1326.70, but once the dollar hit 92 and started to reverse, gold recovered and managed to move back into the green. The trading range today was fairly narrow. Candle print was a short white/spinning top, which the code felt was a bearish continuation. Forecaster dropped -0.33 to read -0.27. Gold has now entered a downtrend. Gold did manage to close the day back above its 9 EMA, which was a plus. I thought gold looked ok today, but my code was not impressed.

COMEX GC open interest rose 8,834 contracts.

Rate rise chances (Dec 2017) remains at 41%.

Silver was a bit better than gold; it avoided making a new low, and the rally in silver [+0.64%] was a larger move than gold [+0.32%]. However, silver did not generate any sort of candle pattern today. Forecaster dropped -0.20 to -0.11. Like gold, silver is now in a downtrend, albeit a gentle one. Silver remains above its 9 EMA. Silver does not look very bearish to me.

Open interest in COMEX SI contracts rose by +1,301 contracts.

The gold/silver ratio fell -0.24 to 74.35. That's bullish.

The mining shares moved higher today, with GDX up +0.45% on light volume, and GDXJ climbing +1.14% on moderately light volume. While GDX printed a thrusting candle pattern, and GDXJ printed a bullish engulfing, neither pattern got a bullish reversal rating from the code. The forecasters both dropped: (GDX: -0.26 to -0.42, GDXJ: -0.08 to -0.44) which pulls both miner ETFs into a more intense downtrend.

Today, the GDXJ:GDX ratio rose, and so did the GDX:$GOLD ratio, albeit just slightly. That's somewhat bullish.

Platinum fell -0.12%, palladium jumped up +2.11%, and copper fell -1.06%. Palladium's rally pulled it back above the 9 EMA, and its forecaster jumped +0.45 to +0.07; more or less back to neutral again. Both copper and platinum remain in their recent downtrends.

USD tried rallying through 92 but the rally failed, printing a doji/northern doji candle. Code felt this was a bullish continuation: this implies that the new USD uptrend stemming from yesterday's swing low remains intact. USD forecaster jumped higher too, up +0.41 to -0.01, which pulls the buck back to a neutral trend. If the USD can get through 92, it will cause gold to sell off – that's how I read things right now. The jury is definitely still out on whether or not it can do this, however.  The buck remains below its 9 EMA.  We will just have to see.

Crude rallied +0.26 to 48.66. The spinning top candle print was neutral – a bearish continuation. Forecaster ticked down -0.07 to read -0.19, which suggests a gentle downtrend. The API report, released after market close, showed a crude build (6.2m barrels) and a massive gasoline draw (7.9m barrels) – the largest gasoline draw on record. This caused oil prices to move briefly higher. In other positive news, OPEC's monthly oil market report showed a production drop: from 32.834m barrels down to 32.755 barrels. Most of the drop was due to unrest in Libya, which cut 112k barrels from production.

SPX continued moving higher, up +8.37 to 2496.48. Today's rally took SPX to a new all time closing high. Rally was led by financials (XLF:+1.18%) with utilities the sole sector that fell (XLU:-1.67%). Financials are continuing their post-Irma relief rally.

VIX fell -0.15 to 10.58.

TLT fell again today, dropping -0.53%. The flight-to-safety trade continues to unwind. Today's print was a spinning top, which has a 30% chance of marking a low. Forecaster plunged -0.45 to read a very bearish -0.61. After 3 days of selling, TLT's downtrend is starting to look substantially more pronounced. That's risk on.

JNK rose +0.13%, moving back up to the 50 MA. JNK is struggling to recover – best case right now is that its moving sideways.

CRB fell -0.14%; 4 of 5 groups fell, led by livestock (-1.13%). Really not much happened. Unleaded gasoline rose across all 3 contracts.

  • Oct: $1.66 [+0.02]

  • Nov: $1.60 [+0.02]

  • Dec: $1.56 [+0.02]

The buck was unable to move through 92 on its first attempt. So far momentum appears to remain in place for the dollar to make another attempt. If it succeeds, PM will probably sell off. The falling bond prices aren't helping, and neither are the new all time highs for SPX.

I'm getting a sense of a reduction in political risk from Washington. I may be jumping the gun, but I am sensing that - just perhaps - Trump just might have turned the corner with that bipartisan vote to raise the debt ceiling. If so, I'd expect a sharp rally in the buck, since my feeling is that a big chunk of the downward pressure on the buck has to do with political uncertainty in Washington.

Again, we'll just have to see how things unfold.

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davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5738
eth update

Intraday, ETH has broken below 290 support...right now it is trading around 275.  Next support is down at about 195.

The daily forecaster has been hinting at this outcome for about several weeks now, as has the weekly reversal model, as did the double top chart pattern I pointed out a few days back.  There are way too many things that point at a lot of selling pressure right now, and that's probably why 290 support failed today.

I would not buy ETH unless and until there was a strong daily reversal pattern - and even then, the weekly chart is suggesting selling pressure will probably dominate. [FWIW I sold my ETH after the ETH forecaster gave off a sell signal two weeks ago.]

From the fundamental viewpoint, China outlawing ICOs is probably the cause of the selling pressure, but that's just my guess.

nickbert's picture
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Just FYI I really like the cryptocurrency side comments...

I'm long term bullish on the future of cryptocurrencies, but even so I don't like buying high.  These updates are really a helpful check on the sometimes unrestrained enthusiasm present in this sphere...

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5738
Dimon Says: Bitcoin is a Fraud


I'm long term bullish on the future of cryptocurrencies, but even so I don't like buying high.  These updates are really a helpful check on the sometimes unrestrained enthusiasm present in this sphere...

Thanks.  :)

The hype scared me away from crypto for the longest time.  Now that I have my code helping me out (and it does seem to work relatively well), I'm less worried.  When both the forecaster and the candles agree, its a high percentage move.  I'm waiting for the stars & moons to align so I can get back in.  The last trade was a 50% move...better than a poke in the eye...

So in related news...

What do we think when we hear that Jamie Dimon says that bitcoin is a fraud, and that he'd fire any employee of his that traded crypto?  I especially like the bits about murderers and drug dealers.

Gosh, murderers and drug dealers use cash too.  That must make cash bad also.  Right Jamie?

PMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he would fire any employee trading bitcoin for being “stupid.”

The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”

If a JPMorgan trader began trading in bitcoin, he said, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”


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