PM Daily Market Commentary - 9/14/2017

davefairtex
By davefairtex on Fri, Sep 15, 2017 - 5:07am

 

Gold rose +6.50 [+0.49%] to 1333.60 on moderately heavy volume, while silver climbed +0.03 [+0.14%] to 17.86 moderately heavy volume also. Once again today was about currencies; the buck fell -0.41%, which accounts for the majority of the rally in gold today.

Gold chopped sideways for the first half of the day, spiking down momentarily at the time of the CPI release at 8:30am, and then moved higher into the close.  Today's print for gold was a bullish harami/spinning top, which the code felt had a 52% chance of marking the low. Forecaster bounced slightly, up +0.08 to -0.42, which is still a downtrend. Gold did manage to close back above its 9 EMA, which is a positive sign.

COMEX GC open interest fell -1,017 contracts.

Rate rise chances (Dec 2017) rose to 51%.  This was - probably - due to the relatively hot CPI report that came out at 8:30 am. 

Silver mostly followed gold, except the bid wasn't as strong.  It too spiked down at 8:30am, making a new low of 17.66, but quickly bounced back.  The print for silver today was a doji, which the code felt was a bearish continuation. Sometimes dojis are reversals, but usually that is when the market is oversold and volume is high – neither of which was true today. Forecaster moved up +0.14 to -0.21, which is a gentle downtrend. Silver remains above the 9 EMA.

Open interest in COMEX SI contracts rose by +2,706 contracts.

The gold/silver ratio rose +0.26 to 74.69. That's bearish.

The mining shares opened down, but then slowly moved higher during the day. GDX ended up +0.62% on moderate volume while GDXJ climbed +0.96% on moderately heavy volume. Forecasters both moved higher: (GDX:+0.14 to -0.70, GDXJ:+0.13 to -0.54) but both remain in fairly strong downtrends.  GDX printed a long white candle which had a 35% chance of being a reversal.

Today, the GDXJ:GDX ratio rose slightly, and so did the GDX:$GOLD ratio. That's a little bit bullish.

Platinum climbed +0.39%, palladium fell -1.35%, and copper dropped -0.65%. Copper's spinning top could be a reversal (44%) but probably isn't. Same thing with platinum's short white candle (46%). Forecasters for all 3 show downtrends, with copper looking the most severe.

USD gave back much of yesterday's rally dropping -0.38 [-0.41%] to 91.90. Candle print was a bearish harami, but the code felt it was probably a bullish continuation instead. Forecaster dropped -0.24 to read a still-bullish +0.32. It does not appear that today's drop was able to derail the new uptrend in the buck. Today's excitement in currencies came from GBP, which shot up 1.43% after the BOE statement was “unambiguously hawkish” following today's meeting. BOE sees inflation at 3% next month, and appears ready to start raising rates. GBP/USD closed at 133.90, a level last seen in September 2016, and up 14 points from the lows set in January.

The CPI reading that came out today at 8:30am showed government-measured inflation was 0.4% m/m, or a 4.8% annualized rate. Core CPI (inflation less food & energy) was at 0.2%, or 2.4% annualized. The usual joke applies: life is good if you don't use food or energy. Most likely this increase in the CPI caused the increased assessment of a rate increase by December.

Crude rose +0.45 to 50.04, rallying for the 4th straight day. Crude actually made a new high to 50.50 before running into selling which forced prices back down to 50. Candle print was a spinning top, which the code felt had a 47% chance of marking the top. It looked a bit like a shooting star. Still, crude managed to close above its 200 MA, and it did make a new high, however briefly. Forecaster jumped +0.45 to read +0.78, which is a strong uptrend. A warning sign was seen in oil equities (XLE:+0.48%) which printed a bearish-looking shooting star that the code gave a 61% chance of being a reversal. This particular phase of the oil rally might be nearing an end.

SPX fell -2.75 to 2495.62, unable to close above round number 2500 for the second day now. Trading range was very narrow, with the spinning top candle having a neutral rating. SPX forecaster didn't like it, dropping -0.36 to read +0.51; its still an uptrend, however. Utilities led (XLU:+0.84%) while cyclicals trailed (XLY:-0.54%).

VIX fell -0.06 to 10.44.

TLT managed to rally today, up +0.41%. While the candle code found the bullish harami to be actually a bearish continuation, the forecaster jumped +0.25, but remains bearish at -0.56. The TLT downtrend remains in place – much like that for gold, silver, and the miners.

JNK rose +0.22%, jumping above its 50 MA for the first time in several weeks. JNK remains in a more or less sideways trading range which is especially apparent if you view JNK on the weekly timeframe.

CRB rose +0.23%, making a new high that briefly moved through the 200 MA. 3 of 5 groups rose, led by energy (+0.77%). Front-month gasoline continues to drop.

  • Oct: $1.63 [-0.02]

  • Nov: $1.60 [unch]

  • Dec: $1.57 [unch]

Today the PM moves were all about currency – this time it was BOE telling everyone that a rate increase is on deck in the near future, which caused the pound to race higher in anticipation. The euro rose somewhat also, and that combined to take the buck lower, which in turn helped PM to rally, at least in USD terms anyway.

Currency is the dog, gold is the tail – at least right now anyway. The rally in TLT was a spot of independent good news, as gold and TLT are fairly closely correlated right now.  If TLT manages to put in a low, that would help PM.

Next week we have the FOMC meeting that ends on Wednesday with an announcement at 2pm and a press conference at 2:30pm. My guess is that the Fed will announce its balance sheet unwind next week, and that it will start out slow with a $10 billion per month limit. At that rate, it will be 20 years before the surplus 2.4 trillion dollar balance sheet is gone.

Has the market priced this in? Its hard to say. Gold often sells off going into FOMC meetings, and then rallies afterwards. Maybe we'll see that again this time around.

Tomorrow we have Retail Sales as well as Industrial Production.  Retail Sales can move markets, when it surprises.

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7 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5410
btc update

Brief update:

Candle code did NOT like BTC "strong line" candle print from yesterday.  No low yet.

Candle code did like ETH "spinning top" (73% reversal).   This suggests there is more buy support for ETH than for BTC, even though today's plunge invalidated yesterday's bullish-looking print.

(That said: I'm not exactly sure when my data provider takes the snapshot of BTC vs ETH; its entirely possible BTC was taken at its worst point, while ETH was taken after a bounce.  If I did this professionally I'd get the data myself.)

Forecasters:

  • ETH: -0.06 to -0.62: strong downtrend
  • BTC: -0.36 to -0.88: very strong downtrend

BTC might be approaching a low.  Round number 3000 could be support.  When my forecaster indicator is very extended (as it is now), that often signals that a bounce - of some sort - is near at hand.  It would be safer to wait for a nice BTC candle print, however.

Its also quite uncertain how high the bounce will go - or how long it will last.

If you are a BTC true believer, you can buy at 3000 and tell yourself that you are buying it at 40% off from where it was just two short weeks ago.  :)

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5727
ETH crashing even harder this morning

The volume continues to ramp ever higher...the price ever lower.

Where does it stop?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5410
where does it stop

I think 200.  Bitcoin 3000.  At least for now.

Congratulations.  You nailed the low.  :)

sand_puppy's picture
sand_puppy
Status: Diamond Member (Online)
Joined: Apr 13 2011
Posts: 1887
Exodus Wallet and Software

In looking through the software and wallets available for cryptos, one seems to be rated fairly consistently high as secure and easy to use.

Anyone else have experience here or a clear preference?

Alas, everything is connected to the web and is surveilled and cataloged by the deep state.  :-(

Exodus Wallet Review piece

Exodus website with a 2 minute intro video

A tutorial / review of Exodus

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5727
A talent of mine.
davefairtex wrote:

I think 200.  Bitcoin 3000.  At least for now.

Congratulations.  You nailed the low.  :)

cheeky

Now to see if that's a dead-cat, or the real low.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5410
a low

I think its going to be "a" low, given the indicators I was seeing earlier.  Maybe "the" low too, hard to say.  BTC is pretty news driven right now.

The bounce off 3000 just fits the chart, and the psychology.  And the heavily extended forecaster.  The long lower shadow will look good to the candle code also, I suspect.

FWIW, BTC's RSI7 was 14.  That's a decent time to bounce.

It also has the virtue of rinsing out everyone from the Aug 2 breakout.  Markets sure do like to hose the largest number of people.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5410
btc 2017-09-15 update

BTC staged a massive rally off 3000 support yesterday.  Candle print was a "long white" candle, which the code felt was very bullish (77% chance of a reversal).  However, the forecaster didn't move up by all that much, which makes me concerned that this isn't over.

Looking at today's moves, I think the following scenario is most likely: a rally back to 4000 (ish) that gets hit with more selling - people who didn't manage to get out yesterday, and are seeing bitcoin in the high 3000s as a helpful opportunity to get out now while they still can.

That's how I read the very meager forecaster response to this massive rally, anyway.  Forecaster knows more about bitcoin than the candle code does - candle code is generic, so applying it to bitcoin must be done with care.

We'll see what the forecaster says after tomorrow.

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