PM Daily Market Commentary - 9/18/2017

By davefairtex on Tue, Sep 19, 2017 - 4:40am

Gold fell -12.50 [-0.94%] to 1311.00 on moderately heavy volume, while silver dropped -0.38 [-2.13%] to 17.86 moderate volume. While the buck did move up a bit, today's plunge was not currency related. It appeared as though traders just bailed out of PM.

Gold sold off steadily during the day, eventually closing relatively close to the new low of 1308.10. Candle print was an opening black marubozu which code felt was a continuation. Forecast plunged -0.14 to -0.49: gold is in a downtrend. There is probably some support at round number 1300 – if you recall that was the resistance level last month. Resistance becomes support on the way down.

COMEX GC open interest rose 6,119 contracts.

Rate rise chances (Dec 2017) remain at 56%.

Silver sold off a lot harder than gold, but it also had a modest bounce at end of day. The print for silver today was an opening black marubozu, which the code felt might be a reversal: 41% chance. Forecaster plunged -0.32 to -0.66, which is a brisk downtrend. Silver did seem to find buyers right at its 200 MA, which was also resistance last month – now support. RSI7 for silver is now 31 - not quite oversold just yet.

Open interest in COMEX SI contracts rose by 2,285 contracts.

The gold/silver ratio rose +0.91 to 75.98. That's bearish.

The mining gapped down at the open and continued falling, with GDX off -1.66% on moderate volume, while GDXJ dropped -2.24% on moderately heavy volume. GDX printed a spinning top, which the code felt might be a reversal: 44% chance. GDXJ's long black candle was a bearish continuation. Forecasters have stopped falling dramatically, but remain in downtrends: GDX: -0.02 to -0.49, and GDXJ: -0.07 to -0.54.

Today, the GDXJ:GDX ratio fell, and so did the GDX:$GOLD ratio. That's bearish.

Platinum fell -0.84%, palladium rose +1.35%, and copper climbed +0.64%. Copper and platinum remain in downtrends, while palladium might be putting in a low: candle print was a confirmed NR7, which had a 60% chance of being the low. That's a pretty good rating.

USD moved up +0.16 to 91.82. It wasn't much of a move, but it did bring DX back above its 9 MA. (I've replaced EMA with MA because it seems to work better). The USD forecaster wasn't happy, dropping -0.39 to -0.09. The dollar rebound isn't looking all that exciting.

This week we have the FOMC announcement coming up on Wednesday; most likely there is a fair amount of adjustment being done leading up to this meeting.

Crude rose +0.08 to 50.31, trading in a fairly wide range but ending up mostly unchanged. Print today was a long-legged doji, which the code felt could be a bearish reversal: 38% chance. Forecaster fell -0.12 to +0.63, which is still a strong uptrend. Crude remains above its 200 MA, and above round number 50, both of which are bullish signs. The API report comes out after market close tomorrow. No doubt it will be skewed by the fuss from Hurricane Harvey, but the oil newsflow right now is bullish.

SPX rose +3.64 to 2503.67, yet another new all time high for SPX. Print was a high wave, which the code felt was a bullish continuation. Sector map looks like – mostly – a reflation rally, with financials leading (XLF:+1.17%) along with industrials and materials, with utilities doing worst (XLU:-1.02%). The poor utility performance may be a combination of hurricane damage and the prospect of higher rates from FOMC.

VIX fell -0.02 to 10.15.

TLT fell once more, dropping -0.58%, making a new low. There was a bit of a rebound towards end of day, however; the long black candle was seen as a possible reversal (52% chance). Forecaster agreed, bouncing +0.05 to -0.27. TLT seemed to find support at its 50 MA. Perhaps the selling in bonds ahead of FOMC is coming to an end?

JNK fell -0.03%, moving sideways. It remains near its recent highs – but longer term, it has just been chopping sideways for the past 5-6 months.

CRB fell -0.17%, dropping back down to its 200 MA. 3 of 5 groups fell, led by PM (-1.31%).

PM is continuing lower following the swing high printed last Monday. How much of this has to do with the FOMC announcement coming up on Wednesday? I should really add “days until FOMC” in my forecaster for gold and see if it turns out to be an important indicator. I think there's a decent chance gold could stabilize tomorrow, and bounce following FOMC. I'm not sure what they could say that would make things worse. There's no way the “balance sheet reduction” will be dramatic - that would risk startling the horses in equities, and we wouldn't want that.

Bonds could be the tell here. They are showing signs of at least slowing down, and they've been closely correlated with gold in recent weeks.

The buck doesn't seem to be going anywhere in the near term – not up, not down.  So far at least, there has been no big plunge below 92. Longer term, the buck remains in a downtrend, due in part to Trump, expectations of an end to the ECB's QE program, and the hints of a rate increase being heard from the BOE.

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