PM Daily Market Commentary - 10/2/2017

davefairtex
By davefairtex on Tue, Oct 3, 2017 - 5:07am

Gold fell -9.00 [-0.70%] to 1273.50 on moderately heavy volume, and silver dropped -0.08 [-0.48%] on moderate volume. The buck rose +0.55%; that accounts for most of the move down in gold today.

Gold made a new low to 1272, and didn't bounce much off that level. Candle print: opening black marubozu, which might be a reversal (36%) but probably isn't. Forecaster rose +0.07 to to -0.17; forecaster knows about currency moves as well as the gold/silver ratio - perhaps it sees those as positive signs.

COMEX GC open interest rose 161 contracts.

Rate rise chances (Dec 2017) rose to 77%.

Silver drifted lower, but it traded in a narrow range, printing a short black/spinning top candle, which the code felt may well be a low (65%). Forecaster wasn't so sure, rising +0.02 to -0.53.  That is still a strong downtrend.  One thing that struck me about the COT report in recent months: silver managed money traders are not getting sucked in on the long side during the rallies the way they used to.  That means there aren't as many to rinse out on the downside.  This may account for silver's relatively sedate move lower.  Note that we haven't seen any of those $0.50 days as we did in times past.

Open interest in COMEX SI contracts rose by 749 contracts.

The gold/silver ratio fell -0.17 to 76.72. That's mildly bullish.

Miners actually moved higher today, with GDX up +0.39% on moderately heavy volume, while GDXJ ticked up +0.03% on moderately heavy volume also. GDX printed a long white, and GDXJ printed a southern doji, both of which were seen as bearish continuations. Forecasters: GDX +0.32 to -0.06, GDXJ:-0.02 to -0.23. GDX's decline has almost entirely stopped, and it may be ready to reverse.

Today, the GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. That's neutral.

Platinum fell -0.02%, palladium plunged -2.76%, and copper was down just -0.03%. Platinum's southern doji has a 50% chance of marking a low here – platinum is oversold with RSI-7 at 19. Palladium's bearish engulfing didn't look bearish to the candle code, but the forecaster wasn't happy, dropping -0.59 points to -0.27; palladium has resumed its downtrend. It is also through the 9 and 50 MA lines.

USD rose +0.51 [+0.55%] to 93.39. Mostly today's rally was about the Euro, which fell -0.65% - possibly as a result of the independence referendum in Catalonia which went ahead (and apparently was a resounding victory for YES) even though the Spanish central government attempted to disrupt it using the Federal police to seize ballots, ballot boxes, and occupy polling sites. And beat voters who tried to vote anyway.  Today's rally in the buck made a new high, invalidating the somewhat lukewarm swing high from Friday. Forecaster rose +0.16 to +0.18; that's a shallow uptrend. With the buck above both 9 and 50 MA lines, that also suggests uptrend.  Candle was an opening white marubozu, which the code felt could be a top (42%).

Crude fell -1.01 [-1.96%] to 50.63. Candle print was an opening black marubozu, which the code felt was a bearish continuation. Crude is now through its 9 MA for the first time in 4 weeks. Crude forecaster (which was hinting at a downtrend before) fell -0.45 to -0.52. Is it just a headfake, or the start of a more intense correction? The cause of the decline appeared to be an OPEC production report that showed an increase of 120k bpd vs August; 60k more from Saudi Arabia, and 50k more from Kuwait.

SPX rose +9.76 to 2529.12, which is another new all time high. The white marubozu is a bullish continuation. Materials (XLB:+1.09%) and sickcare (XLV:+1.02%) led, while staples (XLP:-0.19%) brought up the rear. A strong Manufacturing ISM report helped add to the bullish attitude. 

VIX fell -0.06 to 9.45. VIX levels below 9.50 have been decent buying opportunities, at least in the past.

TLT dropped -0.38%, falling alongside the rise in equities. TLT remains in a downtrend, but today's drop was not a new low.

JNK plunged -0.40% - that's a big move down, and was possibly caused by the move lower in crude – although thats just a guess.

CRB fell -1.19%, a large move that took CRB back down to its 50 MA, wiping out 3 weeks worth of slow gains in one day. 4 of 5 groups fell, led by energy (-2.01%).

The story remains mostly the same: the buck is moving higher off the lows, and this is taking a toll on PM. Miners still have a bid, but they will certainly sell off again if gold keeps dropping.   The longer term USD charts (weekly and monthly) suggest the buck has put in a low here.  That doesn't mean the buck immediately screams higher, but it does suggest that the days of currency-driven easy money in gold are probably over - probably for a while - unless and until some sort of break in confidence occurs.

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1 Comment

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5063
btc update 2017-10-02

I haven't reported on bitcoin recently because it has just been in an uptrend.  But I figured, its been a while, so why not?

Uptrend remains intact.  Yesterday's northern doji was a bullish continuation.  The upside move might be fading a bit, but there is currently no technical reason to sell.  Of course that could change tomorrow if we see a swing high.

ETH looks weaker.  No time for a chart right now, but ETH had a sell signal a few days back.  If BTC prints a swing high, ETH will probably sell off harder.  I think the ICO bans have put a bit of a crimp in ETH.

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