PM Daily Market Commentary - 10/3/2017

davefairtex
By davefairtex on Wed, Oct 4, 2017 - 1:48am

Gold rose +0.60 to 1274.10 on moderately heavy volume, and silver climbed +0.06 to 16.66 on moderate volume. The buck was unchanged on the day; it was a fairly quiet day overall.

Gold traded in a relatively narrow range today; it made a new low to 1271, but it was only $6 from peak to trough. Candle print was a doji star/NR7, which has a 41% chance of marking a low. The forecaster edged up +0.02 but is still negative at -0.20.

COMEX GC open interest fell -7,151 contracts. I suspect the commercials are buying here, covering short. Ringing that cash register.

Rate rise chances (Dec 2017) rose to 82%.

Silver also traded in a narrow range, but it did better than gold, avoiding making a new low on the day. Candle print was a short white/NR7, which the code had no comment on. Forecaster jumped +0.36 to -0.16, which is a vote of confidence. Forecaster knows about the gold/silver ratio, and the GDX/gold ratio, and probably likes the improvement seen both yesterday and today.

Open interest in COMEX SI contracts fell by -2,074 contracts.

The gold/silver ratio fell -0.22 to 76.50. That's bullish.

Miners moved higher, with GDX up +1.0% on moderate volume, and GDXJ climbed +1.31% on moderately light volume. Both miners printed 2-candle swing low patterns; GDX had a 42% chance of a reversal, while GDXJ's print was seen as neutral. That's a pretty lackluster rating for a pair of swing lows. Forecasters all rose: GDX +0.27 to +0.19, GDXJ +0.35 to +0.11. Both miner ETFs have moved back into uptrends. Both miner ETFs have moved back above their 9 MA lines. I could wish for higher volume in this move, but so far things look positive.

Today, the GDXJ:GDX ratio climbed, as did the GDX:$GOLD ratio. That's bullish.

Platinum fell -0.08%, palladium rose +0.84%, and copper climbed +0.39%. According to the forecasters, all 3 other metals remain in downtrends. Platinum's printed a bullish-looking doji, which had a 48% chance of marking a low. We care because platinum has the second-strongest correlation with gold – less than silver, but more than palladium, copper, or crude. If platinum can reverse, that probably helps gold.

USD was unchanged today, closing at 93.39. The buck made a new high to 93.75, but the rally failed. Print today was a doji, which had a 31% chance of marking a reversal. USD forecaster rose +0.14 to +0.30. The buck appears to remain in an uptrend.

Crude fell -0.38 [-0.75%] to 50.22. API report released after market close showed a -4.1m crude draw, but a +4.2m gasoline build. Market treated this as a bearish event, dropping 20 cents after the report release, however crude did not make a new low today. Print was a short black, which the code had no comment on. Forecaster actually treated this as a bullish event, rising +0.25 to -0.25. That's still a downtrend, but maybe its slowing. Crude remains above 50, at least for now. The EIA report comes out tomorrow.

SPX rose +5.46 to 2534.58, which is another new all time high. The trading range was fairly narrow; candle print was a short white marubozu/NR7, which the code felt had a 40% chance of marking a top. Sector map shows that industrials led (XLI:+0.43%) along with materials (XLB:+0.42%) and cyclicals (XLY:+0.42%), while utilities (XLU:-0.28%) brought up the rear.

VIX rose +0.06 to 9.51.

TLT gapped down at the open, but then rallied back, ending the day up +0.10%. Print was a bullish belt hold – a 43% chance of a reversal here. Forecaster rose +0.30 to -0.24. These are hints of a reversal for bonds.

JNK moved up +0.19%, erasing half of yesterday's big loss. The print was a swing low, which has a 49% chance of being a (bullish) reversal. Junk bonds remain in demand.

CRB fell -0.01%, almost unchanged after yesterday's big (energy-driven) drop.

Miners are suggesting we may have a reversal here; while the rating of the swing lows aren't spectacular, miners do tend to lead, and if the buck cooperates by topping out for a time, we should see a bounce in the metals. Certainly it appears that the commercials are covering at this point.

How durable a bounce this would be remains to be seen. There are still a large number of commercial shorts in place, which suggests that we aren't yet at a “COT low”, at least not for gold. We may be there for silver.  Platinum's month-long drop has rinsed out all the managed money longs, but there are still a large number of commercial shorts left to cover.

I saw a large number of NR7 candles today.  NR7 means the smallest trading range over the last 7 trading days.  The theory is, trading range narrows immediately prior to big moves - although direction is unknown.

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8 Comments

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 149
Platinum CoT, FWIW

PL.png

Penny551's picture
Penny551
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 149
Plat / Pall Ratio

The last time Pall traded at a premium to Plat, it lasted for ~20months...

 

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 271
Action

Nice blistering start for PMs today!  Oh wait, never mind.  Just about to go red now...with a rapid decline even before the super duper en fuego expectation-smashing ISM number came out.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5406
Micro-micro managed
Cold Rain wrote:

Nice blistering start for PMs today!  Oh wait, never mind.  Just about to go red now...with a rapid decline even before the super duper en fuego expectation-smashing ISM number came out.

These """markets""" are being so micro-managed that we have to add a second micro on top of the first.

Maybe this time is different...but if not, then the Fed is the culprit and the diagnosis is insanity.

To me, this is insane.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5406
My prediction for the ""market""

Whatever forces are in control of the stock ""markets"" they are not the forces of old.

Now they just frog-march to the next levels, no pullbacks, and no deflections.

So my "prediction," based on extensive analysis, TA, combined with hefty fundamentals is for a reading of 2542.50 at 1:38 pm EST.

Just kidding, it's entirely based on my possession of a magic ruler.

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 271
Micro Micro

That's good, Chris.  It's funny because it's so accurate.  It's at another level now.  We've gone from a few moderate dips followed by V-shape rallies to a few shallow dips followed by V-shape rallies to a few micro dips followed by V-shape rallies to almost no dips at all.  A real genuine vertical market.  Excellent.

debu's picture
debu
Status: Silver Member (Offline)
Joined: Aug 17 2009
Posts: 215
??????

Your point is...?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4683
short-lived PM rally

It will be interesting to see after the close what the change in open interest was today, especially in silver.  If "they" stuffed today's rally by jumping in hard at the top, we should see a large increase in open interest.

Note that the OI numbers I put in my report are marked as "preliminary" at the time I write, and sometimes they change fairly dramatically once they are made "final" on the following day.

 

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