PM Daily Market Commentary - 10/11/2017

By davefairtex on Thu, Oct 12, 2017 - 3:54am

Gold rose +3.60 [+0.28%] to 1293.90 on moderately heavy volume, while silver rose +0.05 [+0.29%] to 17.19 on moderate volume. While the Euro did rally +0.45% today, the gains in PM weren't driven specifically by currency – instead, they came immediately following the FOMC minutes release at 2pm.

I didn't see anything particularly exciting in what was revealed at 2pm; perhaps the market was worrying that there was a risk of a higher degree of hawkishness.  Rate increase chances actually fell after the release, so maybe that's why.

Gold drifted lower going into the minutes release, but shot higher immediately afterwards, rallying almost $10 from trough to peak in the 2 hours following. Even so, the trading range for the day was relatively modest. Gold failed to make a new high, so the candle print (a short white spinning top) provided no information. The forecaster wasn't so happy, falling -0.11 to +0.40. Forecaster doesn't like it when we don't make a new high, I think.

COMEX GC open interest fell -846.

Rate rise chances (Dec 2017) fell to 87%.

Silver had much the same behavior, fading into the release time and then rallying afterwards. Silver too was unable to make a new high, and it also printed a short white spinning top. Forecaster for silver plunged -0.27 to +0.30. Silver did manage to close above both its 50 and 200 MA lines today, which is a positive sign.

Open interest in COMEX SI contracts fell by -773.

The gold/silver ratio fell -0.01 to 75.27. That's neutral.

Miners sold off hard moving into the FOMC minutes release, and then rallied sharply back afterwards. GDX ended the day up +0.98% on moderately heavy volume, while GDXJ rose +1.16% on moderate volume. Trading range was fairly wide – candle print for both ended up being a takuri line/bullish harami. Code saw the whole mess as neutral-to-bullish, but my sense is that this is a bullish print today. Forecasters were mixed: GDX -0.06 to -0.23, GDXJ +0.12 to -0.05. Today's price action doesn't negate the bearish engulfing from yesterday, but I like the long lower shadow; it suggests that buyers showed up once the uncertainty from the FOMC minutes was past.  I think the uptrend remains intact.

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

Platinum rose +0.02%, palladium rallied +2.72%, and copper moved up +1.14%. It was a good day overall for the other metals. Both copper and palladium are climbing strongly and appear to be heading for a retest of their September highs. Forecasters for all 3 metals show reasonably strong uptrends. That's supportive of PM overall.

USD fell again, dropping -0.28 [-0.30%] to 92.82, coming to rest at the 50 MA. My data service did not update DX today – I have no idea why – so no candle or forecaster reports. Mk 1 eyeball suggests a long black candle which is a bearish continuation, and I'm sure the forecaster remains in a downtrend, although it probably isn't accelerating. The dollar move was all about the Euro, which rallied +0.45%. My weekly Euro forecaster shows the Euro heading back into an uptrend – assuming we close here on Friday. That's positive for PM.

Crude edged up +0.09 to 51.18. Crude made a new high today to 51.58, and it looked to be closing around that level, but the API report after market close (released a day late due to the holiday on Monday) surprised the markets, showing a crude build (+3.1m) and a gasoline draw (-1.6m). This instantly knocked 35 cents off the price, and turned a positive day into one that was more or less flat. Candle print was a northern doji, which the code felt might be a reversal (42%). Forecaster didn't agree, jumping +0.36 to +0.58. It liked the new high, I think. If the EIA report confirms the build, we might have a problem. Report comes out at 11am tomorrow.

SPX rose +4.60 [+0.18%] to 2555.24, making another new all time closing high. Print was a closing white marubozu, which was a bullish continuation. The forecaster, which had been heading lower, jumped back up +0.24 to +0.32. Utilities led (XLU:+0.43%), financials trailed (XLF:-0.19%). Its hard to read too much into a relatively narrow-range day, but its not particularly bullish to see financials trailing and utilities in the lead.

VIX fell -0.23 to 9.85.

TLT rose +0.19%, gapping up at the open but then drifting lower during the day. TLT did not make a new high. Forecaster for TLT moved up +0.18 to +0.32. TLT remains in an uptrend, and is now back above its 9 MA. Weekly forecaster also thinks TLT is back in an uptrend, assuming it closes here at end of week.

JNK fell -0.13% today, dropping back below its 9 MA. JNK continues to move sideways. It isn't telling us much right now.

CRB rose +0.16%. Only 2 of 5 sectors rose, led by energy (+0.65%). CRB remains above all 3 moving averages, working towards a recovery.

The release of the FOMC minutes appeared to relieve some amount of selling pressure today in PM, especially on the mining shares, which sold off hard going into the release but then rallied strongly afterwards. While the overall move higher in gold and silver were relatively mild (especially considering the rise in the Euro) it appears that the new PM uptrend remains in place. I especially liked the rally in copper & palladium, which was generally supportive of a continuing PM rally.

It doesn't hurt that the Euro appears to be moving higher – it is once again back above all 3 moving averages.

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Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 374
Impossible Red?

Is it even possible for equities to have a down day anymore?  Lol this is amazing.

Why was gold and silver slammed at 8:00 am today?  So far, they have recovered.

cmartenson's picture
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5782
Why? Because 8, that's why.
Cold Rain wrote:

Is it even possible for equities to have a down day anymore?  Lol this is amazing.

Why was gold and silver slammed at 8:00 am today?  So far, they have recovered.

It turns out that 8:00:00 is a fundamentally bad time for gold. 

Why?  Because, such as.

I think this young woman explains it better.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 374

Haha I remember that.  Just either a very unfortunate brain freeze, along the lines of Rick Perry's "3 departments oops" moment, or terrible preparation.  The Iraq.  Haha! Anyway, that sort of explains all markets right now, really.  The gold just gets smashed at 8:00 am such as.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 374

I guess the market can finish down.  Who knew?

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379

As a note, the DOW has a monthly RSI(10) of 87.26. If that isn't overbought then I don't know what is...

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