PM Daily Market Commentary - 10/12/2017

davefairtex
By davefairtex on Fri, Oct 13, 2017 - 4:40am

Gold rose +2.00 [+0.15%] to 1295.90 on moderate volume, and silver climbed +0.08 [+0.47%] to 17.27 on moderate volume.  PM traded sideways within a relatively narrow range in spite of the bearish influence of a falling Euro.

Gold made a new high to 1299.80 – it looks like round number 1300 is acting as resistance once more. The (short) spinning top candle print was seen as a bullish continuation. Forecaster fell -0.09 to +0.21. The uptrend for gold appears to be intact, but fading somewhat.

COMEX GC open interest rose +3,551.  That's a fair amount of freshly-minted paper gold.

Rate rise chances (Dec 2017) remain at 87%.

Silver made a new high also, to 17.29, keeping most of those gains through to the close. Candle print was a closing (short) white marubozu, which the code saw as a bullish continuation. Forecaster moved up +0.01 to +0.33. Silver's uptrend remains mostly intact.  It is now a bit more conclusively above its 200 MA.  We also see a golden cross (at least using my numbers anyway) for silver - the 50 MA has just crossed over the 200.

Open interest in COMEX SI contracts rose by +1,540.

The gold/silver ratio fell -0.23 to 75.04. That's bullish.

Miners moved a bit lower today, with GDX down -0.34% on moderately heavy volume, while GDXJ fell -0.77% on light volume. Trading range was narrow.  GDX printed a spinning top, which the code felt was neutral. Forecasters: GDX +0.41 to +0.18, GDXJ: -0.07 to -0.16.  With the miners split like that, its hard to know if the uptrend remains intact or not. 

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

Platinum rose +0.65%, palladium rallied +1.28%, and copper moved up +0.84%. It was another good day overall for the other metals. All 3 metals are now in fairly strong uptrends, with copper and palladium approaching breakouts.

USD rose +0.07 [+0.08%] to 92.85, seemingly finding support at the 50 MA. The spinning top candle was seen as a bearish continuation. Forecaster moved up just +0.05 to -0.30, leaving the buck still in a downtrend. From the USD technical perspective, today's print was probably not a reversal. However when looking at the Euro, I see a bearish harami print, and a -0.26% drop. If the Euro rally is over...the buck will almost certainly resume its uptrend.

Crude fell -0.25 to 50.93. The drop followed the EIA report, which looked relatively good to me: crude draw (-2.7m), gasoline build (+2.5m), distillates draw (-1.5m). After bouncing around for a time, crude finally sold off hard, but then rebounded, eventually printing a hammer candle, which the code felt was a bullish continuation. Crude avoided a swing high by a relatively slim margin. Forecaster wasn't happy, dropping -0.25 to +0.23. I liked the hammer candle, but I didn't like the selloff on what looked to me to be a somewhat positive EIA report.

SPX fell -4.31 to 2550.93. Print today was a bearish harami, which the code found to be a bullish continuation. Sector map shows industrials (XLI:+0.53%) and utilities (XLU:+0.52%) leading, with financials (XLF:-0.76%) and cyclicals (XLY:-0.67%) doing worst. That feels a bit bearish to me.

VIX rose +0.06 to 9.91.

TLT rose +0.43%, making a new high, having moved up 4 of the last 5 days. Bonds are attracting money now. Candle print was a closing white marubozu, which the code felt was a bullish continuation. Forecaster moved up +0.08 to +0.39. TLT is in a reasonably strong uptrend. This is generally negative for equities, and somewhat positive for PM.

JNK fell -0.08% today. It appears to now be slowly moving lower. Hints of risk off.

CRB fell -0.12%. Only 2 of 5 sectors fell, led lower by livestock (-1.22%).

Silver is still leading gold, with the miners looking a bit iffy.  Perhaps the other metals can help determine trend; they all look strong right now.  With no shorts to squeeze, we have to rely on managed money to jump in long here.  They don't seem to be doing it in any great numbers at the moment, but ultimately it is an uptrend until its not.

We're also a bit news-driven regarding the Euro: both Catalonia, and the ECB's taper decision which is coming two weeks from now - two things pulling in opposite directions.  If Draghi tapers and peace breaks out, the Euro probably makes new highs, which would be positive for PM.

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4 Comments

Giant Elk's picture
Giant Elk
Status: Member (Offline)
Joined: Dec 13 2014
Posts: 20
The Euro and the Crude

Euro seems week to me - has weakened quite a bit today after initially jumping higher against the dollar after US inflation data was released, dropping from the 50MA. The yen on the other hand has held most of its gains. 

On another note Dave I'd be interested in your comments on the COT positions for Crude. Looks like approaching and extreme position for Commercial Short / Managed Money Long. And looking at the price chart (weekly) with a horizontal perspective there are a few relatively close resistance points but a whole lot of downside.

My COT data up as far as last week's release, in case you can't see:

Price = Blue

Commercial Net long = Orange

Managed Money Net Short = Grey

(By the way your forecaster gold and silver deserves a pat on the back this week!)

Giant Elk's picture
Giant Elk
Status: Member (Offline)
Joined: Dec 13 2014
Posts: 20
The Euro and the Crude

Euro seems week to me - has weakened quite a bit today after initially jumping higher against the dollar after US inflation data was released, dropping from the 50MA. The yen on the other hand has held most of its gains. 

On another note Dave I'd be interested in your comments on the COT positions for Crude. Looks like approaching and extreme position for Commercial Short / Managed Money Long. And looking at the price chart (weekly) with a horizontal perspective there are a few relatively close resistance points but a whole lot of downside.

My COT data up as far as last week's release, in case you can't see:

Price = Blue

Commercial Net long = Orange

Managed Money Net Short = Grey

(By the way your forecaster gold and silver deserves a pat on the back this week!)

Giant Elk's picture
Giant Elk
Status: Member (Offline)
Joined: Dec 13 2014
Posts: 20
The Euro and the Crude

Euro seems week to me - has weakened quite a bit today after initially jumping higher against the dollar after US inflation data was released, dropping from the 50MA. The yen on the other hand has held most of its gains. 

On another note Dave I'd be interested in your comments on the COT positions for Crude. Looks like approaching and extreme position for Commercial Short / Managed Money Long. And looking at the price chart (weekly) with a horizontal perspective there are a few relatively close resistance points but a whole lot of downside.

My COT data up as far as last week's release, in case you can't see:

Price = Blue

Commercial Net long = Orange

Managed Money Net Short = Grey

(By the way your forecaster gold and silver deserves a pat on the back this week!)

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5685
euro, etc

Elk-

Yes the Euro looks pretty horrid right now.  The spike higher has been completely erased at this point and we're seeing a shooting star-ish sort of print.  It will be interesting to see what the weekly charts have to say about the Euro on Saturday.  I just wish I had OHLC data for the Euro - then I could do a daily forecaster.

Eh, it occurs to me that traders may not want to be long Euro ahead of the weekend.  Who knows what Spain will do with two days to play with.  Then again, Euro could pop right back up on Monday if peace breaks out for some reason.  "News driven" is the word we're looking for.  If you want to handicap the Catalonia situation, perhaps you could get an edge.

As for crude...here's what my weekly crude forecaster says.  It knows about COT reports, and open interest, and a bakers dozen other indicators.  (daily forecaster doesn't know about COT - since its a weekly timeseries).   Weekly forecaster has done "ok" although it tends to lag when the market gets choppy.  It's still bullish - although its only as of yesterday's close.

Looking at your COT data - price made a higher high, so maybe the COT needs to make a higher high too before a top kicks in.  Maybe...we run to 55 before the wave of selling starts again?

Daily forecaster for crude isn't so accurate.  Right now the market is badly behaved (lots of news items hit almost daily, driving prices hither and yon) which means its hard to trade.  So - pull back to the weekly where (hopefully) all that tends to wash out a little bit more.

My gut thinks we might have some more room to run.  Market is starting to believe that shale isn't going to have an economic free ride much longer.  That's my guess anyway.  Rig counts are supporting the thesis - down 8 this week.

Oh and as for my forecasters - thanks!  They're the only thing that kept me in my mini-silver futures long trade.  I find myself really motivated to refine them when I have money at risk...funny that...

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