PM Daily Market Commentary - 10/16/2017

davefairtex
By davefairtex on Tue, Oct 17, 2017 - 4:53am

 

Gold fell -8.90 [-0.68%] to 1297.20 on moderately heavy volume, and silver fell -0.19 [-1.09%] to 17.25 on moderately heavy volume also. The buck rallied, PM and bonds fell.

Gold made a new high to 1208.40 in Asia trading, but retreated slowly as the buck rallied. In the early afternoon in the US, gold more or less fell off a cliff, dropping $12 over the next several hours. Day low was 1292.50. A modest bounce at end of day kept things from looking too horrible. Candle print was a bearish harami, which had a 32% chance of being a reversal. Forecaster plunged -0.13 to read +0.09. Its still an uptrend, but not by much.

COMEX GC open interest rose +5,879. The 18 tons of new paper gold almost certainly helped move prices lower today.

Rate rise chances (Dec 2017) jumped to 92%.

Silver made a new high also, to 17.49, and it too started its plunge just after 1pm Eastern, bouncing after the new low was made at around 3pm. Candle print was a long black candle, which the code felt could be a reversal (45% chance). Silver's forecaster plunged -0.41 and now reads 0.0. Hmm. Silver is on the cusp of a trend change.

Open interest in COMEX SI contracts rose by +1,593.

The gold/silver ratio rose +0.31 to 75.18. That's bearish.

Miners fell along with the metals, with GDX down -1.59% on heavy volume, while GDXJ fell -1.94% on moderately heavy volume. GDX printed a 2-candle swing high (38% reversal), while GDXJ printed a long black candle, which was a bearish continuation. Forecasters: GDX -0.28 to -0.36, GDXJ: -0.24 to -0.45. GDXJ is now below all 3 moving averages, while GDX is through both the 9 and 50 MA. Miners are leading the complex lower.

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

Platinum plunged -1.53%, palladium fell -1.74%, while copper screamed up +3.48%. Copper broke out to new multi-year highs (3.24) last seen in 2014. Copper is up 62% ($1.62) off the lows set in 2016.  I think it was about good news from China. Palladium had a failed rally (spinning top: reversal 68%) and platinum's long black candle looked fairly ominous – enough to send platinum forecaster down -0.40.  Platinum is now in a downtrend.  That doesn't bode well for gold and silver.

While I don't watch platinum intraday as a rule, I noted that today platinum started to sell off several hours before gold and silver made their plunge. Platinum's OI didn't jump so it didn't appear to be any kind of futures market game, but it certainly was a good leading indicator today for where PM was headed.

USD rose +0.21 [+0.23%] to 93.09, printing a 2-candle swing low (reversal 43%). DX forecaster jumped +0.25 to read +0.23, which puts the buck back into an uptrend. The buck appears to have bounced off its 50 MA. Looking at the Euro, it appears to be forming a rough head & shoulders pattern, which can end with a sell-off if the neckline gets broken. 117 support appears to be key; Euro closed today at 117.97.

Crude rose +0.54 [+1.05%] to 52.13. The opening white marubozu candle was a bullish continuation, and the crude forecaster jumped +0.27 to +0.54, which is a strong uptrend. Part of the cause for today's rally was fighting in Kirkuk between the Kurdish peshmurga fighters and a collection of forces supporting the central government in Iraq, which took a dim view of the Kurdish independence referendum that was passed by 72% of the voters in the region. US supplies weapons and trains both sides, which makes it even more exciting. The region exports 600k bpd. http://oilprice.com/Geopolitics/International/Oil-Markets-Fear-Iraqi-Escalation.html

SPX rose +4.47 to 2557.64. That's another new all time high. Sector map shows financials led (XLF:+0.65%), while sickcare trailed (XLV:-0.44%). Trump pointed out that insurance companies have done very well under Obamacare, which he called a gift to them. This helped push sickcare stocks lower.

VIX rose +0.30 to 9.91.

TLT fell -0.07%, retreating slightly from the new high made last Friday. While this candle wasn't a reversal, the TLT forecaster dropped -0.21 to +0.29 – its still an uptrend, for now, but it has slowed significantly.

JNK rose +0.03%. JNK is moving sideways with a slight downward bias.

CRB dropped -0.11% today, making a new high which did not hold. Only 2 of 5 sectors fell, led lower by agriculture (-0.99%).

PM appears on the cusp of a trend change – although for the mining shares, the downtrend is already well under way, especially for the juniors. Platinum's forecaster is already negative, silver is right at neutral, and gold is barely positive. The buck has printed a swing low. If platinum continues to be pounded, it will probably drag the rest of the complex down behind it.

ECB meets in 9 days, and presumably Draghi will tell us all when they will start to taper. This is Euro positive. At the same time, the situation in Catalonia is Euro-negative; the Catalan leader failed to clarify if he had declared independence by the Monday deadline.  Next step: Spain takes over Catalonia.  That's Euro negative, especially if the people in Catalonia resist.

Meanwhile Trump continues to talk about tax reform, and has unilaterally eviscerated Obamacare by essentially refusing to fund the insurance contribution component. There is talk of a bipartisan short term Obamacare fix in the works. If that happens, Trump will have successfully spurred Congress into action. Any sign of Trump actually being successful in getting legislation passed would be – my guess – quite dollar positive.

In other words, we're heavily news-driven at this point. If Spain devolves into a civil war, the ECB decides not to taper, and Trump gets tax reform done and “fixes” Obamacare, the buck could scream higher. Or peace could break out in Spain, ECB starts to taper, and Trump goes nowhere. Euro breaks out higher in that case.

In the meantime, the PM rally might just have run out of gas.  Best case, we see a PM sell-off tomorrow that gets bought, giving us a nice reversal bar and the uptrend resumes.  Of course, there are lots of other, less pleasant cases too.  We'll know more tomorrow.

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4 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 364
Bull Trap

Looks like you're getting that selloff, Dave.  Going to give up an entire week's gains in 1 and a half sessions.  Boy they sure do drop em fast.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5416
just to be clear

CR-

Just to be clear, I was looking for a selloff followed by a rebound!

Rebound still pending.  But who knows - platinum is looking quite strong, and the Euro is bouncing back.  Maybe the rest of PM will bounce back too.  Platinum is my new tell.

Miners are actually looking decent.  Buyers showing up.  We'll have to see how it closes.

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 364
davefairtex wrote: CR- Just
davefairtex wrote:

CR-

Just to be clear, I was looking for a selloff followed by a rebound!

Rebound still pending.  But who knows - platinum is looking quite strong, and the Euro is bouncing back.  Maybe the rest of PM will bounce back too.  Platinum is my new tell.

Miners are actually looking decent.  Buyers showing up.  We'll have to see how it closes.

 

I gotcha.  We got a little bounce-back.  The miners did come back pretty nicely, so there's that.  We'll see if it has legs, but I'm skeptical.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5416
btc update

I haven't provided too many bitcoin updates recently - mainly because it just keeps going up and up and up.  Until now.  BTC is on the cusp of issuing a sell signal.

Last buy signal was back at 4300 (ish).  4300 to 5566 isn't a bad trade.

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