PM Daily Market Commentary - 10/30/2017

By davefairtex on Tue, Oct 31, 2017 - 3:13am

Gold rose +2.70 [+0.21%] to 1277.30 on moderate volume, while silver dropped -0.02 [-0.09%] to 16.86 on moderately light volume. The buck fell fairly hard, losing -0.39%, which tells us that the very modest rally in gold was entirely a currency effect.

Gold moved lower in Asia, but found its footing right before the US market opened, moving higher until topping out at 1279.90 in the early afternoon.  Today's mild rally resulted in a two-candle swing low, which the code felt had a 56% chance of being a reversal. That's a decent rating. Gold's forecaster jumped +0.41 to +0.08, which is a buy signal for gold. Even though today's move was all about currency, forecaster still likes today's price action.

COMEX GC open interest rose by 9,665 contracts.  That's 30 tons of new paper gold.  I wonder what that's about.

Rate rise chances (Dec 2017) fell slightly to 96%.

Silver fell a bit more heavily in Asia, and didn't quite make it back to even by end of day.  Silver's candle print was a doji, which the code felt was neutral. Forecaster however was happier, rising +0.17 to +0.05, which was just enough to trigger a buy signal for silver. No swing low yet, however. Volume today for silver was relatively light.

Open interest in COMEX SI rose by 191 contracts.

The gold/silver ratio rose +0.23 to 75.78. That's bearish.

Miners moved higher, with GDX up +0.84% on moderate volume, while GDXJ climbed +1.15% on moderate volume also. While GDX printed just a long white candle, GDXJ put in a swing low,which had a 52% chance of being a reversal. Forecasters: GDX +0.38 to -0.09, GDXJ +0.50 to +0.12. That's a buy signal for the junior miners. The HUI index also gave off a buy signal too. Miners are hinting at a reversal here even if GDX is lagging just a bit.  Today I'll show a chart of the HUI - which includes both juniors and seniors.  You can see it gave off a buy signal today, with the forecaster jumping +0.64 to +0.06.

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

Platinum rose +0.20%, palladium fell -0.56%, copper rose +0.18%. Platinum is struggling to reverse higher, copper is heading into a downtrend (today's rally was just a dead cat bounce off last Friday's big sell-off), while palladium is trying to sort out if it will fall or not. Its a mixed bag for the other metals.

The buck fell -0.37 [-0.39%] to 94.34, printing a swing high which has a 76% chance of a reversal – a high rating. Forecaster dropped -0.53 to +0.12, which is not yet a sell signal for the buck.  We might have a high for the buck, at least for a time.  However when I look at the weekly forecaster, today's move isn't enough to push the buck into a longer term downtrend.

Crude fell -0.06 to 54.12, after first making a new high to 54.46. Print today was a doji, which had a 35% chance of being a reversal. The forecaster fell just -0.07 to +0.65, which suggests the uptrend remains intact. API report is tomorrow after market close. It looks to me as though crude was just taking a rest after Friday's big rally. Volume wasn't particularly heavy, which tends to support that thesis. Crude appears to be preparing to break out above the 54 resistance zone, but it may take a few more days to do so. Perhaps the API or EIA reports will give it the required momentum. RSI7 for crude is 76, which is somewhat overbought – but not dreadfully so.

SPX fell -8.24 [-0.32%] to 2572.83. SPX is starting to show signs of fatigue at this point; there is a bearish divergence in the RSI, which shows declining upward momentum. Candle print was a bearish harami (45% chance of a reversal). The forecaster ticked lower, but remains in a strong uptrend (+0.53). Sector map shows sickcare leading the market down (-1.07%) while energy did best (+0.52%).

VIX rose +0.70 to 10.50.

TLT moved sharply higher today, up +0.96% following through off the swing low printed last Friday. The closing white marubozu was a bullish continuation. Forecaster jumped +0.48 to +0.67. Bonds are back. Is it equity market weakness they sense? It feels like risk off to me.

JNK fell slightly, off -0.03%, printing a long-legged doji on the day.  Forecaster has JNK in an uptrend at this point, but I'm not so sure.

CRB rose +0.34%, making a new closing high. 4 of 5 sectors rose, led by livestock (+1.64%). Commodities continue their recovery.

So the equity market might be topping out, at long last. Money is flowing into bonds. The buck might have hit a high, at least temporarily, and the technicals are saying that gold, silver, and the miners have reversed as well.  Headfake or the real thing?  Its hard to know.

If SPX really does start to correct, gold probably stands to benefit.

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1 Comment

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 380
There goes that

So much for the swing low and rally in the miners.  I wonder if things like agriculture and precious metals equities will ever rise appreciably in the next couple of years?

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