PM Daily Market Commentary - 11/1/2017

By davefairtex on Wed, Nov 1, 2017 - 11:28pm

Gold rose +3.70 [+0.29%] to 1275.50 on very heavy volume, while silver screamed higher, up +0.43 [+2.54%] to 17.14 on very heavy volume also. The buck actually rallied today, up +0.29%; currency movements were a bit of a drag on gold, but had little effect on silver.

The FOMC did nothing, as expected; Econoday's summary (summarized by me):

  • economic activity changed from “rising moderately” to “rising at a solid rate.”

  • labor market continues to strengthen

  • household spending: moderate

  • inflation: soft

The announcement release knocked about 30 cents off the Euro – which caused today's dollar rally, more or less.

Gold tried rallying today, managing to hit 1281.90 before fading; print today was a spinning top, which the code felt was neutral. Forecaster for gold edged up +0.04 to read -0.03. That's about as close to trend-less as you can get. Gold is now chopping sideways, still below the 9 MA.

COMEX GC open interest rose by 1,622 contracts.

Rate rise chances (Dec 2017) remains at 98%.

Silver went a bit nuts today.  The rally started in Asia, alongside some strong moves in copper and platinum, and just continued through to the US session.  The dollar rally after the FOMC statement release at 2pm had a just a brief initial effect. Silver printed a bullish engulfing, which is also a four-candle swing low. Silver is now through its 9 MA. Forecaster jumped +0.30 to read +0.15. That's a buy signal for silver. It looks as though yesterday's move down was actually the headfake.  Silver is dramatically outperforming both gold and the miners.

COMEX SI open interest rose by 4,966 contracts. That's 772 tons of new paper silver, or 11 days of mine production.

The gold/silver ratio plunged -1.67 to 74.42. That's bullish.

Miners were mixed; GDX rose +0.41%, while GDXJ was unchanged. Volume was moderate. Early in the day, miners actually rallied quite strongly, with both ETFs through their 9 MA lines. But that didn't last; miners were sold starting in the afternoon through to the close. Candle prints were long black for both ETFs, which were both neutral. Forecasters: GDX -0.43 to -0.34, GDXJ -0.22 to -0.20. Both ETFs have moved into downtrends – although in truth, they look more like they are just chopping sideways. Curiously, the HUI flipped back to a buy signal today, but the trend still appears to be sideways.  For whatever reason, miners aren't attracting money right now.  Maybe its the repeated new all time highs in the larger equity market?

Today, the GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. That's bearish.

Platinum rose +1.52%, palladium climbed +2.13%, and copper rose +0.85%. It was a good day for the other metals; watching prices intraday, it seemed as though the rallies in all three of these metals strongly influenced the rally in silver. All 3 are now in uptrends, with buy signals today for platinum and copper. Palladium made a new closing high, and platinum appears to have put in a rough double-bottom off the 920 level.

The buck climbed +0.27 [+0.29%] to 94.58, with the gains coming following the FOMC announcement at 2pm. Candle print was a long white, which was seen as neutral. Forecaster jumped +0.43 to +0.34, which is a buy signal for DX. Looks like the buck is back in an uptrend. That's a fair amount of back and forth for the buck.

Crude fell -0.36 to 54.28, after first making a new high to 55.23. Crude fell immediately following the EIA report, which was substantially less bullish than yesterday's API report: crude (-2.4m), gasoline (-4.0m) and distillates (-0.3m). The candle print was a dark cloud cover, which has a 56% chance of being a reversal. Forecaster plunged -0.42 to +0.20. Uptrend is still intact, but may be about to reverse. Perhaps the rig counts on Friday can rescue the uptrend.

SPX rose +4.10 to 2579.36. SPX rallied overnight in the futures markets, and made a new all time high today, but fell back from that high by the close. Candle print was just a spinning top, which was neutral. Energy led (XLE:+1.13%) while utilities brought up the rear (XLU:-0.56%). Sector map looked somewhat more bearish than bullish.

VIX rose +0.02 to 10.20.

TLT rose +0.23%, making a new high, but the long upper shadow shows that today was a bit of a failed rally. Candle print was an opening white marubozu, which has a 46% chance of being a reversal. Forecaster fell -0.01 to a still-bullish +0.28.

JNK plunged -0.54%, a large move which caused JNK to issue a sell signal. JNK is now showing a lower high and a lower low, which defines a downtrend. Its still short term, but its a definite sign of risk off.

CRB rose +0.20%, making a new high. 3 of 5 sectors rose, led by industrial metals (+1.40%). Livestock might have topped out today along with energy. Overall, commodities seem to be doing fairly well.

While gold and the miners chop sideways, silver screamed higher, as did platinum and palladium.  Which of these groups is "right" about metals direction?  I'm tempted to go with the majority here and say things appear to be pointing higher.  The slow but steady progress in the commodity complex is probably helping.

Will tax reform details be announced tomorrow?  That's an open question.  The steps along the way appears to be dollar-positive.  Here's a glimpse of the sausage being made:

Nonfarm payrolls is on Friday.

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