PM Daily Market Commentary - 11/7/2017

davefairtex
By davefairtex on Wed, Nov 8, 2017 - 1:29am

Gold fell -7.10 [-0.55%] to 1275.70 on very heavy volume, while silver plunged -0.29 [-1.68%] to 16.94 on very heavy volume also. The euro made a new low (to 115.53) which didn't help, but the currency move was not the proximate cause of the drop in PM today.  It looked to me as though there was a general sell-off in the metals group, which was led by copper.

Gold moved slowly lower for much of the day, spiking down briefly at around 10:15 am to its day low of 1272.30, but then it bounced back somewhat by end of day.  Candle print for gold today was a bearish harami, which the code felt was neutral rather than bearish. Gold's forecaster moved up +0.08 to +0.17; gold remains in an uptrend.  Gold ended the day right at its 9 MA. 

COMEX GC open interest rose by 1,233 contracts.

Rate rise chances (Dec 2017) remains at 97%.

Silver sold off in Asia and into London, but rallied sharply prior to the US open.  Silver's black marubozu candle didn't make a new high or low, so it was not rated by the code. Forecaster fell -0.26 to -0.15, which is a sell signal for silver. Silver's forecaster continues to whipsaw across the 0-line, on some pretty high daily volume. Silver ended the day right at its 9 MA.

COMEX SI open interest fell by -5,466 contracts.

The gold/silver ratio plunged -1.11 to 74.36. That's strongly bullish.

Miners moved lower today, with GDX off -0.79% and GDXJ down -0.91%. Volumes were substantially lighter than yesterday. Both miners printed bearish harami candle patterns which the code rated as neutral rather than actually bearish. Forecasters: GDX -0.47 to -0.02 (sell), GDXJ unch +0.17. The HUI rose +0.13 to +0.25; I'm going to believe in the HUI, since it has a longer track record and doesn't seem to be as volatile. Both GDX and GDXJ remain above their 9 MA lines.

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

The other metals ran into some trouble today; platinum fell -1.45%, palladium dropped -0.60%, and copper plunged a huge (for copper) -2.23%. Copper's attempts to rally out of its downtrend don't seem to be working. Palladium is chopping sideways near its highs, while platinum is also chopping sideways with a slight upward bias – it has remained in the 920-940 trading range for the past 6 weeks. It felt to me like the big drop in copper and platinum helped pull silver prices down hard.

The buck staged a fairly strong rally in Asia and London, briefly breaking through 95 resistance, but then lost most of that during the US session.  The buck ended the day up +0.13 [+0.14%] to 94.65, printing a spinning top (with a long upper shadow) candle which the code felt had a 34% chance of being a reversal.  The 5-day forecaster moved up +0.07 to +0.36. Forecaster didn't seem to care about that failed rally.  On the chart, we see that the buck has been chopping sideways for the past 8 trading days.  That matches with the performance of gold and the miners.

Crude retreated -0.28 to 57.02, retreating somewhat after making a new high to 57.77. The candle print today was a spinning top, which the code felt had a 46% chance of being a reversal. It might have been the high volume/small trading range at RSI7=81 – sometimes that's a signal for a trend change. The API report showed the following inventory changes: crude -1.6m, gasoline +520k, distillates -3.1m. The changes were somewhat less than predicted; crude dropped about 30 cents following the release.

Is crude finally tiring out after an $8 run? It might be. Or today could just be a day of rest before the shorts get squeezed one more time. EIA report tomorrow at 10:30 am.

SPX fell -0.49 to 2590.64. SPX made a new all time high today, but could not hang on to the high, eventually printing a high wave candle – neutral. Forecaster moved up +0.13 to +0.77, which remains very bullish. Equity sector map shows utilities leading (XLU:+1.20%) along with staples (XLP:+1.12%) while financials brought up the rear (-1.38%). Some large-ish moves – sector rotation, as I see it, from bullish sectors to bearish ones.

VIX rose +0.49 to 9.89.

TLT rallied for the 5th day in a row, up +0.42%. The long white candle was a bullish continuation, and the forecaster moved up +0.19 to +0.56. Bonds continue to attract money flows; bonds have staged a 4% move over the past 2 weeks.

JNK fell -0.14%, dropping for 5 days straight. Volume was quite heavy. Risk off.

CRB fell -0.37%, retreating after yesterday's big breakout. 3 of 5 sectors fell, led by industrial metals (-1.85%).

It appears that the whipsaw moves in PM aren't over just yet. Large moves in copper and platinum probably helped silver to sell off fairly hard. However, the moves in gold and the miners were more mellow, and the HUI index forecaster still shows an uptrend.

The buck isn't setting the world on fire; it has remained within a 94-94.50 range for the past 8 days.  As a result of the sideways move in the buck, PM is still looking for direction.

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4 Comments

Cornelius999's picture
Cornelius999
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 357
Dave, I'm wondering if the

Dave, I'm wondering if the markets look too topping to buy oil shares. I've recently bought Eog, Cimarex, CDEV and thinking of buying more?

Cornelius999's picture
Cornelius999
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 357
oil manipulation?

I'm also wondering if there's scope for controlling the price of oil, as the price of gold has been manipulated?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4770
oil phase

Cornelius-

Things are pretty extended on this particular leg of the oil rally.  Daily USO RSI7=88, and weekly is also > 70.  Usually that's not the time to be adding more longs. 

We might have reached exhaustion today for crude.  The grand spike to the high 57s was just sold hard.  We may be out of shorts to squeeze for this phase.

Of course I'll know more after today's close, see what my code says.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 287
Failed Rally Incoming

Looks like another failed rally for PMs and miners.  Big spike, followed by consistent selling.  I'm sure the code is not gonna like this action.  But those stocks though....

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