PM End of Week Market Commentary - 11/10/2017

davefairtex
By davefairtex on Sat, Nov 11, 2017 - 6:02pm

On Friday gold fell -10.00 [-0.78%] to 1275.60 on very heavy volume, and silver dropped -0.11 [-0.65%] to 16.88 on very heavy volume also. A spike assault that happened after 11am in the US caused the price to drop, taking gold down $10 and silver down $0.25 in the space of about 10 minutes.

Were there any related items that were correlated to this move? Not in currencies, not in bonds, not in equities, and not in commodities. Process of elimination: it was a manipulation. I'm not one to normally quote KWN, but I think they have the goods this time:

https://kingworldnews.com/andrew-maguire-it-was-the-plunge-protection-team-that-conducted-the-17-minute-raid-in-the-gold-market/

The raid saw the PPT sell some 50K+ lots of December futures — 155+ tonnes of paper gold —in just 17 mins once the physical market closed. This sort of action may rinse out specs in the COMEX casino, but it forces bullion banks exposed to the physical market to bid to meet delivery demands...

This does tie in with a lot of intraday selling pressure I've been observing for much of the week. All I can surmise is that this is tied to the situation in Saudi Arabia. I'm not seeing the increases in open interest that should accompany this sort of activity, but the collection of small hits that were visible on several different days really suggests to me that there is a lot of pressure right now to keep prices down.

The PM sector map was mixed again this week; gold and silver moved higher, as did GDX, but the moves were a bit feeble. Platinum is the sole item remaining above its 9 MA. Friday's plunge in gold and silver took 4 elements back below their 9 MA lines: gold, GDX, GDXJ, and palladium. Looking at the sector map, PM appears to be heading back into a downtrend.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Platinum $PLAT 0.90% -4.72% rising falling falling falling ema9 on 2017-11-08 2017-11-10
Gold $GOLD 0.43% 1.35% falling falling rising falling ema9 on 2017-11-10 2017-11-10
Senior Miners GDX 0.40% -1.01% falling falling falling falling ema9 on 2017-11-10 2017-11-10
Silver $SILVER 0.27% -9.30% falling falling falling falling ema9 on 2017-11-09 2017-11-10
Junior Miners GDXJ -0.03% -13.80% falling falling falling falling ema9 on 2017-11-10 2017-11-10
Palladium $PALL -0.38% 44.01% falling rising rising falling ema9 on 2017-11-10 2017-11-10
Copper $COPPER -1.35% 20.98% falling falling rising falling ema9 on 2017-11-07 2017-11-10
Silver Miners SIL -1.69% -20.17% falling falling falling falling ema9 on 2017-10-16 2017-11-10

Gold rose +5.40 [+0.43%], breaking out of its sideways trading range (and the 9 MA) on Monday, but then dropping back below on Friday because of the spike assault. Gold's shallow uptrend remains intact. Gold printed a 2-candle swing high on Friday, but the code found it to be neutral rather than bearish. Gold's forecaster ended the week with a sell signal on Friday, dropping -0.27 to -0.16.  Given that it took a spike assault to throw gold back into a downtrend, things don't look all that bad.

The weekly forecaster has gold in a downtrend, although it moved up +0.05 to -0.04 this week - the weekly forecaster is on the edge of a bullish reversal.

The December rate-increase chances fell to 92%.

COMEX GC open interest rose +2,312 contracts this week.

Silver rose +0.05 [+0.27%] to 16.88. Until Friday, silver's uptrend had been substantially steeper than gold, but Friday's drop took silver back below the uptrend line as well as the 9 MA. Candle print Friday was a just a long black candle, which the code felt was neutral. In the past two weeks, silver has seen 6 directional changes from the forecaster. That's a lot of whipsaw action. Silver's forecaster ended the week at -0.13, which is a mild downtrend. The weekly forecaster issued a buy signal for silver this week; it moved up +0.11 to +0.03.

The gold/silver ratio rose +0.12 to 75.59, which is slightly bearish.

COMEX SI open interest fell by -5,683 contracts.

Miners were mixed on the week, with GDX up +0.40%, while GDXJ fell -0.03%. Really what happened was a strong rally Monday, followed by some chop, ending with a sell-off on Friday. Both ETFs printed long black candles, which the code found to be continuations – probably bearish. Friday's action took both ETFs back below their 9 MA lines. The HUI, which is a cleaner chart, shows a buy signal Monday, and a sell signal on Thursday. Friday's HUI forecaster has it down -0.28 to -0.31, which is a relatively clear downtrend. The HUI has also seen 6 directional changes over the past 2 weeks. That's a lot of chop.

The GDX:$GOLD ratio was largely flat this week, and the GDXJ:GDX ratio fell slightly. That's a bit bearish.

USD

The buck fell -0.61 [-0.64%] on the week, printing a swing high on Thursday. Friday's spinning top was a bearish continuation. Daily forecaster issued a sell signal on Thursday, and ended the week at -0.20, which is a shallow downtrend. However on the weekly chart, DX remains in a strong uptrend, with the 4-week forecaster at +0.40.  This could just be a correction within the longer-term DX rally.

US Equities/SPX

SPX fell -5.54 [-0.21%] on the week, with most of the drop happening on Thursday and Friday.  Thursday's move down was triggered by news that the corporate area of the tax cuts wouldn't be effective until 2019.  While Thursday's big doji candle looked as though it could be a (bullish) reversal, the SPX forecaster issued a sell signal on Friday, ending the week with a rating of -0.23. SPX also ended the week below the 9 MA. SPX weekly forecaster remains in an uptrend, where it has been for the past 10 weeks, but it is drifting lower, down -0.17 to +0.54.

Sector map shows REITs and consumer staples in the lead, while financials, materials, and industrials did worst. Looks like a somewhat-bearish rotation out of Trump Reflation.

VIX rose +2.15 to 11.29.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
REIT RWR 2.60% 7.38% rising rising rising rising ma50 on 2017-11-07 2017-11-10
Cons Staples XLP 2.15% 7.29% rising falling rising falling ma50 on 2017-11-10 2017-11-10
Energy XLE 1.43% -1.54% rising rising falling rising ma200 on 2017-10-31 2017-11-10
Homebuilders XHB 1.09% 23.34% rising rising rising rising ema9 on 2017-11-08 2017-11-10
Cons Discretionary XLY 0.73% 16.53% rising rising rising rising ema9 on 2017-11-03 2017-11-10
Utilities XLU 0.54% 20.10% rising rising rising falling ema9 on 2017-11-02 2017-11-10
Gold Miners GDX 0.40% -1.01% falling falling falling falling ema9 on 2017-11-10 2017-11-10
Technology XLK 0.02% 36.30% rising rising rising rising ema9 on 2017-10-26 2017-11-10
Healthcare XLV -0.50% 13.47% falling falling rising falling ema9 on 2017-11-10 2017-11-10
Telecom XTL -0.71% 0.89% falling falling falling falling ema9 on 2017-11-01 2017-11-10
Industrials XLI -1.07% 16.61% falling rising rising rising ema9 on 2017-11-08 2017-11-10
Materials XLB -1.22% 19.03% falling rising rising rising ema9 on 2017-11-02 2017-11-10
Financials XLF -2.61% 20.68% falling rising rising rising ema9 on 2017-11-07 2017-11-10

Gold in Other Currencies

Gold rose in most currencies, and was up in XDR by +2.78.

Rates & Commodities

TLT reversed course this week, falling -1.23%. The reversal came on Thursday – a swing high, and a forecaster sell signal. Friday's big drop (-1.51%) was just the follow-through. So much for the bond rally. Forecaster ended the week at -0.80, which shows a very steep downtrend. TY (10-year treasury) looks similar, with the sell signal happening on Wednesday. So - stocks and bonds, both selling off?  That's either money fleeing US assets, or traders moving to cash.

JNK fell -0.86% on the week, falling 4 days out of 5. Friday's print was a swing low, which had an 80% chance of being a bullish reversal. JNK tends to do this – sell off really hard, only to reverse hard off the lows. Longer term, JNK has made a lower low on the weekly chart, and closed below its 50 week MA for the first time since mid-2016. Volume was immense this week. Overall the chart is saying that if you own JNK, you should be selling the rallies, rather than buying the dips.

CRB rose +1.20%, with all of the gain happening on Monday. CRB has moved to within a few percentage points of its previous high set back in January. Energy led (+2.75%) with agriculture (+2.53%) close behind.

Crude climbed +1.28 [+2.30%] to 57.01, with all of the gains happening on Monday's strong move higher. Crude spent the rest of the week chopping sideways, a collection of spinning tops and dojis. As price moved sideways, the forecaster plunged more than 0.70 points to +0.09 – just above stall speed. Weekly forecaster remains in an uptrend, at +0.42. EIA report was slightly disappointing: crude +2.2m, gasoline -3.3m, distillates -3.4m. Rig counts were downright bearish, with the North American rig counts rising by 20 rigs this past week; US +9, and Canada +11. Shale producers look to be adding production now with oil above 55. 

All of this news probably should have caused oil to correct, but my guess is that traders don't want to be short crude going into the weekend with the situation in Saudi Arabia still "fluid."  An amusing and highly editorial article from Al Jazeera - targeted a few months back by MBS - is more-than-suggesting an explicit “shakedown” aspect to the whole affair: http://www.aljazeera.com/blogs/middleeast/2017/11/saudi-arabia-game-thobes-171105162806956.html.

Physical Supply Indicators

* SGE premiums over COMEX are at +7.81.

* The GLD ETF tonnage on hand fell -2.66, with 843 tons in inventory.

* ETF Premium/Discount to NAV:

 PHYS 10.39 -0.56% to NAV [up]
 PSLV 6.34 -0.73% to NAV [up]
 CEF 13.24 -2.6% to NAV [up]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) no premium for gold and a slight premium for silver.

* Big bars premiums were: gold [1kg] 1.35% and silver [1000oz] 3.26%.

Futures Positioning/COT

No COT report this week.

Gold Manipulation Report

There were no after-hours spikes this week.  Of course, there was the big spike assault at 11am on Friday - but that wasn't "after hours".

Eurozone Status

  • Italian Elections: New polling data shows anti-Euro M5S are ahead of the PD: 27.8% to 25.45%. A combination of FI + LN (center-right) are now 29.7%.

  • Italy has passed an electoral law at long last; 36% of representatives will be elected by FPTP, and 64% using proportional representation.  As a result, the next Italian election will be held on March 11th, 2018. https://en.wikipedia.org/wiki/Italian_electoral_law_of_2017

  • Sicily, an Italian province, had a regional election this past weekend, which gives us a foretaste of the upcoming national election. Sorting out what happened is complicated, but the executive summary is: the left was kicked to the curb, a center-right coalition will end up running the place, and M5S will be the largest single party. The frantic and belated attempts by the left to stem the migrant tide by hook or crook does not seem to have been persuasive to the voters in Sicily.  https://www.thelocal.it/20171107/five-things-sicily-election

  • After the Spanish supreme court annulled Catalonia's independence declaration, the Spanish Foreign Minister suggested that Spain would consider holding a national referendum on whether or not to allow “legal independence referendums” - a vote to allow a vote. That is, all of the people in Spain would vote on whether or not to allow Catalonia to be able to vote.

  • Catalonia's President (former president?) was allowed to remain free on bail by a Belgian court until it could hear Spanish charges of rebellion (penalty: 30 years in prison). This allows him to remain free to campaign for the upcoming regional vote in December, which is now being seen as a de facto independence referendum. Current polls suggest that pro-independence parties would win the election, but might not have a parliamentary majority. https://www.reuters.com/article/us-spain-politics-catalonia/catalonias-ex-leader-granted-freedom-to-campaign-for-independence-idUSKBN1D616K

  • A press release from the statistical service of Germany on migration, as translated (fairly well) by google, provides some interesting numbers on migration to Germany. There are 158,000 applicants whose applications have been rejected, but who remain in country for various reasons. Of the total applicants, 64% are male, and the average age is 29.4 years. https://translate.google.com/translate?hl=en&sl=de&tl=en&u=https%3A%2F%2Fwww.destatis.de%2FDE%2FPresseService%2FPresse%2FPressemitteilungen%2F2017%2F11%2FPD17_387_12521.html

Summary

Now it appears as though the corporate tax breaks won't happen until 2019; this displeased both the equity market and the dollar, both of which sold off in response – the dollar more intensely than equities. Saudi Arabia is looking extremely unstable; a bevy of billionaires is being held prisoner for “suspected corruption” in a five star hotel in Riyadh.  So far this hasn't directly affected gold just yet, but that also could be because of official intervention targeted at keeping a lid on prices. Certainly the drama is keeping crude hovering around 57, at least for now.

Gold, for its part, appears to be the victim of a suppression campaign this week, with the largest, most visible assault happening on Friday.  At the same time, the moves down were modest; it does not appear that the commercials were able to cause any sort of price collapse.  That's a positive sign.

Gold and silver big bar shortage indicators shows no signs of shortage; premiums on big-bar gold and silver remain normal. GLD tonnage fell, while ETF premiums moved higher. Shanghai premiums remain positive.

There was no COT report this week.

Things seemed relatively quiet last week, but now there seem to be a lot of balls in the air.

  • An election coming up in Catalonia in early December which is being treated by the parties as though it is a de facto independence referendum.  One hopes the Spanish Federal police won't beat the voters this time around.
  • apparent inability of Merkel to form a government in Germany where the central issue dividing the parties is migration
  • a Shakedown in Saudi Arabia that might lead to civil war
  • the Russia probe, where a Federal obstruction of justice charge could net the unfortunate victim 20 years in prison and a $250,000 fine.  Strategy: hit the kids with charges, and make the dads cave in.
  • Italian election, now set for March 11th, where it now appears as though the Euro-skeptics in one form or another will come out winners.

All of this should definitely provide a bid underneath gold, in spite of the spike assaults.  The technicals aren't showing any sort of imminent collapse in the PM space, although the miners look weakest.  My read on all the back and forth price action in the metals over the past few weeks is that its an attempt to keep a lid on prices.  I don't say this all that often, but the charts are behaving in funny ways right now, there isn't any specific news driver for many of the moves, and so I chalk it up to suppression attempts.

Gold won't start rallying seriously until confidence in government starts to ebb, and we're just not there yet.  Gold might attract more money if SPX starts to correct more seriously.  We'll have to see if that happens.  Oil, on the other hand, will go nuts if anything more serious happens in Saudi Arabia.

Next week: Retail Sales [Wed], Industrial Production [Thu], Housing Starts [Fri].

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7 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4770
flattening yield curve = recession predictor

When the 1 year yield (black) moves up to the 10 year yield (red), it is sometimes - but not always - a prediction of an impending recession.  Right now, the 1 year yield is clearly moving up to the 10 year yield, and if the current path is any indication, that sets us up for a possible recession sometime around 2020.  There seems to be a 1 year lag between the flattening of the curve, and the actual recession hitting.

Of course, this is during "normal times."  Who knows what the rules are today.

Here's another try at that same chart - this time I do the math for you.   A dip below the 0 line = recession coming shortly.  This chart suggests that the inverted yield curve almost always predicts a recession.

newsbuoy's picture
newsbuoy
Status: Silver Member (Offline)
Joined: Dec 10 2013
Posts: 213
BANKERS UNLOAD A HUGE $4 BILLION NAKED COMEX GOLD SHORT

Mysterious Gold Trades of 4 Million Ounces Spur Price Plunge

  • Bullion jolted after volatility seen near lowest since 2001
  • Prices poised for biggest loss in more than three weeks

Trades that moved about 4 million ounces of gold in a matter of minutes awakened the precious metal from its slumber.

After 11:10 a.m. on the Comex in New York almost 40,000 contracts, each representing 100 ounces of the metal, traded in a span of 10 minutes. That triggered a sell-off, sending prices down as much as 1.1 percent.

...while the move appears to be dramatic to gold investors, the reality is that it is probably a small speculative play from a major fund. He added that this type of move could be expected as funds square books ahead of the end of the fiscal year on Nov. 30.

https://www.bloomberg.com/news/articles/2017-11-10/mysterious-4-million-ounces-of-gold-trades-trigger-price-plunge

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 155
What, no Fat Fingers this time?

Love the explanation these baffoons come up with when this stuff happens. 

Last time it was: 

Instantly, analysts dismissed the move as the result of a “fat finger” trade — a mistakenly large order by a trader who made an order about 100 times too big.

Simply thinking about that explanation doesn't add up. In order to make something 100 times larger than you want to you have to hit the zero button TWICE. That's how zeros work. An order 10 times too large may simply be explained like that, but not 100 times. 

This time it's just a "small speculative play"? Sure. 

They really think the little people are just that stupid. 

 

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1467
And they are, apparently

They really think the little people are just that stupid. 

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

Bout time to get some Bitcoin.  I'm guessing it doesn't go much lower.  It's currently around $5800ish.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4770
so you want a btc update?

Ok, so BTC has managed to drop to the 6000 level, and through it.  Will it stop here?  Its hard to say.  I'm guessing there's a fair amount of support 5500-6000.  Candle code shows that today's long black has a 62% chance of being a reversal.  Volume was very heavy, a decent-sized lower shadow showed some dip-buying.

Forecaster doesn't gamble on reversals though, its still deeply in downtrend-land.

I'm not sure 6000 will hold.  We might have one more leg down.  Next support level is down at 5000.  You could put a buy order slightly above 5000 and you might get lucky.  Bitcoin tends to like its round numbers.  That's because we humans like them.

Bitcoin cash surged to almost $2000, but has since pulled back.

From what I see, people are essentially wagering on the future popularity of each software release.  They are called "coins" but the coins are really just side effects spun off by a big bag of code.  Coins are essentially a share of the future operations of the software package. Or something like that.

 

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

I've been slaving away applying my forecaster technique to bitcoin intraday.  Timestamps are in GMT.

The 4h forecaster issued a buy signal at about 6300.  The daily forecaster has yet to issue a buy, but the candle code has rated today's swing low at an 80% chance of being a reversal.  That's as high as swing low ratings get.

I think I'm going to stop commenting on what I think bitcoin will do.  My code ends up being smarter than me, and its getting embarrassing.

BItcoin cash has (mostly) retraced its spike high.  I'm guessing that's the reason for the bounce.

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