PM End of Week Market Commentary - 11/17/2017

davefairtex
By davefairtex on Sat, Nov 18, 2017 - 5:11am

On Friday gold rallied +15.90 [+1.24%] to 1294.40 on heavy volume, and silver jumped +0.23 [+1.32%] to 17.30 on very heavy volume. The rallies on Friday had nothing to do with currencies – it seemed to be a relatively broad-based commodity rally, with energy, PM, agriculture, and industrial metals all moving higher. Both silver and gold broke above their recent trading ranges, and there appeared to be some short-covering that happened on the breakout.

The PM sector map improved this week, but it is not yet in “bullish mode.” Silver led gold, but the miners are lagging, with the seniors outperforming the juniors. What's more, the miners as a group are lagging the metals. While most items have moved above their 9 MA lines, and many are back above the 50 and 200 MA, the lagging miner bloc should give us some amount of pause. When PM is ready to rally for real, the miners will be screaming higher. They aren't there yet.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Silver $SILVER 2.55% 3.90% rising falling falling falling ma50 on 2017-11-17 2017-11-17
Platinum $PLAT 2.38% 1.90% rising falling falling falling ma50 on 2017-11-17 2017-11-17
Gold $GOLD 1.47% 6.45% rising falling rising falling ema9 on 2017-11-17 2017-11-17
Senior Miners GDX 1.20% 7.00% rising falling falling falling ema9 on 2017-11-17 2017-11-17
Junior Miners GDXJ 0.90% -6.22% rising falling falling falling ema9 on 2017-11-17 2017-11-17
Silver Miners SIL 0.88% -11.71% rising falling falling falling ema9 on 2017-11-17 2017-11-17
Palladium $PALL 0.01% 36.64% rising rising rising rising ema9 on 2017-11-17 2017-11-17
Copper $COPPER -0.05% 23.63% falling rising rising falling ma50 on 2017-11-17 2017-11-17

Gold rose +18.80 [+1.47%], with almost all of the gains coming on Friday. Gold has broken above its uptrend channel, and the volume bar on Friday strongly suggests that a fair amount of short-covering happened as price popped above the previous high. Candle print was an opening white marubozu, which is a bullish continuation. Forecaster shot higher, up +0.79 to +0.48, which is a buy signal for gold. One caveat to the “buy signal”: I have noticed that buying breakouts in gold can be a frustrating experience; gold may well retrace for a few days on Monday and Tuesday. Gold is now above all 3 moving averages.

Confirming the breakout on the daily chart is the gold weekly forecaster, which also issued a buy signal this week.

The December rate-increase chances fell to 92%.

COMEX GC open interest rose +30,833 contracts this week.  Almost all of that happened on Friday; 95 tons of paper gold were added.

Silver rallied +0.43 [+2.55%] to 17.30. Much of the gains happened on Friday, which saw silver break out above the previous high set last week. Silver's long white candle on Friday was a bullish continuation, and silver's forecaster closed the week at +0.26, which is a slow uptrend. Friday's move took silver back above all 3 moving averages too. All of that together is bullish.

Weekly forecaster for silver remains in an uptrend, although with a rating of +0.13, its not a very strong move.

The gold/silver ratio fell -0.79 to 74.80, which is bullish.

COMEX SI open interest rose by +5,239 contracts.

Friday rescued the miners this week; they were down right up until Friday's rally. On Friday though, the junior miners outperformed the seniors, moving up +1.54%; although that's not a massive move (and it barely kept pace with the move higher in gold), it is good to see juniors doing better than the seniors, even if just for a day. What's more, both both junior and senior miners issued buy signals on Friday: GDX +0.43 to +0.26, and GDXJ +0.46 to +0.23. The HUI confirms the move, also issuing a buy signal Friday. The HUI chart suggests a possible double bottom chart pattern is forming; to confirm a double bottom, price must rise about the middle hump (around HUI 190). That would be quite positive if it happens.

The HUI weekly chart has yet to confirm; it remains in a slight downtrend. This reinforces the sense that the mining shares continue to lag over the longer term.

The GDX:$GOLD ratio fell -0.54%, and the GDXJ:GDX ratio fell -0.29%. That's a bit bearish.

USD

The buck fell -0.75 [-0.80%] on the week, with most of the losses coming on Tuesday. Not even the House passing Tax Reform was enough to pull the buck out of its downtrend – I believe that's a bad sign for the buck. When markets sell off on good news, that is always bearish. DX forecaster closed the week at -0.81, which is a strong downtrend.

The 4-week DX forecaster has yet to confirm the downtrend; it is weakening (down -0.18 to +0.21) but it is relatively slow to change trend by design – otherwise the whipsaw action in the dollar would end up rendering the forecaster useless. Every instrument has its own rhythm to it.

US Equities/SPX

SPX fell -3.45 [-0.13%] to 2578.85 on the week, more or less chopping sideways with a downward bias. SPX did drop fairly sharply on Wednesday, but the good news (for companies) on Tax Reform was good for only one day of rally. Forecaster ended the week at +0.06, with a buy signal for SPX coming on Friday. Weekly forecaster ended the week at +0.43. That's still an uptrend. SPX weekly remains above its 9 MA.

Sector map shows telecom and homebuilders in the lead, while energy was hit hard. Overall the sector map looks a bit bearish – even more so when you factor in the progress of Tax Reform through Congress, which theoretically should be “risk on” news.

VIX rose +0.14 to 11.43.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Telecom XTL 3.23% 0.61% rising falling falling rising ema9 on 2017-11-16 2017-11-17
Homebuilders XHB 1.74% 22.63% rising rising rising rising ema9 on 2017-11-08 2017-11-17
Cons Discretionary XLY 1.27% 14.84% rising rising rising rising ema9 on 2017-11-03 2017-11-17
Gold Miners GDX 1.20% 7.00% rising falling falling falling ema9 on 2017-11-17 2017-11-17
Cons Staples XLP 0.88% 8.05% rising falling rising falling ma200 on 2017-11-17 2017-11-17
Utilities XLU 0.54% 20.20% falling rising rising falling ema9 on 2017-11-17 2017-11-17
Materials XLB 0.34% 20.50% rising rising rising rising ema9 on 2017-11-16 2017-11-17
Financials XLF 0.31% 18.05% falling rising rising rising ema9 on 2017-11-07 2017-11-17
Healthcare XLV 0.05% 15.32% falling falling rising falling ema9 on 2017-11-17 2017-11-17
REIT RWR -0.18% 6.45% rising rising rising falling ema9 on 2017-11-16 2017-11-17
Technology XLK -0.24% 33.65% rising rising rising rising ema9 on 2017-11-16 2017-11-17
Industrials XLI -0.79% 14.97% falling rising rising rising ma50 on 2017-11-13 2017-11-17
Energy XLE -3.20% -4.81% falling rising falling rising ma50 on 2017-11-15 2017-11-17

Gold in Other Currencies

Gold rose in all currencies, and was up in XDR by +13.21.

Rates & Commodities

TLT spent the week recovering from last Friday's big plunge, rising +1.85%, with TLT issuing a buy signal on Tuesday. TY confirmed, issuing its own buy signal Wednesday. TY weekly also issued a buy signal this week too, although there has been a lot of whipsaw action in TY over the past few months. TY monthly remains in a fairly strong downtrend, so perhaps we shouldn't expect too much from bonds until that reverses. Sometimes when things move around a lot on the daily chart, it helps to pull back to weekly and monthly timeframes to provide perspective.

JNK rose +0.30% on the week, making a new low on Wednesday but then rallying sharply on Thursday on the equity market rally/Tax Reform passage news. JNK issued a buy signal on Thursday. Since JNK is a relatively new fund, I don't have weekly or monthly charts for JNK – I use BAA from FRED, which isn't quite as “junky”, but it does provide a sense; BAA weekly and monthly charts are more or less chopping sideways.  A "bullish" reversal in the BAA yield chart below of any real substance would be "risk off", since rising BAA yields = falling BAA bond prices.  Note that's the inverse of the TY.CW chart above.

CRB fell -1.26%, with 4 of 5 sectors moving lower. PM was the sole sector that rose this week.

Crude fell -0.23 [-0.40%] to 56.78 this week, plunging hard on Tuesday, only to rally sharply back on Friday, recovering most of the Tuesday loss. Friday's print was a white marubozu, which was a bullish continuation. Forecaster jumped +0.69 to +0.45, which is a buy signal for crude. Friday's rally took crude back above its 9 MA, which is a positive sign. The cause for the plunge on Tuesday was probably the bearish-looking IEA report, which suggested that US shale would end up producing huge amounts of oil-and-gas for as far as the eye could see (i.e. 2040). In addition, the API report Tuesday evening showed large inventory builds in both oil and gasoline. Fortunately, Wednesday's EIA report showed a much smaller build (crude +1.9m, gas +0.9m, distillates -0.8m) which seemed to stop prices from declining further. Friday's rally – caused by what? The ISDA committee voted that Venezuela has officially defaulted - both the government and its oil firm PDVSA. Who gets to vote? Well lets see: Goldman Sachs, Deutsche Bank, JP Morgan, Credit Suisse, Barclays – to name a few. Another possible mover on Friday: Platts reported that China's crude oil inventories fell for the first time in 12 months.

Lastly, the situation in Saudi Arabia is getting substantially clearer: it is now definitely all about shaking down Saudi billionaires for cash - presumably to refill the shrinking Saudi government treasury. Its yet another example of the following rule that we all need to keep firmly in mind: when things go bad, the government will change the rules on you, usually with no notice at all. The act of confiscation is just done a bit more overtly in other places.  If we start having troubles at the Treasury, we won't get rooms in the Ritz Carleton where we can consider our options - but the shakedown will happen just as surely.

Physical Supply Indicators

* SGE premiums over COMEX are at +7.25.

* The GLD ETF tonnage on hand rose +0.30 with 843 tons in inventory.

* ETF Premium/Discount to NAV:

 PHYS 10.54 -0.71% to NAV [down]
 PSLV 6.48 -0.87% to NAV [down]
 CEF 13.46 -1.1% to NAV [up]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) no premium for gold and a 1% discount for silver.

* Big bars premiums were: gold [1kg] 2.5% and silver [1000oz] 4.4%.

Futures Positioning/COT

COT report is as of Nov 14th, when gold was at 1269.70 and silver at 17.02.

In gold, the commercial net position fell by -504 contracts; almost no change. Managed money net rose by +5.3k contracts, which is a small change. Roughly speaking, gold COT could be supportive of a short term low here, but probably not a major turning point.

In silver, commercial net position rose by +1.1k contracts, a small change. Managed money net position rose by +2.4k contracts, also a small change. Roughly speaking again, silver looks closer to a high than a low, but its mostly inconclusive.

Gold Manipulation Report

There were no after-hours spikes this week. There were a fair number of assaults on both gold and silver, but none that happened during the magic “after hours” period that used to be so popular in the past.

Eurozone Status

  • Italian Elections: No new polling data. Anti-Euro M5S are ahead of the PD: 27.8% to 25.45%. A combination of FI + LN (both semi-anti-Euro parties) are at 29.7%.

  • Merkel continues to be unable to form a government. Immigration remains the primary issue dividing the parties. Gone are the headlines talking about her “landslide victory” - adjectives now include “struggling”, “weakened”, “faltering”, “overtime”, “final hour”, and so on.

  • Related: a poll estimating that 37% of Germans and 36% of Italians feel that immigration is their largest issue – up from 9% and 3% back in 2012. That's why Merkel and Renzi are in such trouble right now. https://www.ft.com/content/bfabfcc2-c882-11e7-aa33-c63fdc9b8c6c This results in the spectacle of the social democrat Italian government essentially funding migrant concentration camps in Libya ahead of the March 2018 elections in an act that smacks of total desperation.

  • The rest of Spain appears very unwelcoming to the Catalan demands for independence: 39% of people polled say things are fine right now, 28% want less regional autonomy, 13.4% want more regional autonomy, and only 10.2% would allow independence. https://www.politico.eu/article/spain-regional-conundrum-catalan-independence/

Summary

It was all pretty quiet in PM until Friday, when most of the commodity complex took off about halfway through the New York session, with PM performing best, with oil coming in a close second. It was a nice finish to a relatively quiet week.  The one-day rally in equities on Thursday had no follow through, and bonds have recovered from last week's smash. The buck fell in spite of Tax Reform passing the House. I'm feeling a vague sense of risk off right now.

Gold and silver big bar shortage indicators are mixed; premiums on big-bar gold and silver have moved higher, GLD tonnage edged down, while ETF premiums moved lower. Shanghai premiums remain positive.

The PM COT report showed very little change, and remains mostly inconclusive. It might support a near-term bullish reversal in gold, and it might be a bit top-heavy in silver, but the positions suggest that no major turning point is in the offing.

Looking forward – Catalonia is still scheduled to have its vote in early December, Merkel still can't form a government primarily because of immigration, the shakedown in Saudi Arabia has become more overt, Italy has its vote in early March where the only question right now is: will it be M5S + Northern League, or Forza Italia + Northern League running the country. And there is the China debt wildcard.

At least with impending Tax Reform, all those US companies with big cash hoards stored overseas can look forward to repatriating all that money – presumably to buy back more stock, pumping up stock prices even further in order to reward their executive teams for a job well done. Making America Great Again: One Executive at a Time.

Next week: a shortened trading week due to the Thanksgiving holiday in the US. We have Durable Goods orders and the FOMC minutes release – both on Wed.

Forecasting code says:

Uptrend: gold, silver, copper, platinum, treasuries, miners, natgas, crude, SPX.

Downtrend: USD.

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11 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4851
consumer-grade NSA-inspired surveillence device

So you want an area bug that looks like a USB cable, uses the cell network to report back, and also sends location data?

Its $10.

https://www.aliexpress.com/item/1m-GPS-Positioning-Pick-up-Line-Tracker-Remote-Tracking-Cable-GIM-Answer-Monitor-USB-Charging-Data/32813314360.html?trace=msiteDetail2pcDetail

Plug in your GSM microsim, and send it texts to turn on audio monitoring.

It calls you when there is noise around the item > 45 db, hangs up when the noise stops.  Or, you can call the sim card and the mic turns on.

Also, it responds to texts with its GPS location.

Oh it also acts as a USB pass-through cable too.

Did I mention it was $10?

Original article here:

https://boingboing.net/2017/11/15/cottonmouth-for-the-rest-of-us.html

And of course someone ripped it open and poked around inside:

https://ha.cking.ch/s8_data_line_locator/#s8-data-line-locator-capabilities

Important caveat: the thing can be remotely controlled from a website (which is not mentioned in the docs), and is far more capable than the documentation describes.  The hacker tearing the device apart actually was listened to by an unknown individual - and only found this out when viewing his (GSM) bill.

It occurs to me that the $10 price might just be a loss leader.  The real money could be on the back end through blackmail, once they figure out who you are recording and why.  In CA, for instance, its illegal to do this - I think its a felony.  How much would you pay not to be reported to the police?

Fun device though.  :)

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4851
Merkel fails to form majority government

Huge news out of Germany where the relatively conservative FDP has pulled out of talks to form a new government.  Since "there is little appetite for a second vote" (see article, below) the more likely outcome is that Merkel will attempt to form a "minority government."

The negotiations foundered on one issue: migration.  Greens wanted no limits on migration, while the FDP wanted a hard limit (and my guess is, so did every other German politician who has an eye on the 37% of Germans who rate this as their #1 issue).

Fun fact: last time there was a minority government in Germany was in 1932, during the chaotic period that occurred immediately prior to the Nazis seizing power.

I have maintained for several years that the migration issue would end up blowing EU apart.  It has already done that to the German government.  What happens when there is an EU banking crisis and Germany has a weak government in place?

https://www.reuters.com/article/us-germany-politics/merkel-fourth-term-in-doubt-as-german-coalition-talks-fail-idUSKBN1DJ0I3

A major sticking point had been a demand by the conservatives for a cap on the number of asylum seekers that Germany accepts each year, a measure opposed by the Greens.

There is little appetite for a second vote, especially as the main parties fear that the AfD would win more than the almost 13 percent of votes it secured in September.

Failure to form a government in Europe’s largest economy could have implications for everything from euro zone reforms to European Union policy on Russia and Turkey.

 

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
Joined: Dec 14 2008
Posts: 422
foundered

Thanks for that.  Things are fishy enough 'round here these days....Aloha, Steve.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5468
Germany's political future

While I am certainly no expert on German politics, I can provide my assessment after my recent trip; the German people are harboring many more refugee resentments privately than they will admit to publicly.

I gauged this in the way the people lowered their voices and looked around to assure they were not being overheard when they told me their private views.

No different than the number of equally silent Trump voters.  When the great machinery of your captive press is busy shaming you for holding a particular view or even, as is the case in Germany and elsewhere in the EU, criminalizing your held views, then there's a lot of incentive to say one thing but think and VOTE! another way.

These elections confirm my recent anecdotal observations.  

Great question Dave - what will a politically fractured Germany do during the next great EU banking crisis which is just one stiff breeze away from happening?

My guess is "less than it might do otherwise."

Paralysis and fast moving financial crises are poor bedfellows.

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 291
Failure

Really interesting how lately you never seem to get two strong days in a row either up or down in PMs and miners.  Just when it looks like a breakdown is imminent, you get some chop and then a breakout that ultimately fails as well.  I guess we have leaked down from the highs over time, so I suppose, depending on your time frame, we're in a solid downtrend.  Either way, the nice run on Friday will be more than erased by the end of the day today, from the looks of things.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4851
moving averages

CR-

I know its annoying that PM can't seem to string together two good days in a row.  Its one reason I suggested that people not try to buy breakouts, but instead, buy the plunges.  Like today.  Today counts as a plunge.  If we're chopping sideways with lots of heavy movement up and down...I'm thinking, buy the down days.  We aren't in a downtrend (at least not yet!) so theoretically its not dangerous.  :)

In fact, looking at the weekly, gold actually looks pretty good.  The 200 has flattened out and is even starting to rise a bit.  The 50 crossed over the 200 back in December, and price is above both averages.  That all says that gold has bottomed out.  Probably.

[Silver's weekly doesn't look nearly as nice.  It might need a bit longer to recover.]

thc0655's picture
thc0655
Status: Diamond Member (Online)
Joined: Apr 27 2010
Posts: 1482
You'd be proud of me Dave

Having followed PM's daily since 2010 I have become quite educated on the subject.  But more than that, I have become emotionally disengaged from the price movements.  I don't get the least bit excited, depressed, angry or anything else anymore.  I hope you're proud of me Dave!  I'm just dollar cost averaging at this point, making a small purchase every month.  But that purchase requires a one hour round trip, so I go when I get paid and when I can fit it into my schedule, not when the ebbs and flows might indicate a good opportunity to buy.  Of course it helps that I'm in it for the long term, and have not been trading in and out of positions.  I do look at the prices every day, but not to see how my investment is doing.  I know what's going to happen so I know how my investment is going to turn out in the long run.  Now, I'm just looking for signs that the camel's back has broken or the avalanche has begun, and I look for that in 20 places in addition to prices (geopolitics, stock markets, other commodities, my local economy, etc.).

"Welcome to the Hunger Games.  And may the odds be ever in your favor."

rl's picture
rl
Status: Bronze Member (Offline)
Joined: Feb 9 2009
Posts: 39
Islam in Europe
HI Chris, 
 
I've been reading a lot about what has been going on in Europe
now that so many millions of Muslim migrants have entered 
the past few years.
 
It's been causing some serious issues!
 
 
Many people are speaking on the issues, 
including former muslims. 
 
 
Here are some knowledgeable and well researched commentators about 
Islam that you can find on Youtube and Twitter
 
 
Bill Warner, Political Islam, PHD
Sharia Watch
Jihad Watch,Robert Spencer
Voice of Europe  V_of_Europe
barenakedislam
Onlinemagazin
Sam Corfield
 
 
Former Muslims:
 
The Masked Arab
ExMuslimBecause
Yasmine Mohammed
ExMuslim TV
 
 
 
Do take a look
 
 
 
 
Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 291
Good Post Dave

Your charts help.  It would "feel" better if gold could get and remain above $1300 and silver above $17.  Seems like we get a run and eclipse those marks and then break back below shortly after.  Lots of manipulation along the way.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4851
emotion in markets

Tom-

While emotions may be our guide to understanding what we want (and don't want) in daily life, they are killers when we try and apply them to the market.  Congratulations on stripping away that handicap for yourself!

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5468
Thanks rl, Will Do
rl wrote:
HI Chris, 
 
I've been reading a lot about what has been going on in Europe
now that so many millions of Muslim migrants have entered 
the past few years.
 
It's been causing some serious issues!
 
 
Many people are speaking on the issues, 
including former muslims. 
 
 
Here are some knowledgeable and well researched commentators about 
Islam that you can find on Youtube and Twitter
 
 
Bill Warner, Political Islam, PHD
Sharia Watch
Jihad Watch,Robert Spencer
Voice of Europe  V_of_Europe
barenakedislam
Onlinemagazin
Sam Corfield
 
Former Muslims:
 
The Masked Arab
ExMuslimBecause
Yasmine Mohammed
ExMuslim TV
 
Do take a look

Thanks for the list rl.  I'll take a look.

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