PM Daily Market Commentary - 11/20/2017

By davefairtex on Tue, Nov 21, 2017 - 2:48am

Gold plunged -18.20 [-1.41%] to 1276.20 on very heavy volume, and silver fell -0.42 [-2.43%] to 16.89 on extremely heavy volume. The selling pressure started at around 8:30 am, and relentlessly pounded gold, silver, and platinum down through about mid-day.

I can't tell you what caused the sell-off, because there was no cause that I could see. Copper rallied, crude was off a bit, bonds were unchanged, equities went nowhere - but the metals prices were hammered for about 5 hours straight. The Euro had a bit of an exciting day, given Merkel's failure at forming a government, but it only moved -0.50%, which was not generally enough to cause this sort of move. What's more, the selling kicked off at 815 am rather than at market open in Asia – if it were related to Merkel, the metals should have been hit right away, but they weren't. Instead, the metals just went sideways at the open for hours.

Platinum actually suffered worst of all, plunging -2.96%; the decline in platinum seemed to precede the drop in gold and silver by a few minutes.  For platinum, it was the largest down day in months, the highest volume day in six weeks.  The market is quite small, and movements of platinum are very closely aligned with gold. It's almost as if someone said, “that was an awfully big rally on we need a big down day on Monday, so let's smash platinum and silver and gold will follow.”

Ok. Gold's candle print today was a swing high (50% reversal), and gold's forecaster dropped -0.65 to -0.18. That's a sell signal for gold – the 8th signal in the past 15 days. The sideways chop continues. Gold remains above its uptrend line, so the forecaster downtrend hasn't turned into a chart downtrend. Instead, we continue to chop violently back and forth in what amounts to a gentle uptrend.

COMEX GC open interest fell by -9,277 contracts.

Rate rise chances (Dec 2017) remain at 92%.

Silver was hit far harder than gold, on much higher volume. This makes me suspect that silver was the lever that was used to move the PM group lower. There weren't a huge raft of long stops triggered in some big spike, it was just a relentless smashing through about six different minor support levels. Candle print was a swing high/bearish engulfing, which had a 51% chance of being a reversal. Forecaster plunged -0.60 to -0.34, which is a sell signal for silver – like gold, the 8th sell signal over the past 15 days. Silver did break below its uptrend line, which is bearish for silver's chart.

COMEX SI open interest fell by -7,611 contracts.  1183 tons of paper silver, gone - 3.5% of the total open interest.

The gold/silver ratio rose +0.78 to 75.58. That's bearish.

The miners fell, but not by as much as I would have expected; GDX dropped -1.10% on moderately heavy volume, while GDXJ fell -1.91% on heavy volume. Normally when the metals are smashed this badly, the miners have one of those 5-7% down days, so this is actually a "good outcome." While both miner ETFs printed swing highs, the candle print ratings were neutral rather than bearish. Both miner forecasters also issued sell signals: GDX -0.47 to -0.21, GDXJ -0.52 to -0.29. On the charts, the miners appear close to a breakdown, but that probably just depends on where the metals go tomorrow.

Today, the GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. That's unusual – and probably neutral.

Platinum plunged -2.96%, palladium dropped -0.65%, and copper rallied +0.55%. Copper, palladium: uptrend, platinum: sell signal, downtrend.  Did I mention that platinum was really hammered?

The buck rallied +0.41 [+0.44%] to 93.78, mostly because of a -0.50% drop in the Euro, which was probably caused by Merkel's failure to form a government. The move in the currency did not trigger the moves in PM. Today's candle print was a confirmed bullish spinning top (a kind of swing low), which had a 41% chance of being a bullish reversal. Forecaster jumped +0.36 to -0.45. Buck remains below its 9 MA and in a downtrend, but the ongoing political uncertainty in Germany will probably keep the buck from sinking too much further.

Crude fell -0.40 [-0.70%] to 56.38. Crude was actually down more than a buck intraday, but buyers showed up to pull prices back up. Candle print was a spinning top, which was a bullish continuation. Forecaster fell -0.09 to +0.39, which leaves crude still in an uptrend. Crude ended the day just above its 9 MA. There is an OPEC meeting scheduled for Oct 30th – that's next Thursday. If OPEC doesn't extend the production limits, oil will probably have a big sell-off.  I'm guessing they won't be that stupid.

SPX rose +3.29 [+0.13%] to 2582.14. There has been no follow-through off last Thursday's rally. Print today was a short white (neutral) candle. Forecaster was up +0.16 to +0.22. Financials led (XLF:+0.46%) while sickcare trailed (XLV:-0.42%). SPX is just moving sideways right now.

VIX plunged -0.78 to 10.65.

TLT fell -0.04% - basically no change. Candle print was a long white, which was a bullish continuation. Forecaster fell -0.08 to +0.31. TLT remains in an uptrend. The 10 year treasury does not look nearly as good; it dropped -0.22% today, and has fallen into a downtrend.

JNK rose just +0.05%, trying to rally and failing. The spinning top candle (which looked like a shooting star) was neutral, however, and the forecaster moved up +0.32 to +0.64 – a bit surprising, since I don't think JNK looks all that strong.

CRB fell -0.62%, with 4 of 5 sectors falling. PM was by far the worst performer, dropping -1.78%.

It was a bad day for the metals, with platinum and silver leading gold lower.  Was it all just genuine selling of the metals for - some reason I can't quite fathom - or was it suppression?  I can't think of any genuine reason why platinum should plunge quite so hard today, on such immense volume.  Often in "normal" moves, all sorts of items line up - the buck will rally at the same time gold drops.  Copper shoots higher and so does silver.  The commodity complex sells off as a group, and that drags the metals lower.  Bonds and gold sell off while the equity market rallies in a risk on move.  That sort of activity is how things normally work.

But that's not what happened today.

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