PM Daily Market Commentary - 11/22/2017

By davefairtex on Thu, Nov 23, 2017 - 7:30am

Gold rallied +11.70 [+0.91%] to 1291.80 on extremely heavy volume, while silver moved up +0.19 [+1.12%] to 17.13 on heavy volume. The rally in PM mirrors a big (-0.78%) plunge in the buck; much of today PM's move was just a currency effect.

What caused the dollar plunge?  It wasn't the FOMC minutes; the move in the buck started roughly around the time of the durable goods report at 8:30 am.  The report did look somewhat weak, but it didn't look weak enough to cause the buck to drop that much - at least not to me.  Its also possible that hints of rebellion from the rank and file members of the SPD - in favor of a grand coalition - might have helped the Euro as well, although I'm unsure about the timing of that particular news item.

My sense is, the collective memory of "what happens if you have a minority government" (i.e. 1932) looms large in the background in Germany.  That may end up driving the parties together, when logic suggests they should take another path.

Gold moved slowly higher along with the Euro until just after 8 am, at which point it started moving higher more rapidly, paralleling the move higher in the Euro which started up (+0.71%) about that same time. Candle print today for gold was just a long white candle (no rating) and the gold forecaster jumped +0.59 to +0.21 - yet another buy signal, reversing yesterday's sell signal. Forecaster is useless when the trend is weak. Over the longer term, gold is moving slowly higher, on steadily rising volume.

COMEX GC open interest rose by +8,735 contracts.

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

Silver's pattern looked a bit different. It crept slowly higher until 9am, whereupon it shot up 15 cents in about 15 minutes. That was silver's move for the day. Candle print was a closing white marubozu (no rating), and silver's forecaster moved up +0.47 to -0.05. Silver's plunge on Monday was more intense than gold's drop, and so today's rally wasn't nearly enough to make up for it.

COMEX SI open interest fell by -1,442 contracts.

The gold/silver ratio fell -0.16 to 75.41. That's bullish.

The miners did well, with GDX up +0.88% on moderate volume, while GDXJ rallied +1.56% on moderately heavy volume. The forecasters both rallied sharply: GDX +0.34 to +0.39, GDXJ up +0.60 to +0.17 (buy). HUI forecaster climbed +0.60 to +0.26 – a buy signal for HUI also. Miners have moved higher in their recent trading range but have not yet broken above it.

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

Platinum rallied +0.55%, palladium rose +0.44%, and copper moved up +0.24%. The other metals continued moving higher. Platinum managed to close above both the 9 and 50 MA lines today, but it has yet to recover from Monday's big plunge.

The buck plunged -0.73 [-0.78%] to 92.92. The buck started lower after the Durable Goods orders report at 8:30 am, and it didn't stop dropping until past mid-day. It closed right at the low; the black marubozu candle is a bearish continuation. The dollar ended up breaking below the previous low, which is bearish. Forecaster dropped a huge -0.76 to -0.80, putting the buck back into a clear downtrend. If we close the week here, the buck will be back in a weekly downtrend also.

Crude rose +0.97 [+1.70%] to 58.06. The EIA report was not as positive as the API report, and it caused crude to sell off, but buyers showed up relatively quickly, pushing prices to new multi-year highs. Oil hasn't closed above 58 since mid-2015. EIA report: crude -1.9m, gasoline flat, distillates +0.3m. The long white candle is a bullish continuation, and the crude forecaster moved up +0.09 to +0.60. Trading volume today was very heavy, likely caused by a burst of short-covering as oil broke above the previous high.

Both the weekly and monthly forecasters are suggesting crude is about to reverse here.  I'm not sure what they see, but they aren't happy about something.

SPX edged down -1.95 [-0.08%] to 2597.08. Short black candle was unrated, SPX forecaster moved up +0.02 to +0.60. Energy did best (+0.40), financials worst (XLF:-0.49%). It was a quiet day.

VIX rose +0.15 to 9.88.

TLT rose +0.32%, making a new high again today. TLT is on a roll. Candle print was a bullish continuation, but the forecaster fell -0.22 to +0.35; I'm not sure what that's about. TY managed to rally today too, up +0.32%. TY forecaster issued a buy signal for the 10 year.  Moves higher in TLT and TY mean that the yield curve is flattening more rapidly - 10 and 20 year bond yields are dropping, while the 1 year is rising along with expectations for another Fed rate increase.

JNK rose +0.22%, another new high. Print was a long white, which was a bullish continuation. Forecaster rose +0.23 to +0.77, which is a strong uptrend. JNK is showing no signs yet of stopping.

CRB rose +0.94%, with all 5 sectors moving higher. Livestock did best (+1.66%) followed by energy (+1.10%). The commodity rally today was fairly broad-based.

While today was a reasonably strong day for PM, it has yet to break out of its recent trading ranges, and the bulk of the move was due to a large drop in the buck.  If Merkel can manage to form a government after all, we might yet see a nice rally in the Euro.  That should help PM somewhat, if only because of currency moves.

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davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5738
btc update: sell

Daily forecaster (which gives off fewer headfakes than the 4h forecaster) issued a sell signal today.

Of course, if dip buyers appear tomorrow, the forecaster is perfectly happy to issue a buy signal tomorrow.  That's why I like it - it doesn't have any ego, whereas we included...often have difficulty buying right back into something tomorrow that we sold today.

Now I just need to work on suppressing the headfakes when the market trades sideways...

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5738
btc update 2017-11-24: buy!

Just when I thought I was out...they pulled me back in!

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