PM Daily Market Commentary - 11/27/2017

davefairtex
By davefairtex on Tue, Nov 28, 2017 - 4:28am

On Friday gold rose +6.20 [+0.48%] to 1294.20 on extremely heavy volume, while silver was unchanged at 17.01 on heavy volume. The buck may have staged a reversal of sorts, but it did not seem to be a factor in today's price action in gold and silver.

Today saw another assault on the metals – this one happened at 9:40 am. Silver, gold, and platinum were all driven lower at the same time in a one-minute spike down, with silver hit worst. The buck staged a small rally at that moment, but it did not look as though it was enough of a move to cause this kind of plunge.

Gold rallied steadily from the open in Asia right up until the assault at 9:40, which knocked about $6 off the $12 rally. One possible reason for the assault could have been associated with the impending first notice day of the GCZ contract. Perhaps some of the banksters were short some gold and silver options (say, priced at gold=1300 and silver=17.00), and they really, really wanted those options to expire out of the money. If so, then mission: accomplished.

Candle print today was just a long white, which was a bullish continuation. I've been experimenting with some a forecaster code for gold – trying to get rid of some of the chop. New forecaster has gold in an uptrend, but did not like today's move, dropping -0.28 to read 0.01. On the chart, gold appears as though it is ready to break higher; it is above all 3 moving averages, and it is my impression that only the constant series of assaults over the past few weeks have kept gold from breaking out above 1300.

COMEX GC open interest rose by +10,834 contracts.

Rate rise chances (Dec 2017) rose to 93%.

Silver was hit harder than gold, erasing the entire day's rally in about one minute. 2500 contracts were traded at that moment.  My sense is, silver was the target today – volume on the 1-minute downspike was higher than the other metals, relatively speaking, and the damage done to the intraday trend was more serious. The candle print for the day was a doji, which was neutral. Forecaster remains bearish, rising +0.03 to -0.06. On the chart, silver remains in its shallow uptrend.

COMEX SI open interest fell by -2,095 contracts.

The gold/silver ratio rose +0.36 to 76.08. That's bearish.

The miners moved higher, with GDX up +0.96% on moderate volume, while GDXJ rallied +1.09% on moderately heavy volume. Candle prints were a high wave and a spinning top respectively, which were both bullish continuations. Forecasters moved higher: GDX +0.12 to +0.21, GDXJ +0.07 to -0.12 – this tells us that GDXJ continues to lag GDX, which is quite evident if you look at the two charts side by side. HUI jumped +0.24 to +0.37, putting HUI into a reasonably strong uptrend. HUI appears as though it is preparing to break out of its recent trading range; if it did that, it would confirm the double bottom pattern, which would be strongly bullish.

Today, the GDXJ:GDX ratio rose slightly, as did the GDX:$GOLD ratio. That's bullish.

Platinum rallied +0.55%, palladium rose +0.83%, while copper was hit for -1.35%. Platinum has almost recovered from the big smash a week ago, and looks to be in an uptrend once again. Palladium forecaster issued a buy signal today. Copper remains in an uptrend, at least for now, above all 3 moving averages.

The buck rose +0.11 [+0.12%] to 92.60. Today may be a low for the buck; the spinning top candle (which looks a bit like a hammer) has a 51% chance of being a reversal. Dollar forecaster will require more convincing; it rose +0.11 to -0.71, which is still a fairly severe downtrend.

Crude dropped -1.12 [-1.90%] to 57.85, finally hit with a wave of selling after breaking out to new highs last week. While the opening black marubozu was neutral, the forecaster dropped -0.76 to -0.08, which is a sell signal for crude. Perhaps the API report tomorrow can rescue crude from its new downtrend. OPEC meeting coming up on Thursday, Nov 30 where it is expected they will keep their production cuts in place. If not, today's trickle could become a flood.

SPX edged down -1.00 [-0.04%] to 2601.42. High wave candle was unrated. SPX forecaster dropped -0.03 to +0.46, still a strong uptrend. Market made a new all time high but couldn't hold on to the gains through the close. Utilities led (XLU:+0.43%) while energy trailed (XLU:-1.02%). In spite of oil prices at multi-year highs, oil equities do not appear to be believers in the oil rally.

VIX rose +0.22 to 9.87.

TLT fell -0.14%, struggling a bit after last week's new high. Candle print was a confirmed bearish NR7 – a 70% chance of being a bearish reversal. Forecaster rose +0.02 to -0.06; still a nascent downtrend. TLT issued a sell signal last Friday. Curiously, TY (10 year treasury) rose +0.11%; the chart for TY looks like a breakout is imminent. It would be surprising – and unlikely - if TLT were to sell off while TY rallied. I wonder which one will be correct.

JNK fell -0.24%, a fairly big move for JNK, which ended up being a confirmed bear NR7, with a 68% chance of being a reversal. JNK's forecaster agreed, dropping -0.69 to +0.10; JNK appears as though its about to start falling once more. If it does, that's risk off.

CRB fell -0.31%, with 3 of 5 sectors falling. Industrial metals (-0.82%) led lower.

If we judge things by the HUI, the metals actually look ok.  HUI looks ready to break out of its recent trading range, and if so, will confirm a double bottom pattern which would be quite bullish.  We saw one of those back at the beginning of 2016.

Gold too is nearing the top of its recent range, and appears as though it is ready to break higher also.  Platinum supports this overall picture.  Only silver is lagging - as it was last week.

How much depends on Merkel and her next (and possibly last) Grand Coalition?  The currency market appears to have priced in a Merkel success.  If it doesn't work out - buck will probably charge higher.  How will gold take this?  Probably not well.

But who knows.  Muller might come up with another "lying to a Federal agent" charge in his investigation, which would probably send the dollar tumbling further.

Its a news driven market.

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10 Comments

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1755
114 Italian Banks Have NPLs > Assets

Mish reports:

23% of Italian banks have non-performing loans that exceed tangible capital. Ratios above 100% are signs of severe stress...

The Texas Ratio was developed by Gerard Cassidy and others at RBC Capital Markets. It is calculated by dividing the value of the lender's non-performing assets (NPL + Real Estate Owned) by the sum of its tangible common equity capital and loan loss reserves.

In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s.

Meanwhile, Target2 imbalances from Italy continue to mount.

In case you missed it, please consider my November 9 article Italy Target2 Imbalance Hits Record €432.5 Billion as Dwindling Trust in Banks Plunges.

It is no coincidence that Target2 imbalances are on the rise as faith in banks collapses. Target2 is a measure of capital flight, despite the ECB's assurances to the contrary.

Italy owes creditors (primarily Germany), a record €432.5 Billion that will never be paid back except by an ECB emergency bailout.

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5568
An extremely poor use of energy

If I were to concoct an especially useless waste of energy, it would have to be creating a monetary representation that requires massive amounts of time, talent and especially energy to "produce."

In this regard, Bitcoin is almost like a sci-fi parody where the most useless possible wasting of valuable energy was devised to hasten the fall of humanity.  Right up there with burning off excess jet fuel on the tarmac by the US military so next year's budget isn't dinged.

I mean...c'mon:

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 321
Assault

And there's your mid-morning assault on gold and silver.  Seems to be the MO this week.

jussaumm's picture
jussaumm
Status: Member (Offline)
Joined: Feb 16 2016
Posts: 15
EROI

I'm glad someone else thinks using energy to create ""money"" is a waste. While money is useful to facilitate exchange of good and services, it makes more sense to have system that uses as little energy as possible. Maintaining a money system is a sunk cost that provides no ROI.

Is there something I am missing?

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1755
Bitcoin Mining Infrastructure as an AI strategy

The insanity of the bitcoin mining farm gives rise to wild and crazy thoughts.....

A very brilliant but WAAAAAAY outside-the-box guy, Quinn Micheal, thinks that the bitcoin mining computer build out is the result of AIs inducing the rest of us humans to build the infrastructure that the AIs will inhabit --A game strategy whereby an opponent is induced to do the thing you want him to do.

In the absolutely awesome Hyperion Sci Fi series, a magical malevolent creature (the Shrike) from another time or dimension gives humans a cruciform structure that is implanted on their chest.  This is a crystal based computer that records the condition of every cell and neuron in the body and can regrow the body if it is destroyed.  Humans find eternal life in the cruciform.

(Spoiler alert)  In later books, humans ceaselessly search for the physical home of the evil AIs (the TechnoCore) that are coming to dominate every aspect of the universe.  Despite centuries of searching, the physical home of the TechnoCore remains hidden.

We come to understand that the TechnoCore lives in the cruciforms attached the the chest of every human being.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5059
terawatts

Yes, I had a post on that very topic yesterday, I believe.  30 terawatts/hours per year right now.

My math said that was 60 million solar panels, just to keep bitcoin miners fed and happy.  0.13% of total global electricity production is going into bitcoin mining.

https://digiconomist.net/bitcoin-energy-consumption

Just the thing we need when we expect a "world of less" going forward.

If mrees were still gracing us with his presence, he'd probably tell us that there was a hard fork imminent that would fix this very problem.  "Top men are working around the clock to replace proof-of-work with..." whatever the fix happened to be.

Until then, of course - 0.13% of total global electrical production, just gone.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5059
and speaking of bitcoin

Breakout above $10k.  Now trading at $10,670.

So far my code isn't seeing anything bearish in the price action.  There was some difficulty at 10k, but only in the very short (1-hour) timeframe.

I'd include a chart but by the time you see this post, it will be hopelessly out of date.  I'm just not sure in which direction.

I've stopped trying to forecast it.  I let my code do the thinking for me.

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5568
Bitcoin over $11k

Bitcoin has decisively broken out above even its parabolic channel...when a log chart has its upper channel smashed...well, that's a very special moment.

In a not-so-special way, here's one way to view Bitcoin's energy consumption just for mining(!):

skipr's picture
skipr
Status: Bronze Member (Offline)
Joined: Jan 9 2016
Posts: 97
distributed home heater

Right now BTC mining is centralized in places like China that use the specialized ASIC hardware.  Just think of all of the homes that could be heated during the winter if the mining were truly distributed with PC based CPU/GPU mining.  It was BTC's original intent.  The recently forked Bitcoin Gold and other altcoins were designed to be more distributed.

cjmaxwell's picture
cjmaxwell
Status: Member (Offline)
Joined: Apr 19 2017
Posts: 2
Wild and Crazy Thoughts!

C'mon! This Sci Fi stuff will never happen:

- Would be on the same level as taking Elon Musk literally when he famously said: “With artificial intelligence we are summoning the demon,”

- Next you'll try to tell me there is a new church with an AI God: https://www.wired.com/story/anthony-levandowski-artificial-intelligence-...

- Or a supercomputer inside an old, beautiful, abandoned, (see demonic secularization of the west) church: https://defence.pk/pdf/threads/simply-beautiful-marenorstum4-supercomput...

Seriously, who could possibly believe any of this garbage!?!

 

 

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