PM Daily Market Commentary - 12/7/2017

By davefairtex on Fri, Dec 8, 2017 - 7:05am

Gold fell -16.50 [-1.30%] to 1249.10 on moderately heavy volume, while silver dropped -0.23 [-1.41%] on moderate volume. The buck moved up just +0.19%.  Today wasn't about currency though - it was just another down day in a downtrend.

Gold sold off from the open almost through the close in New York - there was a slight bounce right before 4pm that was good for about $3. Today's price drop took gold's RSI-7 down to 22, which is oversold. Candle print was just a long black, which was a bearish continuation. The big price drop took the forecaster down -0.20 to -0.58, which is a fairly strong downtrend. There is no good support for gold until about 1210, but I think we might see a low before then.

COMEX GC open interest fell by -4,500 contracts. More short-covering by the commercials. During a downtrend like this, the low is sometimes indicated by rising open interest.  No sign of that yet.

Rate rise chances (Dec 2017) remain at 90%.

Silver plunged along with gold, finding some support intraday at about 15.80, but then falling through that level making a new low to 15.66 before bouncing into the close. Silver printed a long black/bearish continuation. Silver's RSI-7 is at 13, which is quite oversold. Silver's forecaster dropped -0.14 to -0.49. Silver probably has some more support around 15.50.

Given the RSI, and the relatively slow pace of the silver decline, I could see a low for silver at 15.50. I don't get the sense that managed money is bailing out wholesale. Looking at the OI chart for silver, it is actually rising rather than falling.  Rising OI is a bullish sign.

COMEX SI open interest fell by -1,412 contracts.

The gold/silver ratio rose +0.08 to 79.33. That's a bit bearish.

The miners fell again today but only modestly, with GDX down -0.39% on moderately heavy volume, and GDXJ off -1.28% on heavy volume. GDXJ printed a southern doji candle, which had a 53% chance of being a bullish reversal. GDX Forecaster fell -0.03 to -0.10, while GDXJ forecaster edged up +0.02 to -0.26. The downtrends in the miners are not all that severe, especially when you think back to how things were in 2015. Today there were clear signs of buying; when gold drops -1.30%, and GDX falls only -0.39%, that's definitely a sign of strength.

Today, the GDXJ:GDX ratio fell, but the GDX:$GOLD ratio climbed. It looked relatively bullish to me.

Platinum fell -0.85%, palladium shot up +2.05%, while copper inched down -0.03%. Platinum broke through 900 support, dropping to 894. Open interest in platinum is continuing to increase. I think they're forcing it down. Normally platinum OI declines along with price drops, but not now. Not in silver either, except for today.

The buck rose +0.18 [+0.19%] to 93.46. The dollar made a new high today, and the uptrend appears to be strengthening; forecaster jumped +0.27 to +0.61. Candle print was a bullish continuation. While the buck isn't setting the world on fire, it is steadily moving higher.

Crude bounced back after yesterday's strong sell-off, rising +0.64 [+1.14%] to 56.64. The bullish harami candle print was only mildly bullish (26% reversal), and crude's forecaster bounced back +0.24 to -0.41. Are we back to an uptrend again? Not yet. But the bounce shows an underlying bid for crude. Traders buy the dips during uptrends, but they sell rallies during downtrends.

SPX moved higher today, up +7.71 [+0.29%] to 26.36.98. Print was a confirmed bullish NR7, which had a 36% chance of being a bullish reversal. Is the SPX short-term drop over? It might be. Forecaster moved higher, +0.08 to +0.75.  Industrials led (XLI:+0.92%) while consumer staples brought up the rear (XLP:-0.97%).

VIX fell -0.86 to 10.16.

TLT was hit hard, dropping -0.78%, printing a swing high which had a 69% chance of being a bearish reversal. TLT is saying risk on. Forecaster plunged -0.82 to -0.21; that's a sell signal for TLT. That's probably also good news for SPX. TY also fell, but it only dropped -0.14%. TY remains in a downtrend.

JNK rose +0.08%; the spinning top is probably not a reversal according to the candle code, but the forecaster bounced +0.51 to -0.16. JNK might be putting in a low.

CRB fell -0.14%, with 4 of 5 sectors falling, led by PM (-1.02%).


Maybe I'm an optimist, but today I'm choosing to focus on the miners rather than gold or silver. The HUI chart is remarkable for that white candle, on a day with gold down $16. How many times have you seen the miners down big when gold drops more than $10? Price action is telling us very clearly that traders think the miners are good deals down here at these levels. This suggests that whatever capitulation is happening in the rest of the sector, the PM lows should be happening relatively soon.

We could even have something happen for the nonfarm payrolls at 8:30 am.

While I know you guys were hoping for silver with a 14 handle, we may have to be content with silver in the 15s.

We'll have to see how tomorrow goes.  You can get PSLV at a -0.65% discount to NAV.  That's not bad.  Even big-bar physical silver is about 3.5% above spot.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
frothy, toppy, about-to-crash bitcoin update

So is that it for bitcoin?  Yesterday I thought so.  What does today's update bring?

"I'm not dead yet!"

That's NOT a buy recommendation from me - but, astonishingly, the uptrend is not yet over.  Not on the daily chart anyway.

[Note: my hourly charts are all showing varying degrees of "sell" - but they tend to move around a whole lot more than the daily.]

And ETH? 

ETH is back, baby.  Confirmed bullish doji, 59% reversal, plus a forecaster buy signal.  And I've upgraded the ETH forecaster with some secret, nifty new inputs.  Its a ton more accurate, at least that's what history suggests.

Of course price could flop around here for a while, but - ETH has been relatively hosed while bitcoin has done very well.  The ETH/BTC ratio looks really sucky.  Maybe its time for ETH to make up for lost ground?

Who knows?  Not me.  These days I just listen to what my code says.  It says buy.  (And FWIW yesterday's "long-legged doji" was a 56% bullish reversal).

Here's that ETH/BTC ratio which I was pointing out earlier.  If money decides to move from BTC to ETH because of "relative under-valuedness", ETH might move fairly violently higher.  Of course this is me thinking again, and I should probably avoid doing that.

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