PM End of Week Market Commentary - 12/8/2017

davefairtex
By davefairtex on Sat, Dec 9, 2017 - 7:57am

On Friday gold rose +1.40 [+0.11%] to 1250.50 on moderate volume, while silver moved up +0.12 [+0.79%] to 15.87 on moderate volume also.  The buck tried to rally but largely failed.

The PM sector map was a sea of red this week; everything dropped, with platinum leading the way down. Poor platinum, it has been beaten like a rented mule every day this week. Volume in platinum has been massive, while gold and silver volume has just been moderate.  Platinum, gold, and silver are more or less joined at the hip.  If you beat on platinum, gold and silver will probably follow.

Juniors led seniors lower, silver led gold lower. That's bearish. All regular PM elements are below all 3 moving averages. Silver, platinum, and the junior miners are all down for the year. That places them at risk for tax-loss selling here in December. That's more selling pressure for the PM group overall.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Palladium $PALL -1.79% 35.24% rising rising rising rising ema9 on 2017-12-07 2017-12-08
Gold $GOLD -2.55% 6.66% falling falling falling falling ma200 on 2017-12-06 2017-12-08
Senior Miners GDX -3.60% 1.03% falling falling falling falling ema9 on 2017-11-29 2017-12-08
Copper $COPPER -3.64% 13.52% falling rising rising falling ma50 on 2017-12-04 2017-12-08
Silver $SILVER -3.64% -7.17% falling falling falling falling ma50 on 2017-11-28 2017-12-08
Silver Miners SIL -3.77% -16.34% falling falling falling falling ema9 on 2017-11-29 2017-12-08
Junior Miners GDXJ -4.47% -15.73% falling falling falling falling ema9 on 2017-11-29 2017-12-08
Platinum $PLAT -5.69% -5.35% falling falling falling falling ma50 on 2017-12-04 2017-12-08

Gold fell -32.70 [-2.55%] on the week, with half of the loss coming on Thursday. Friday's print was a long-legged doji, which had a 50% chance of being a bullish reversal. Forecaster agreed, rising +0.11 to -0.47. That's still a downtrend – for today's doji to be something we could safely trade, we need confirmation on Monday, which would be a close above today's high of 1254.40. Gold closed the week in a downtrend for all 3 timeframes.

The December rate-increase chances fell to 90%.

COMEX GC open interest fell -17,249 contracts this week.

Silver plunged -0.60 [-3.64%] to 15.87 this week, breaking below round number 16, but finding support in the rough support zone from 15.50-15.75. Candle print Friday was a bullish harami, which had a 39% chance of being a bullish reversal. Forecaster ended the week at -0.33, which is a downtrend. Silver is in a downtrend in all 3 timeframes.

The gold/silver ratio rose +0.89 to 78.80, which is bearish.

COMEX SI open interest rose +6,990 contracts.  Taking a peek at the COT report - that was because managed money was jumping in short.

The miners fell this week, with all the damage happening Monday-Wednesday. Thursday the buyers emerged to buy the dip, and on Friday the buying continued. GDXJ printed a swing low (52% chance of a bullish reversal), while GDX just showed a spinning top which was a bearish continuation. Friday's action had the look of a failed rally about it.  Even so, the HUI forecaster ended the week at 0.0. Is that a buy signal? Code says no, not yet. HUI also missed a swing low by a few pennies.  HUI remains in a downtrend in both weekly and monthly timeframes. Monthly HUI chart is on the edge of a much larger breakdown.

The GDX:$GOLD ratio fell -0.98%, and the GDXJ:GDX ratio fell -0.90%. That's bearish.

USD

The buck had a good week, rising +0.93 [+1.00%], moving up 5 days out of 5. While Friday's candle looks a bit like a shooting star (and it has a 53% chance of being a bearish reversal), the dollar forecaster closed the week at +0.62, which is a strong uptrend. The other timeframes don't agree; the weekly remains in a downtrend, while the monthly is in an uptrend. This seems right to me – where the buck goes next isn't so clear.

US Equities/SPX

SPX rose +9.28 [+0.35%] to 2651.50. While the tax cut rally proved to be a sell-the-news event, the selling only lasted two days; Thursday there was a swing low, and on Friday SPX printed a new all time closing high. Forecaster closed the week at +0.62.

The sector map was mixed; financials and industrials did well, while the interest-rate sensitive sector more or less sold off. That feels like the effects of “tax cuts” + “impending rate increases” to me.

VIX fell -1.85 to -9.58. We are back in single digits again. Rumor has it that selling volatility is a very popular trade. They also call that: “everyone is on the same side of the boat” which as we know, works right up until it doesn't.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Financials XLF 1.56% 18.19% rising rising rising rising ema9 on 2017-11-28 2017-12-08
Industrials XLI 1.49% 17.27% rising rising rising rising ma50 on 2017-11-27 2017-12-08
Cons Staples XLP 0.71% 10.31% rising rising rising rising ma200 on 2017-11-28 2017-12-08
Cons Discretionary XLY 0.66% 15.61% rising rising rising rising ema9 on 2017-11-03 2017-12-08
Materials XLB 0.61% 15.42% rising rising rising rising ema9 on 2017-12-07 2017-12-08
Technology XLK 0.14% 31.68% rising rising rising rising ema9 on 2017-12-07 2017-12-08
Homebuilders XHB -0.07% 22.33% rising rising rising rising ema9 on 2017-12-07 2017-12-08
Healthcare XLV -0.35% 22.04% rising rising rising falling ema9 on 2017-12-08 2017-12-08
Energy XLE -0.57% -9.27% rising rising falling rising ema9 on 2017-12-08 2017-12-08
REIT RWR -0.58% 0.09% rising rising falling rising ema9 on 2017-12-08 2017-12-08
Utilities XLU -0.96% 17.72% falling rising rising rising ema9 on 2017-12-04 2017-12-08
Telecom XTL -2.35% -3.07% falling falling falling falling ma50 on 2017-12-05 2017-12-08
Gold Miners GDX -3.60% 1.03% falling falling falling falling ema9 on 2017-11-29 2017-12-08

Gold in Other Currencies

Gold plunged in all currencies, dropping -29.87 in XDR.

Rates & Commodities

TLT had a number of large moves, but ended the week largely flat, up +0.11%. Thursday saw a big sell-off which ended up firing off a forecaster sell signal. Friday saw the forecaster at -0.27, which is a downtrend. TY bounced around a whole lot less, but it remained in a downtrend all week long. Both the weekly and monthly TY forecasters are in downtrends too. At least for the 10 year, that suggests higher rates are probably ahead.

JNK fell off a cliff last Friday, and spent this entire week moving sideways. On Friday, JNK printed a weak-looking swing low (45% reversal). On the weekly and monthly charts, the BAA “junk bond rate” forecaster remains in a weak downtrend – which, since bonds are backwards, is actually a mildly positive signal for the price of JNK longer term.

CRB fell -2.97%, which is a fairly large move down. All commodity groups fell this week, with industrial metals (-3.72%) falling the most. Copper was the industrial metal I track; it fell -3.64%, with all of that loss happening on Monday. Copper is in a downtrend in both the weekly and monthly timeframes. A commodity downtrend won't help gold and silver at all – both industrial metals and energy have some effect on the price of PM.

Crude fell -0.94 [-1.61%] to 57.35, with the loss happening Monday and Wednesday. EIA report on Wednesday wasn't great: crude -5.6m, gasoline +6.8m, distillates +1.7m. Oil sold off relatively soon after this report was released. However, the buyers appeared on Thursday and Friday, with crude printing a swing low (56% reversal) as well as a forecaster buy signal on Friday, ending the week at +0.14. North American rig counts rose by just 1 this week; that's relatively bullish, but could be related to cold weather in the shale regions. Crude is in a (weak) uptrend in both the daily and weekly timeframes. The monthly issued a sell signal last month, which remains in force.

Physical Supply Indicators

* SGE premiums over COMEX are at +8.06.

* The GLD ETF tonnage on hand fell -5.30 tons, with 843 tons in inventory.

* ETF Premium/Discount to NAV:

 PHYS 10.17 -0.48% to NAV [down]
 PSLV 5.95 -0.79% to NAV [down]
 CEF 12.69 -2.5% to NAV [down]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) is at no premium for gold but a 1-2% premium for silver.

* Big bars premiums were: gold [1kg] 1.1% and silver [1000oz] 3.28%.

Futures Positioning/COT

In gold, the commercial net position shot higher, up 57k contracts, adding 16k longs, and closing 41k shorts. That's the commercials buying the dip – 177 tons of paper gold. Managed money net fell by 64k contracts, bailing out of 41k longs and adding 22k shorts. These were large changes in position, but it would require another 2 weeks of this to get to a “COT low” for gold. Mostly, the change was about managed money bailing out of their long positions – 20% of managed money longs sold this week.

In silver, the change was more dramatic. Commercial net position rose 27k, closing 17k shorts and adding 10k longs. 16% of the commercial shorts were closed this week. Managed money net position fell by a massive 35k contracts, adding 23k shorts and selling 12k longs. Mostly the drop in silver was due to managed money going short. Managed money tripled their short position. That's something new. Because of the delay in reporting, we could be at a COT low for silver right now.

Gold Manipulation Report

There were no after-hours spikes in PM this week.

Grey Swan Status

  • Italian Elections: anti-Euro M5S (27.3%) is leading vs the PD (24.25%). A combination of FI + LN (both semi-anti-Euro parties) are at 29.5%. M5S is expanding its lead. If the current trend continues, the PD will be lucky to win 20% of the vote. Money will probably move well in advance of the election.

  • The SPD has agreed to engaging in talks to form a government with Merkel's CDU. The SPD faces a tough choice: either have a new election (and probably lose more seats), or join in another government with Merkel and lose even more seats next time around. What will the SPD's terms be? If they are smart, they'll dodge the migrant issue and focus on other things.

  • Catalonia regional elections are scheduled for Dec 21. Current polls have the separatists 46.2% to the unionist 43.7%. https://ig.ft.com/catalonia-poll-tracker/ The separatists are slowly widening their lead. Turnout is also important; will the separatists be more motivated to vote with their candidates in jail?

  • Muller Investigation. mission: investigate “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump.” And anything else you happen to wander across too.  So far, four people have been charged; Manafort and Gates for financial matters that predate Manafort's involvement in the Trump campaign, and Flynn and Papadopolous who have both pled guilty to lying to the FBI. So far, no evidence of collusion has appeared, but a fair amount of "anything else." Stockman thinks that's because there isn't any collusion: http://original.antiwar.com/david_stockman/2017/12/04/fbis-perjury-trap-century/. If Muller's investigation turns up only this much, the buck would probably rally quite strongly, because so far, its nothing.

Summary

Gold, silver, and the miners all suffered moderate losses on the week, with the decline primarily driven by managed money bailing out of gold, and going heavily short in silver. Equities sold off to start the week, but rapidly rebounded leading to another new all time closing high.

Gold and silver big bar shortage indicators are showing no sign of shortage; premiums on big-bar gold and silver are normal, GLD tonnage fell, and ETF discounts increased. Shanghai premiums are slowly increasing.

Next Wednesday (Dec 13th) we have the FOMC meeting, where it is expected (90% chance) that they will raise rates another 25 basis points. PM sometimes sells off the week before FOMC, bottoms out the day before, and then rallies afterwards.  With that in mind and looking at the current situation, it is entirely possible that things play out in just this way. We are definitely oversold enough for this to fit the pattern.  And, those commercials have been covering like crazy, especially in silver.

That said, the weekly and monthly charts remind us that the current trend for both gold and silver remains down.

Forecasting code – weekly – says:

Uptrend: crude, JNK, SPX.

Downtrend: gold, silver, copper, miners, treasuries, USD.

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2 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5417
btc update

Sadly the new data I was relying on to improve bitcoin accuracy hasn't updated yet today, so I can't give you a daily-chart update.

All of my shorter-timeframe bitcoin models are saying "buy", FWIW.  This happened after bitcoin snapped above its downtrend line - visible on the shorter term charts - around 8am GMT.

ETH on the other hand gave a sell signal today after printing a variety of unpleasant-looking candles: a swing high, a confirmed shooting star, a bearish engulfing.  It adds up to an 83% chance of a (bearish) reversal.  Forecaster issued a sell signal, but only by a slim margin.  Looking at the chart though, ETH could whipsaw back up tomorrow.  You can see that over the past few weeks ETH has just chopped sideways, albeit with some pretty high volatility.

pieffe's picture
pieffe
Status: Member (Offline)
Joined: Nov 3 2013
Posts: 6
Bitcoin

Thanks a LOT Dave ...your cristal clear envisions are helpfull ...in order to complete the picture look at a crashing BTSC (Bitcoin Service,OTC) ...that may be THE telling !!!!

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