PM Daily Market Commentary - 12/14/2017

davefairtex
By davefairtex on Fri, Dec 15, 2017 - 4:05am

Gold fell -2.80 [-0.22%] to 1255.30 on moderate volume, while silver dropped -0.18 [-1.09%] to 15.93 on moderate volume also. The buck had a wide trading range, but ended the day just up +0.03%.

The Retail Sales report was released at 8:30 am - it was surprisingly strong.  At more or less the same time, the ECB announced they were not changing anything, and then Mario Draghi gave a press conference where he opined that growth in the EU was quite strong, and that stimulus was still needed and would continue indefinitely.  (No cognitive dissonance there at all.)  This combination of things caused the Euro to plunge and the buck to rally.  Silver and platinum started dropping around that same time, while gold held its ground.

Gold more or less ignored all the fuss, and traded sideways in a narrow range today, selling off slightly into the close. Candle print for today was a bearish harami, which was actually neutral: bullish continuation. Forecaster moved up +0.02 to +0.22; that suggests today's mild retracement isn't a big deal. Gold's new uptrend remains in place.

COMEX GC open interest fell by -5,408 contracts.

Rate rise chances (March 2018) rose 5% to 50%. Strong retail sales probably supports the Fed's slow rate increase campaign.

Silver traded sideways up until about 8am, when it dropped about 20 cents in about 90 minutes starting roughly after that ECB meeting ended, and silver didn't really recover all that much by end of day.  Like gold, silver also printed a bearish harami, which was also neutral: bullish continuation. Silver's forecaster dropped -0.23 to +0.17, which is still an uptrend, although not nearly as strong.

COMEX SI open interest rose by 2,406 contracts.

The gold/silver ratio rose +0.68 to 78.83. That's bearish.

The miners sold off at the open, but traders bought the AM dip; GDX fell -0.41% on moderately heavy volume, while GDXJ dropped -0.13% on moderately heavy volume also. GDX printed a neutral-looking bearish harami, while GDXJ printed a doji. Both were bullish continuations. GDX forecaster was flat, while GDXJ's forecaster fell -0.21 to +0.24. Both remain in uptrends. HUI agrees, dropping just -0.04 to +0.41. All that nets out to “no change in trend.”

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

Platinum fell -0.68%, palladium climbed +1.67% (and broke out to a new high: $1025), and copper rose +0.56%. It has taken copper 7 days, but it has almost managed to retrace all the losses from the big smash two weeks ago. Platinum remains the poor red-headed stepchild of the PM group; it is just chopping sideways right at the lows. It has yet to issue a buy signal .

The buck had a large trading range but ultimately ended the day up just +0.03 [+0.03%] to 93.07.  The DX forecaster continued dropping, -0.39 to -0.50.  The buck remains in a downtrend.

Buyers rescued crude today, but only after it fell to a new low of 56.06. The rally back was fairly strong, and it eventually closed up +0.54 [+0.95%] to 57.20. Candle print was a bullish harami – only 25% chance of a bullish reversal. Forecaster wasn't impressed either, rising just +0.01 to -0.33. Crude remains in its short term downtrend. Over the past month or so, crude has just been chopping sideways, capped on the top by 58 resistance, and finding support whenever price drops to 56.

SPX fell -10.84 [-0.41%] to 2652.01. Selling started at about 11am, and continued through to end of day.  There was the usual rally attempt at 3:30, but the rally failed.  This happened on a day when Republicans came to an agreement on tax reform, and that surprisingly strong retail sales report was released.   Market sells off on good news: that's bearish.  Today's print was a swing high (50% bearish reversal), and the SPX forecaster plunged -0.79 to -0.39; that's a sell signal, the first one in almost 3 weeks.  Materials (XLB:-1.11%) and sickcare (XLV:-1.01%) led the retreat, with cyclicals (XLY:+0.31%) the sole sector that rose.

VIX rise +0.31 to 10.49.

TLT had a good day, up +0.42%. TY on the other hand fell, dropping -0.14%. While those are some fairly mixed signals from bonds, I'm going to go with TLT – call it risk off.

JNK fell -0.24%. Forecaster plunged -0.61 to -0.69. That's a much more emphatic downtrend for JNK.  JNK is saying risk off.

CRB rose +0.47%, with 4 of 5 sectors rising, led by industrial metals (+1.08%).  CRB is looking to put in a low after three weeks of decline.

Gold had a pretty quiet day; it was silver that dropped the hardest in the PM group. Then again, silver also rallied most strongly yesterday. I particularly liked what the miners did. At the open it looked a bit unpleasant, but traders seemed to like the miners on sale, bidding prices right back up to even. Miners are the best indicator for risk in the PM space, and today's moves were positive.

The buck's weakness is reassuring, as is the risk-off sense we are seeing in both SPX and TLT – in spite of a great Retail Sales report, and agreement among Republicans on the details of tax reform. All that adds up to a relatively positive environment for the metals.

Might the SPX sell-off be the start of something?  I'm not going to hold my breath, but you just never know.

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