PM Daily Market Commentary - 12/21/2017

By davefairtex on Fri, Dec 22, 2017 - 6:01am

Gold rose +0.80 [+0.06%] to 1269.90 on moderate volume, while silver moved down -0.06 [-0.40%] to 16.18 on light volume. The buck hardly moved at all, losing -0.03%, so it was not a factor.

Gold made a new high today to 1272.50, but couldn't hold the very modest gain, printing a spinning top that was a bullish continuation. Forecaster moved up +0.04 to +0.33; it is still an uptrend. It was another sleeper of a day for gold.  Gold may have run into resistance here at 1270.  Its a logical place for the shorts to re-enter after being squeezed out on the way up.

COMEX GC open interest rose by +3,533 contracts today.

Rate rise chances (March 2018) remains at 56%.

Silver chopped sideways with a lower bias, ending the day relatively near its low. Print was just a neutral-looking spinning top but silver forecaster dropped further into downtrend territory, losing -0.10 to -0.12. Silver continues to underperform, and it appears as though it may be reversing soon. It just doesn't look as though it is ready to take off yet, in spite of the encouraging COT report.

COMEX SI open interest fell -2,038 contracts today.

The gold/silver ratio rose +0.36 to 78.51. That's bearish.

The miners continued moving higher, with GDX up +0.58% on moderate volume, while GDXJ climbed +1.07% on moderate volume also. The opening white marubozu candles were both bullish continuations. XAU forecaster fell -0.05 to +0.39, which is still a strong uptrend. XAU's RSI-7 is currently 81, which is fairly heavily overbought. It is now right up against the 200 MA.

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

Platinum fell -0.22%, palladium rallied +1.03%, and copper climbed +0.64%. Copper appears ready to retest its multi-year highs in the near future, palladium is also near its high, while platinum may be about to reverse; its forecaster dropped –0.13 to +0.03, which is just barely an uptrend. If platinum starts dropping again, that won't be good news for the rest of PM either.  Hmm, first silver, then platinum. 

The buck fell -0.03 [-0.03%] to 92.86, trying to rally today but failing. The short black/NR7 candle was neutral, and the forecaster dropped -0.02 to dead even. Its hard to know where the buck goes next.  Monthly remains bullish, while weekly is bearish.

Crude rose +0.20 [+0.34%] to 58.23, edging higher into that 58 resistance zone. Oil is creeping up on the previous high of 59.05, set back on November 24th. The spinning top candle was a bullish continuation, and the forecaster edged down -0.01 to +0.19, which is a relatively slow uptrend.

Here is an oil article talking about oil discoveries for 2016, which we know all about here: lowest number of barrels discovered since the 1940s. 550M barrels discovered every month – and that's BOE, not barrels of oil. Reserve replacement rate: 11%. They didn't utter the words “Peak Oil” in the article, but it was definitely the elephant in the room – and the writer talked all around it.

SPX rose +5.32 [+0.20%] to 2684.57; it actually was up perhaps 16 points at one point, but the larger rally topped out in the early afternoon and then sold off into the close, resulting in a shooting star candle with a 39% chance of marking a top. That SPX forecaster still looks quite unhappy, off -0.09 to -0.50. The energy sector (XLE:+2.12%) continued screaming higher breaking out to levels not seen since early 2017, while utilities (XLU:-1.19%) plunged again. These are really big moves for both sectors. In 4 days, XLU has dropped almost 5%. Money seems to be flowing from XLU to XLE. That's nice if you happen to be one of those long-suffering XLE owners.

VIX fell -0.10 to 9.62.

TLT recovered today, rising +0.37%, with the spinning top candle having a 48% chance of being a bullish reversal. TLT is so choppy right now its hard to sort out direction – so we look at TY, which rose +0.04%, trying to rally but failing, resulting in a spinning top/bullish harami which had just a 23% chance of being a bullish reversal. TY forecaster remains in a horribly steep downtrend, falling -0.07 to -0.88. This probably isn't the low for TY.  Weekly and monthly are both pointing downhill for TY.

JNK rose +0.03%; the spinning top candle print was neutral. Forecaster dipped -0.04 to -0.74, which is a strong downtrend. That aligns with the BAA weekly chart, which has staged a sharp recovery this week; the bounce in BAA is bullish for yield, bearish for price. You don't want BAA to rise if you own junk debt, and that's what it is doing right now.

CRB rose +0.35%, with all the sectors rising, led by industrial metals once more (+0.69%). Copper just continues to move higher. Previous high at 3.26, with copper just one percent away at 3.22.

There seems to be a very strong sector rotation out of utilities and into energy. Services are doing particularly well (OIH:+3.12%). It looks as though traders are betting that the oil glut is coming to a close sooner rather than later. Perhaps that news from Total a few days back was the bullish trigger. Once one company starts, the rest won't want to be left out, because renting equipment right now is a lot cheaper than it used to be. Locking in that long term rig contract at today's prices could be a very smart move – assuming your timing is right. I think traders are front-running that move.

With all the fun being had in energy, PM seems to be a bit of an afterthought. The miners are still strong, but the move in the metals (silver and platinum especially) may be starting to peter out.

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jtietz79's picture
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Posts: 9
BTC Bloodbath


Your forecaster nailed the bloodbath in BTCUSD. Has the forecast changed any since the sell off?

davefairtex's picture
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Joined: Sep 3 2008
Posts: 5874

The forecasters aren't the best at picking lows.  They'll get you back in once the trend is moving higher.  I have some other code for picking reversals, but ... I just don't have enough time in the day to finalize it.

Bottom line: the 4h forecaster is showing some positive signs - it liked the most recent 4h bar a lot (FC: +1.29 to -0.52), but not nearly enough to trigger a buy.

My Mk 1 eyeball sees a very high volume hammer candle, and some other signs of capitulation.  This could be a temporary low.

If you were eager 4 days ago to get into bitcoin, now's your chance.  :)  You should be 40% MORE eager after a 40% price drop!

I tell ya, if I get this code working, I'm going to start a service.  It has real potential.


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Posts: 618
Armstrong podcast

Legendary financial and geopolitical analyst Martin Armstrong says the Trump tax cuts are going to be a very positive move for the U.S economy. Armstrong explains, “It’s huge, I cannot tell you how much. . . . Any company that doesn’t bring its cash back under this deal should be sold short, basically.  You bring it in because who knows what will happen when the politics change.  It’s a one-time deal.  You get to bring it in, and you better get it in fast.”

Armstrong thinks you cannot overestimate the effect Trump tax cuts will have on the U.S. economy. Armstrong goes on to say, “It’s monumental.  It really is a very pro-business situation, and that’s going to grow jobs, etc.  Small businesses and pass-throughs have been abused.  They have been abused.  A small business tries to get a loan from a bank, and 70% of them are declined.  It’s really more of a pro-business type thing.  I mean in what you are paying out in taxes, in our office, we could hire ten more people.  You have to understand what it does, it then puts pressure on everybody else.  We already have Canadian companies standing up and saying we are going to have to move to the United States if this keeps up.”

Armstrong says the rest of the world is freaking out about the Trump tax cuts because they are going to lose business. Armstrong says, “Absolutely, China, I had to fly to London to meet with very senior people and they met me in London. . . . You have to grasp the structural differences outside the United States. . . . If this tax thing goes through, our models are showing we should be reaching the 37,000 to 40,000 level (on the DOW) at least by 2020.”

There is also some bad news. Armstrong is worried about central banks continually buying bonds to suppress interest rates.  Armstrong says, “Yes, absolutely.  We are in the biggest bond bubble in history, not a stock bubble, but a bubble. . . . The scary thing in Europe is the ECB (European Central Bank) has been basically supporting the governments.  It is subsidizing all the governments in the Eurozone.  We are looking at almost 10 years of quantitative easing with that, and it hasn’t helped the economy.  If the ECB backs off, who’s going to buy the debt?”

How does this end? Armstrong says, “Our computers are showing that interest rates are going to go up faster than anybody has ever seen in history. . . . You are looking at a doubling of interest rates very, very rapidly. . . . Gold and equities are the place to be.”

davefairtex's picture
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Posts: 5874
4h buy signal

So the 4h forecaster triggered a buy signal a few updates ago, at around 14k.  This doesn't surprise me, since I'm seeing signs that the current wave of fear-based selling has - largely - run its course.  See how the 4h forecaster popped higher after the large, high volume hammer candle?  It likes seeing those long lower shadows, but it also wants to see some confirmation before triggering the trend change.

Watching it in realtime, I had the sense that a low was in around 13k.

For now at least!


charleshughsmith's picture
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Posts: 741
thanks for sharing your charts

Dave, thanks for sharing your charts. I am completely surprised that the "crash" lasted less than 24 hours. 

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