PM Daily Market Commentary - 1/18/2018

davefairtex
By davefairtex on Fri, Jan 19, 2018 - 9:10am

Gold fell -0.20 [-0.02%] to 1327.10 on moderately heavy volume, while silver dropped -0.04 [-0.26%] to 16.96 on moderate volume. The metals tried to rally today but mostly failed. Currency went nowhere also, but the mining shares fell regardless - which could be an uh-oh moment for the current uptrend.

Gold more or less chopped sideways all day long; it did try to move higher, but the rally more or less failed, with gold closing almost where it opened.   Gold's candle print was a (neutral) doji, while the forecaster dropped -0.17 to -0.11.  That's a sell signal for gold.  That said, gold remains perched just above its 9 MA, which is the lone remaining bullish sign.

COMEX GC open interest rose by +4,991 contracts today. Commercials continue to lean on gold. I think they feel its time for the rinse.

Rate rise chances (March 2018) remains at 73%.

Silver looked a lot like gold, except with a wider trading range.  Silver printed a (neutral) high wave, and its forecaster dropped -0.07 to -0.25; silver's downtrend is slowly growing steeper.

COMEX SI open interest fell -1,442 contracts today.  That suggests commercials are ringing the cash register - as opposed to loading up short to push prices lower, which is what they appear to be doing in gold.  Maybe it is managed money doing the selling in silver.  If silver loses the 200 MA, that will be a bad sign.

The gold/silver ratio rose +0.20 to 78.25. That's bearish.

The miners had a weak day, with GDX down-1.38% on heavy volume, with GDXJ off -1.89% on very heavy volume. XAU forecaster plunged -0.46 to -0.20, which is a sell signal for the mining shares.  When the miners sell off, and gold itself is unchanged, that's a bad sign.  At the same time, XAU did manage to remain above its 9 MA, which is the one remaining bullish sign in the miners.

Today, the GDXJ:GDX ratio fell hard, and the GDX:$GOLD ratio fell. That's bearish.

Platinum rose +0.13%, palladium dropped -1.36%, and copper was up +0.23%. Palladium and copper are now both in downtrends; platinum is the only PM component that is still clinging to an uptrend, and its forecaster ended the day down -0.04 to +0.07.  I'd call that a somewhat negative influence from the rest of the metals.

The buck fell -0.03 [-0.03%] to 90.20. The buck actually tried to rally, but failed; its forecaster climbed +0.08 to -0.68, which is still a strong downtrend. If the buck is going to reverse, it doesn't appear to be in any hurry to do so.

Crude fell -0.30 [-0.55%] to 63.68. Crude appears to be having real trouble moving higher; even the bullish EIA report (crude -6.9m, gasoline +3.6m, distillates -3.9M) helped only briefly; oil rallied on the news for an hour, and then slowly sold off for the remainder of the day. The drop in crude caused the forecaster to fall -0.19 to -0.12, which is a sell signal.

SPX fell -4.53 [-0.16%] to 2798.03. Equities traded in a narrow range, with the energy sector (XLE:-0.82%) leading the market lower.  That bearish engulfing the other day is starting to look as though it might have marked the top for XLE.  Tech did best (XLK:+0.18%). SPX forecaster dropped -0.20 to +0.61, which is still a strong uptrend.

VIX rose +0.31 to 12.22. A lot of people are buying puts right now – this is the highest close for the VIX in 6 weeks.

TLT plunged -0.93%, with the forecaster issuing a sell signal. TY dropped also, losing -0.17%, making a new low. TY forecaster dropped -0.09 to -0.70. There is just no good news for bonds right now. As a result of the falling TY, the yield on the 10-year treasury broke 2.60% today, ending the day at 2.61%. Supporting the bearishness in stuff-with-a-yield, XLU dropped -0.63%.  Here's the chart that has most of my attention right now: note how the previous low goes back all the way to 2014.

JNK fell -0.08%, moving slowly lower. JNK forecaster also fell, losing -0.25 to -0.23, which is a sell signal for JNK.

CRB fell -0.03%, basically going nowhere. 3 of 5 sectors dropped, led lower by PM (-0.93%).

So while gold and silver actually didn't really move, the miners were sold today. Since they tend to lead, that dragged the rest of the forecasters into downtrends. (The GC forecaster knows about what happens to the mining shares, for instance, and it - probably - gets unhappy when XAU sells off).

And yet until the buck really starts moving higher, I really can't be too worried about PM.  Unless we start a new, strong USD uptrend, my sense is that this will just be a correction in the PM/commodity rally.  Oh, we may well correct for a few weeks (and that won't be any fun) but I'm trying to look at the macro trends (rising bank credit, rising commodity price trends, some signs of wage inflation, along with pro-inflationary government policies) and intuit from that where the longer term trend is generally headed.

It says to me bonds down, buck down, PM and commodities higher - with perhaps some rinse cycles thrown in there just to keep everyone guessing.

Even with the commercials loading up short, they really haven't been able to force gold down very far at all.

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