PM Daily Market Commentary - 2/12/2018

davefairtex
By davefairtex on Tue, Feb 13, 2018 - 3:06am

Gold rose +6.90 [+0.52%] to 1325.10 on moderately light volume, while silver rallied +0.20 [+1.26%] to 16.50 on moderately heavy volume. A relatively modest drop in the buck [-0.28%] helped the metals to rally to some degree, but it felt like a more general “buy everything” mood was responsible for the rally in the metals today.  The junior gold miners were the notable exception, with some heavy buying taking place there.

Gold spiked higher in Asia along with the Euro, faded during London, and then started rallying once more just before the US open.  Gold kept most of its gains through the close.  Candle print was a confirmed NR7/swing low, which had a 35% chance of being a reversal. Forecaster moved up +0.11 to +0.15, which is a mild uptrend.  The light volume is a bit of a concern.

COMEX GC open interest rose by 639 contracts today.

Rate rise chances (March 2018) rose to 78%.

Silver looked stronger than gold; the rally in Asia looked a bit stronger, and the rally during the US session was stronger still.  Candle print for silver was a swing low, which had a 46% chance of being a bullish reversal. That's not all that great for a swing low. Forecaster was a lot happier, shooting up +0.44 to +0.03, which was just enough for a buy signal in silver. Silver remains well below its 50 MA. Still, that COT report from last Friday suggests this might be the real deal.  Silver's volume was better than gold's volume.

COMEX SI open interest rose by 29 contracts.

The gold/silver ratio fell -0.59 to 80.28. That's bullish.

Miners looked quite strong today, with GDX up +1.34% on very heavy volume, while GDXJ rallied +3.46% on extremely heavy volume. Both ETFs printed swing lows: both were rated 80%, which is the highest rating the code can give for a swing low. XAU forecaster shot higher, up +0.54 to +0.29, which is a buy signal for the mining shares. The metals may be a bit iffy, but the miners sure are not. That very strong rally in GDX in the 10 minutes on Friday might have been the clue.

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

Platinum rose +0.46%, palladium was up +0.51%, while copper rallied +1.21%. Copper also printed a swing low (62% bullish reversal), as did palladium (57%), while platinum is still trying to put in a low. The moves in the other metals were supportive of the rebound in PM.

The dollar moved lower today, falling -0.25 [-0.28%] to 89.91. While the candle print was just a short black candle (neutral), the forecaster wasn't happy, dropping -0.32 to +0.13. That's a pretty big forecaster change for just a small drop in the buck.

Crude rallied strongly during Asia trading, up almost $1.50, but then sold off for the remainder of the day, closing up just +0.30 [+0.51%] to 59.24. Candle print was actually a bullish harami, which had a 32% chance of being a reversal.  While the rest of the commodity complex seemed to want to move higher today, crude seemed to be hit with a lot more selling pressure.

SPX rallied +1.39% [+36.45] to 2656.00. Print today was a swing low, which had an 80% chance of being a bullish reversal. Forecaster saw it as good news but only to a point, rallying +0.30 to -0.54; forecaster remains in a fairly strong downtrend. Sector map has materials (XLB:+2.02%) and tech (XLK:+1.79%) leading the market higher, with utilities (XLU:+0.76%) bringing up the rear. While the technical indicators all look positive, I suspect the selling may not be done yet. It just didn't feel like the dip-buying had enough conviction to convince me today.

VIX fell -3.45 to 25.61.

TLT rose +0.44%, moving higher along with the equity market, which is a bit surprising. The candle print showed a bit of a failed rally (TLT was up 0.84% earlier in the day), but it did fit into the “buy everything” mood today. I'm not sure its a durable move, but the forecaster did rise +0.62 to +0.45, which is a buy signal for TLT. TY didn't do nearly as well, dropping -0.11% on the day. TY remains in a downtrend.

JNK rallied strongly, up +0.67%, printing a very strong swing low (80% reversal chance). Forecaster isn't convinced yet, rising +0.48 to -0.67, which is still a strong downtrend. I'm not sure I'm convinced either.

CRB rose +0.30%; 4 of 5 sectors rose, led by agriculture (+1.82%). As a group, the commodities have yet to mark a convincing reversal.

The miners printed a strong reversal today, most of the other metals reversed too.  Is this just a headfake or the real thing?  Volume in the mining shares today was very heavy - for the junior miners, it was heavier today than yesterday.  Volume = money, and more volume = more money, which becomes more convincing the money money flow we see.  I'm guessing that the move in the miners is the real thing, based mostly on volume.

As for the rest of the market, I'm not as convinced.  Unlike with the miners, the volume in SPX today looked a bit light.  I think at a minimum we will have another re-test of the lows.  While there were a number of weaker items that rallied hard, the more solid stuff didn't do all that well.  I think equities get sold again before long.  Perhaps that's because of the ongoing weakness in crude.

How will that affect the nascent PM rally?  That I don't know.  Last time everything was sold.  If the bottom falls out and we have another 100 point down day, miners probably get sold too, but that's just a guess.

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