PM Daily Market Commentary - 3/20/2018

davefairtex
By davefairtex on Wed, Mar 21, 2018 - 6:06am

Gold fell -5.80 [-0.44%] to 1310.90 on moderate volume, while silver dropped -0.13 [-0.80%] to 16.18 on moderate volume also. The buck shot higher – up +0.70% - a big rally, unwinding all of yesterday's drop and then some.  Why the big rally?  No news that I could see.  All I can do - like everyone else - is blame the move on concern about the upcoming FOMC announcement.

Gold roughly followed the Euro lower, making a new low to 1306.60 at around 10:20 am before bouncing back somewhat, although the Euro continued to decline.  Today's long black candle was a bearish continuation, and gold forecaster dropped -0.06 to -0.15.  Gold remains in a mild downtrend.  However, with gold falling -0.44% and the Euro dropping -0.77%, that means gold in Euros actually rallied today.  That rally was enough for the GC.EUR forecaster to issue a buy signal.  That's good news, although GC.EUR remains in a downtrend in both the weekly and monthly timeframes.

COMEX GC open interest rose 5,919 contracts today.

Rate rise chances (March 2018) rose to 94%. I think its 100%.

Silver took a similar track as gold but dropped more substantially, making a new low to 16.10 before bouncing back into end of day.  The momentary drop below the previous low is not a positive sign.  Candle print was a long black candle, which was a bearish continuation. Forecaster rose +0.01 to -0.27; silver remains in a downtrend.

COMEX SI open interest rose 4,677 contracts today; that's 727 tons of paper silver, or more than 10 days of actual silver from mine supply.  That's a big increase in OI.  Someone is going short; I'm guessing that's managed money.

The gold/silver ratio rose +0.29 to 81.02. That's bearish - although in the longer term, it suggests that when the PM trend eventually changes, silver will move much more strongly than gold as the ratio snaps back.

Miners fell today, gapping down at the open, and then more or less trading sideways.  GDX dropped -1.12% on moderately heavy volume, while GDXJ fell -1.10% on moderate volume. XAU moved down only -0.67%, and XAU forecaster fell -0.08 to -0.34. Curiously, the GDX forecaster actually issued a buy signal today; both GDX and GDXJ are looking more bullish than XAU.

Today, the GDXJ:GDX ratio rose slightly, while the GDX:$GOLD ratio fell. That's slightly negative.

Platinum dropped -0.98%, palladium fell -0.80%, copper plunged -1.28%. The other metals all looked fairly unhappy today; copper made a new low, and all three metals are in downtrends that look substantially worse than gold.

The buck rallied +0.62 [+0.70%] to 89.95, totally erasing yesterday's drop and making a new high. Forecaster jumped up +0.45 to +0.59, which is a strong uptrend. The buck is now above both the 9 MA and the 50 MA. Not only that, the weekly forecaster issued a buy signal for the buck, assuming current prices hold through Friday. That's a reasonably big deal, since the buck has been in a weekly downtrend for 10 weeks. Mostly the rally was about the Euro, which lost -0.77% on the day.  On the chart, the buck still needs a conclusive close above 90.29 to really confirm the double bottom.

Crude rallied +1.53 [+2.46%] to 63.74. The API report issued after the close at 4:30 pm looked bullish [crude -2.7m, gasoline -1.1m, distillates -1.7m], and resulted in a $0.30 move. While the API report was bullish, one possible reason for the overall move today was the latest IEA report that projected oil markets are moving into balance mostly because of Venezuela's production declines. The article I read summarizing the rport is not too long, but has some longer-term relevant detail for PP readers, including a projection of shortage in the 2+ year timeframe because only 4 billion barrels were discovered in 2017, while 36 billion barrels were produced - along with the projection that exploration budgets were going to be similarly constrained this year too.

https://oilprice.com/Energy/Energy-General/The-Single-Largest-Supply-Risk-In-Oil-Markets.html

SPX bounced back slightly, up +4.02 [+0.15%] to 2716.94. Candle print was a bullish harami, which had a 42% chance of being a bullish reversal. Forecaster bounced +0.14 to -0.61, which is still a strong downtrend. It was not much of a bounce considering yesterday's big plunge, as well as the strong rally in crude. Energy led (+0.85%) while utilities fared worst (XLU:-0.46%).

Facebook (FB) continued moving south today on massive volume, with all the losses happening at the open – it looked as though there was a lot of dip-buying in FB today. The Cambridge Analytica “scandal” (which is really just about weaponized Facebook data used exactly as it was intended to be used) is starting to pick up steam. To me, the "scandal" isn't about Trump - the question is larger than him.  Do we want our elections decided by AIs that microtarget voters in swing counties? If so, the companies who own and process the data (i.e. Facebook, and whomever Facebook grants access) will end up deciding our elections for us.  I think that's probably a bad idea.  But I digress.

VIX fell -0.82 to 18.20.

TLT continued moving south, dropping -0.40% on the day. Forecaster dropped -0.72 to -0.35, which is a sell signal for bonds. TY also fell, losing -0.25% and also issuing a sell signal. Bonds are moving to the lower end of their recent trading range. The 10-year yield has moved back up to 2.90%.  Bonds look a bit nervous ahead of FOMC.

JNK rose +0.14%, most likely moving higher because of the big rally in crude. Certainly today wasn't a risk-on sort of day. JNK remains in a slow-paced downtrend.

CRB rose +0.65%; only 2 of 5 sectors rose, led by energy (+2.03%), which pretty much single-handedly pulled the commodity complex higher.

Today appeared to be mostly about getting positions set prior to the FOMC meeting, with crude the notable exception.  Roughly speaking, that's bond-bearish, dollar-bullish, and commodity-bearish.  More or less anyway.

FOMC announcement tomorrow at 2:00 pm, with a press conference to follow at 2:30.

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11 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
USDT: they're back!!!

As pointed out by New_Life (who watches such things in real time)...

A bunch of new "money" flowed into USDT today...about $300M.  Amusingly, it happened just after my 2h forecaster issued a sell signal.  BTC was starting to tip over...and presto, out comes 300M in freshly-printed USDT and price absolutely rockets higher on that very same 2h bar!!

Thank heaven we have the incorruptible blockchain to protect us all from all those banksters looking to defraud us.

Since all bitcoin holders want price to go up, nobody really wants to expose the corruption in the system, because the current holders all benefit from the corruption.   Sound familiar?  "Its all fun and games until someone loses an eye." --Mom.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
Holy Crud Batman!

When that pop in BTC happened, I posted in my alter-ego in the comment section at ZH that I wanted to wait and find out how many USDT were issued.

I got soundly down voted by the Crypto faithful.  Hehe.

But this is the largest USDT of which I am aware.  $300 million?!?  Wow.

This scam is not off the charts.  I would personally step back from all cryptos because when this blows I doubt there's a safe space left anywhere within it.

This looks, smells and acts exactly like a completely obvious scam.  Is there an alternative POV here?

Thanks for the data Dave!

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
And, oh, by the way...

...""somebody"" is absolutely pounding the VIX futures in the pre-market.  They are working extra hard to keep these ""markets"" elevated.

Same old, same old.

I think something is popping in the background.  Looks and smells bad.

Here's my dot connecting:

DB has now sunk nearly to crisis lows.  This major bank is in some sort of trouble.  Probably got suckered into holding the bag again by Goldman/Wall Street.  They never learn.

I'm suspecting a dollar-based funding emergency, and the evidence for that is found here:

What this index is showing us is the additional amount above LIBOR that one would have to pay to borrow dollars in the overnight market.  For some big reason, dollars are in very short supply.

Strategists at the U.S. lender predict that the gap between the London interbank offered rate for dollars and the overnight indexed swap rate will continue to widen, potentially leading to a sharper tightening of financial conditions than central bankers have been anticipating.

The differential between three-month rates has already more than doubled since the end of January to 55 basis points, a level unseen since 2009.

The rise “is contributing to a general increase in nervousness around risk assets,” Citigroup strategists Matt King and Steve Kang wrote in a note dated March 18. While technical in nature, the widening nevertheless reflects an increasing scarcity of dollar funding over and above the Fed’s intended tightening, they wrote.

(Source - Bloomberg)

I think DB is caught up in something unpleasant.  I think that if DB swirls the bowl, an entire daisy chain of unpleasant effects rapidly follow that.

Hence, ""somebody"" is busy banging away on the VIX futures to create the appearance of market calm...because, after all, in this simulacra world we've been herded into, appearances are everything.

But reality has its way.  It always does.

Cold Rain's picture
Cold Rain
Status: Gold Member (Online)
Joined: Jul 26 2016
Posts: 379
Awesome

Gold up $14 pre-Fed.  Great.  Will probably reverse hard after the meeting.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
DB stock price

DB looks horrible.  DB:$BKX gives you a better sense as to how its doing relative to its peers.  Nasty descending triangle that just collapsed today.  33% drop since mid-November.

Good catch.  I was eyeing it a few months ago but lost track.  Its a good coal-mine canary.

I should probably run some bit of code that tracks all banks against their index and spits out something whenever one diverges.  Otherwise I miss my shorting opportunities!

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3210
Do My Eyes Deceive Me?

Are gold & silver actually UP after an FMOC meeting?

For the day, gold futures are currently up +$17/oz (1.3%), silver +$0.38 (2.4%)

Excuse me while I go check the skies for flying pigs..

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
My monitor seems broken too
Adam Taggart wrote:

Are gold & silver actually UP after an FMOC meeting?

For the day, gold futures are currently up +$17/oz (1.3%), silver +$0.38 (2.4%)

Excuse me while I go check the skies for flying pigs..

It must be swapping red for green.  Either that or the deep recesses are frosting over.

Alternative theory based on recent COT report:  managed money shorts just got hosed by the commercial banks.  Again.  

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Online)
Joined: Jul 26 2016
Posts: 379
Yep

It's pretty stunning.  Still need to get through the week to see if this is a head-fake or not.  DXY is getting hammered.  It was interesting to see long bond yields spike for a bit and then sharply retreat.  Equities have been bouncing all over the place.

It was interesting to listen to Powell speak.  In contrast to former Fed chairs, he actually sounded like a real person and didn't "Fed-speak" as much, it seemed to me.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
FOMC events

Yeah, the usual pattern I see is that gold sells off prior to FOMC, and then takes off afterwards.  I'm really not so surprised by today's outcome.

I should really do a study.  Dig back into the archives, find all the FOMC meetings, and then see if an impending FOMC meeting ends up being a positive or negative influence, as well as if the FOMC meeting day is positive or negative.

I've said this before, after an FOMC meeting.  But then time passes, and I forget...get distracted by bitcoin or something...and it doesn't happen.

 

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5967
The Off The Cuff Applies This Week
Cold Rain wrote:

It's pretty stunning.  Still need to get through the week to see if this is a head-fake or not.  DXY is getting hammered.  It was interesting to see long bond yields spike for a bit and then sharply retreat.  Equities have been bouncing all over the place.

It was interesting to listen to Powell speak.  In contrast to former Fed chairs, he actually sounded like a real person and didn't "Fed-speak" as much, it seemed to me.

Axel Merk and I discussed all of this pretty extensively in this week's Off The Cuff (OTC) which will be out shortly.  

We discussed Powell's demeanor and statesmanship, we discused gold, LIBOR-OIS and many other things.

Be sure to tune in!

:)

Cold Rain's picture
Cold Rain
Status: Gold Member (Online)
Joined: Jul 26 2016
Posts: 379
Looking Forward
cmartenson wrote:
Cold Rain wrote:

It's pretty stunning.  Still need to get through the week to see if this is a head-fake or not.  DXY is getting hammered.  It was interesting to see long bond yields spike for a bit and then sharply retreat.  Equities have been bouncing all over the place.

It was interesting to listen to Powell speak.  In contrast to former Fed chairs, he actually sounded like a real person and didn't "Fed-speak" as much, it seemed to me.

Axel Merk and I discussed all of this pretty extensively in this week's Off The Cuff (OTC) which will be out shortly.  

We discussed Powell's demeanor and statesmanship, we discused gold, LIBOR-OIS and many other things.

Be sure to tune in!

:)

 

will do.  Very much looking forward to it.

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