PM Daily Market Commentary - 4/6/2018

davefairtex
By davefairtex on Thu, Apr 5, 2018 - 3:54pm

Gold dropped -7.10 [-0.53%] to 1329.90 on moderate volume, while silver rose +0.07 [+0.46%] to 16.36 on moderately heavy volume. The buck moved higher on the day [+0.41%], which accounts for most of gold's plunge.

Gold moved steadily lower in Asia and London, bottoming out right at 9:30 am, just in time for the US open. The bearish engulfing candle print was definitely bearish, and gold's forecaster fell -0.34 to -0.19, which resulted in a sell signal for gold.  Today's drop took gold back below its 50 MA.

COMEX GC open interest fell -4,919 contracts.

Rate rise chances (June 2018) remained at 79%.

Silver sold off along with gold, but then spiked sharply higher at 9:30 am – seemingly along with copper, which staged a strong rally at that time also. While the spinning top candle print was neutral, the forecaster moved up +0.08 to -0.26. Silver remains in a downtrend.

COMEX SI open interest rose by 2,250 contracts today.

The gold/silver ratio fell -0.81 to 81.26. That's bullish.

After gapping down at the open, the miners managed to rally today, with GDX up +0.46% on light volume, while GDXJ climbed +0.50% on very light volume. A variety of candle prints (bullish belt hold, thrusting) were neutral; XAU forecaster fell -0.21 to -0.07, which is a sell signal for the miners.  The 50 MA is acting as resistance; a close above the 50 would be a bullish sign.  Both weekly and monthly forecasters continue to show an uptrend.

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

Platinum fell -0.56%, palladium plunged -2.33%, while copper rallied +1.44%. Both palladium and platinum made new lows today, while copper continues to look as though it has put in a low. However, the poor behavior in platinum is a warning sign for both silver and gold.

The buck rallied +0.37 [+0.41%] to 90.12, moving the buck up to within a short distance of the 90.29 double-bottom low. It appears as though the buck has more or less decided that it will move higher.

Crude rallied +0.17 [+0.27%] to 63.72. The short white candle also marks a swing low, which moved the daily forecaster up +0.14 to +0.14 – a buy signal for crude. Still, to my eye, crude remains in a longer-term downtrend; I'm concerned the recent bounce is just a rally within a downtrend.  The weekly forecaster confirms: downtrend.

SPX climbed +18.15 [+0.69%] to 2662.84. Materials did best (+1.86%) while sickcare (XLV:-0.07%) brought up the rear. Forecaster jumped +0.33 to -0.12, which brings SPX quite close to a buy signal.

VIX fell -1.12 to 18.94.

TLT plunged -0.75%, gapping down at the open and selling off further during the day. Forecaster plunged -0.44 to -0.84, which is a steep downtrend for bonds. TY doesn't look quite as bad, down just -0.12%, with its forecaster off -0.24 to -0.48. Bonds definitely don't like it when SPX moves higher.

JNK rose +0.08%; the doji candle looked neutral, but JNK forecaster jumped +0.40 to +0.30, which is a buy signal for JNK.

CRB rose +0.76%, with 4 of 5 sectors moving higher, led by agriculture (+1.97%).

While the equity market has done well over the past few days, today after market close, Trump announced another $100 billion in tariffs on Chinese goods. This took SPX down 40 points in the futures markets, which have slowly tried to recover since then.

My sense is that Trump directed his staff to come up with the most painful tariffs possible for China – similar to what the Chinese are trying to do to the US.

And here's a shocker: the Washington Post printed an op-ed that agreed with Trump on the China-trade issue.  https://www.washingtonpost.com/opinions/global-opinions/trump-is-right-chinas-a-trade-cheat/2018/04/05/6cd69054-390f-11e8-8fd2-49fe3c675a89_story.html?utm_term=.cc4798a22c4a

Is there starting to be a broader-based US consensus on the China trade issue?  I'm seeing less knee-jerk ridicule, and more thoughtful commentary.  Interesting times; I can't say if a broader consensus is positive for the markets or not. 

And of course there are the higher rates as well; 10-year treasury yields are back up to 2.83%, after dropping to 2.81% last week.  April brings an increase in the rate of unwind of the Fed's balance sheet.

However if you're a goldbug, the rising dollar is the critical item. Gold in Euros is moving higher only in fits and starts, and so for the most part, a rising dollar will end up causing gold to drop. That's where we have been for quite a while now, and the buck definitely appears to be moving higher right now.

Nonfarm payrolls is tomorrow at 8:30 am.

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