PM Daily Market Commentary - 6/4/2018

davefairtex
By davefairtex on Tue, Jun 5, 2018 - 7:02am

Gold fell -2.00 [-0.15%] to 1295.90 on moderately light volume, while silver was unchanged at 16.43 on moderately light volume also. The buck fell -0.21 [-0.22%], which tells us that gold in Euros fell a bit more substantially, losing -0.45%. The level of concern over the new Italian government seems to be continuing to fall, at least for now.

Gold basically chopped sideways, selling off slightly in the afternoon in New York. The daily forecaster issued a sell signal last Friday, and it continued moving deeper into downtrend today, losing -0.34 to -0.38. That's just a moderate downtrend. GC.EUR issued a sell signal today, losing -0.33 to -0.24. The GC.EUR is definitely down off its highs, and any further decline will likely cause the weekly forecaster to issue a sell signal also. Gold (USD) has decent support around the 1290 level.

COMEX GC open interest fell -1,550 contracts.

Rate rise chances (June 2018) rose to 94%.

Silver rallied along with the Euro today, but then retreated as the Euro rally ran out of gas. Pretty much nothing happened with silver today.

COMEX SI open interest rose by 543 contracts today.

The gold/silver ratio fell by -0.15 to 78.90. That's mildly bullish.

Miners gapped up at the open, and then sold off all day long. GDX closed down -0.13% on very light volume, while GDXJ fell -0.03% on very light volume also. XAU actually sold off harder, losing -1.04%; this caused XAU forecaster to plunge -0.29 to -0.42. XAU also fell below its 50 MA today. All this looks fairly bearish.

The GDXJ:GDX ratio was unchanged, as was the GDX:$GOLD ratio.

Platinum fell -0.18%, palladium dropped -0.55%, while copper rose +1.52%. Copper appears to be breaking out to the upside – it is in an uptrend in all 3 timeframes.

The dollar fell -0.21 [-0.22%] to 93.61. The buck actually sold off substantially harder, making a low to 93.25 around 8 am, but bounced back recovering most of its losses. Still, the forecaster dropped -0.30 to -0.11, which is a sell signal for the buck. The buck remains in an uptrend in both weekly and monthly timeframes, although momentum does seem to be slipping just a bit.

Crude dropped -0.85 [-1.29%] to 64.86. The plunge in crude is just relentless right now, and today certainly does not look as though it will mark the low. Forecaster dropped -0.32 to -0.61. I go back to the failure to rally last Thursday off the good EIA report – that was the market telling us that price was probably headed lower. Crude is in a downtrend in all 3 timeframes.

SPX rose +12.25 [+0.45%] to 2746.87. Today's move took SPX to a new multi-month high; along with the breakout, SPX forecaster issued a buy signal (+0.41 to +0.40). SPX is in an uptrend in all 3 timeframes. Cyclicals led (XLY:+1.12%) while energy trailed (XLE:-0.86%) along with utilities (XLU:-0.80%). Today's sector map was reasonably bullish, minus the fall in energy.

VIX fell -0.72 to 12.74. VIX hasn't been below 12 since January 2018, but at this rate it could be there tomorrow.

TLT fell -0.72%; last week's rally is continuing to unwind. TY confirms, dropping -0.28%, and the TY forecaster issued a sell signal today. While bonds were acting as a safe haven refuge last week, it appears as though the immediate emergency is now past. US 10-year rates rose 4 bp to 2.94%.

JNK rose +0.28%, bouncing back strongly off yesterday's sell-off. Longer term JNK is moving lower in fits and starts, but it seems as though there are still plenty of dip-buyers out there, and that's what appeared to be happening today – in spite of the drop in crude oil prices.

CRB fell -1.41%, with 4 of 5 sectors moving lower, led by agriculture (-2.77%). Today's plunge took CRB below its 50 MA. The decline has started to accelerate, helped by the strong move down in crude.

Bonds and gold are telling us that the concern over the Italian election is receding.  While the new government is saying things like "Italy will no longer be Europe's refugee camp", that isn't something the market really cares about - at least not in Italy anyway.  The attention-getter will be when the new government starts spending money.

In the meantime, economic news in the US continues to be relatively positive, although the different sectors are mixed. Tech has broken out to new highs, while many other sectors including financials continue to languish.  While rates are edging back up towards 3%, so far the economy remains relatively unaffected.

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