PM Daily Market Commentary - 7/10/2018

davefairtex
By davefairtex on Wed, Jul 11, 2018 - 2:57am

Gold fell -2.40 [-0.19%] to 1255.90 on moderately heavy volume, while silver dropped -0.05 [-0.34%] to 16.09 on moderate volume. The buck rose +0.07%; it wasn't much of a move, but there was a strong intraday rally in the buck that yanked prices of the metals around fairly substantially.

Shortly after market close, the Trump administration published a preliminary list of additional Chinese products that could be targeted with a 10% tariff, with the list covering some $200 billion in exports. The tariffs would not take effect until after a public comment period which runs through August. Copper, which didn't do so well during the day, immediately cratered, making a new low to 2.72. This news (and especially copper's plunge) could well end up overwhelming any TA I tell you about in the rest of today's report.

Gold fell in Asia and London, made a new low to 1247.50 around 7:30 am, then bounced back to recover most of its losses by end of day. Gold's plunge tracked a similar drop in the Euro; gold rebounded at the same time the Euro did. Candle print was a takuri line (46% chance of marking a low) but forecaster wasn't happy, dropping -0.43 to -0.25, which is a sell signal for gold.  Candle code doesn't know about copper, but gold forecaster definitely does.

Gold remains above its 9 MA.

COMEX GC open interest rose 9,095 contracts; 4 days of global production.

Rate rise chances (September 2018) rose to 82%.

Silver tracked gold, made a new low to 15.95, and then it too bounced back, recovering most of its losses. Silver's print was a hammer candle, which had a 39% of marking a low. Silver's forecaster ticked up +0.02 to -0.03, which was still a very mild downtrend. The long lower shadow says that there are still plenty of buyers for silver below 16; whether that remains true if copper continues to plunge is not as certain.

COMEX SI open interest rose by 2,848 contracts today. That's 5 days of global production.

The gold/silver ratio rose +0.12 to 78.05, which is somewhat bearish.

Miners were mixed again today, with GDX up +0.22% on moderately light volume, while GDXJ dropped -0.27% on very light volume. XAU printed a thrusting candle, which was a bullish continuation; XAU forecaster moved up +0.11 to +0.44. That's a reasonably strong uptrend. Miners continue to do well, although today was another low-volume day.

The GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. That's neutral.

Platinum fell -0.49%, palladium plunged -1.84%, while copper dropped -1.43%. These moves all happened prior to the tariff announcement...which does not bode well for what comes next. Palladium's candle print was a swing high (48% bearish reversal) and its forecaster issued a sell signal. Copper's bearish harami was neutral. The other metals aren't looking so happy. It looks as though the traders betting on “dead cat bounce” had the right idea.

The buck rose +0.07 [+0.07%] to 93.82, trying to rally but ultimately failing, printing a shooting star candle which was actually just neutral. DX forecaster rose, up +0.17 to -0.12. The buck may be recovering here; perhaps the brief Euro rally has run its course. Weekly and monthly remain in uptrends.

Crude moved up +0.27 [+0.37%] to 73.44. The positive API report after market close was largely the reason; crude was set to close flat until it was released: (crude:-6.8m, gasoline: -1.6m, distillates: +2.0m). The prospect of sanctions on Iran continue to support oil prices, but how long will Trump's “zero tolerance” policy remain in place? Saudi Arabia cannot pump enough to make up for Iran's potential shortfall, but the miderms are coming up, and high gasoline prices could make for a problematic election for Trump. The article below provides the key thumbnail sketch: “The White House can drive Iran’s oil exports to zero, or it can have moderate U.S. gasoline prices, but it probably cannot have both.” https://www.reuters.com/article/oil-prices-kemp/column-white-house-must-choose-between-tough-iran-sanctions-and-moderate-gasoline-prices-kemp-idUSL8N1TY1P8

SPX rose +9.67 [+0.35%] to 2793.84. SPX broke out to a new high today, moving above the previous high set back in June; higher highs, and higher lows marks an uptrend. The short white candle is a bullish continuation, and SPX forecaster moved up +0.06 to +0.76. Sector map had consumer staples in the lead (XLP:+1.19%) along with utilities (XLU:+0.95%) while financials brought up the rear (XLF:-0.37%). That's bearish, as both utilities and staples are safe haven sectors, and financials tend to lead. This map suggests that traders are not buying the breakout – they are selling it instead.

VIX fell -0.05 to 12.64.

TLT inched down -0.01%, effectively no change. TLT remains in a downtrend. TY moved up +0.03%, which was also basically no change. TY also remains in a downtrend. The 10-year treasury moved up +0.1 bp to 2.87%.

JNK was unchanged, printing a short black candle which was neutral.

CRB edged up +0.03%; 4 of 5 groups fell, led by livestock (-1.33%) which had another bad day today. CRB remains in no mans land, above the 200, but below the 50.

So what happened following the tariff announcement at 4:45 pm?

  • SPX -20 (-0.74%)

  • Copper -0.11 (-4.0%)

  • 30-year Treasury (+0.37%)

  • Crude -0.45 (-0.59%)

  • Gold -3.00 (-0.24%)

  • Silver -0.09 (-0.57%)

  • Platinum -1.50 (-0.18%)

  • Palladium unchanged

Copper is clearly the biggest loser so far, and the drop to 2.71 is a new low that dates back to August 2017. The drop in US equities doesn't look all that unpleasant; perhaps the PPT is on the job keeping things from getting too ugly.  The effects on gold and silver don't look too bad at the moment, but history suggests plunging copper prices won't do the PM group any favors.

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