PM Daily Market Commentary - 9/5/2018

By davefairtex on Thu, Sep 6, 2018 - 8:16am

Gold rose +5.31 [+0.44%] to 1204.15 on moderately light volume, while silver moved up +0.03 [+0.21%] to 14.22 on moderate volume. The buck fell -0.26%, which accounts for a fair amount of the move in the metals.

Gold moved steadily higher all day long, seemingly tracking copper prices rather than the Euro, or the Yen, or any of the other suspects. Gold's candle print was a neutral-looking bullish harami, and gold forecaster moved up +0.16 to -0.15, which is still a downtrend for gold. Gold remains below its 9 MA, and is in a downtrend in all 3 timeframes.  That said - gold's downtrend is a lot milder either silver, or the miners.

COMEX GC open interest fell -4,675 contracts.

Rate rise chances (September 2018) remain at 100%.

Silver chopped sideways in a narrow trading range with a slight upward bias. The candle print was a bullish harami, which was just slightly bullish (27% reversal), while the forecaster moved up +0.22 to -0.52. Silver remains in a downtrend in all 3 timeframes.

COMEX SI open interest fell -1,573 contracts.

The gold/silver ratio rose +0.20 to 84.68. The rising ratio is bearish – but the level suggests PM could be at or near a long term low.

Miners fell again today, with GDX off -0.83% on moderate volume, while GDXJ dropped -0.96% on moderate volume also. XAU fell -0.57%, and the short black candle was a bearish continuation. Forecaster dropped -0.14 to -0.80. The new low was bearish too. XAU is in a downtrend in all 3 timeframes.

The GDX:$GOLD ratio fell -1.27%, while the GDXJ:GDX ratio dropped -0.13. That's bearish.

Platinum rose +0.84%, palladium dropped -0.86%, while copper rose +0.85%. Palladium was the outlier today – I got the sense that copper was the leader and everything else more or less followed copper higher, to varying degrees. That said, all 3 other metals remain in downtrends, so things still remain bearish.

The buck fell -0.25 [-0.26%] to 94.79. The spinning top candle was actually a bullish continuation, but forecaster dipped -0.16 to +0.43; the buck remains in an uptrend in the daily and monthly timeframes, and it also remains above its 9 MA.  Today's drop didn't change the trend.

Crude fell -0.74 [-1.07%] to 68.27. Sadly for the price of crude, Hurricane Gordon managed to miss every single piece of oil-producing equipment in the gulf. API was mildly bearish (crude: -1.2m, gasoline: +1m, distillates: +1.8m), which was responsible for about $0.22 of today's decline. Crude printed a swing high today (49% bearish reversal), and crude forecaster plunged -0.35 to -0.04, which is a sell signal for crude. Crude also closed the day below its 9 MA. Crude remains in an uptrend in the weekly and monthly timeframes.

SPX fell -8.12 [-0.28%] to 2888.60. Once again, most of the losses in SPX came in the futures markets overnight; SPX sold off during the day, but managed to bounce back, printing a takuri line candle which was actually just a bearish continuation. Forecaster plunged -0.37 to -0.26, which is a sell signal for SPX. SPX is now below its 9 MA, but remains in an uptrend in the weekly and monthly timeframes. Sector map shows utilities did best (XLU:+1.40%) along with staples (XLP:+1.15%) while tech (XLK:-1.25%) and cyclicals (XLY:-1.08%) led lower. That's a bearish sector map. Even so, the US still did fairly well compared to the rest of the world.

VIX +0.75 to 13.91.

TLT continued moving lower, losing -0.27%, making a new low. TY looked a bit better, rising +0.02%; TY forecaster remains in a downtrend in both daily and weekly timeframes. The 10-year yield was unchanged at 2.90%.

JNK continued falling, down -0.11%, avoiding a new low, but remaining in a downtrend.

CRB fell -0.58%, with 3 of 5 sectors moving lower, led by energy (-1.38%). CRB is now back below all 3 moving averages, and remains solidly in a downtrend. It appears to be in the process of forming yet another lower high.

Today's bounce in the metals was a mildly positive sign, but certainly not a reversal of any sort.  Gold did see some short-covering today, which looks helpful, as did copper. Perhaps if the rally continues today we can see if that changes things in the mining shares, which still look horribly weak.

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1 Comment

Nate's picture
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Joined: May 6 2009
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James Grant

The 10 most important lessons James Grant learned in finance…

1. The key to successful investing is having everyone agree with you — LATER. The most popular investment of the day is rarely the best investment. If you want to know what’s popular, look no further than the front page of your favored business journal… Or just tune in at your next cocktail party.

2. You aren’t good with money. Because humans aren’t good with money. We buy high and sell low because it’s what comes naturally. It’s difficult to control emotions. It’s more difficult when money is involved.

3. Everything about investing is cyclical… prices, valuations, enthusiasms. And this will never change. The greatest investors develop a sense of when markets have reached euphoric levels. And of when fear is crippling reason.

4. You can’t predict the future. Nor can the guy who claims he can.

You can, however, see how the crowd is handicapping the future. Observing the odds, you can make better choices.

5. Every good idea gets driven into the ground like a tomato stake. Exchange Traded Funds (ETFs) were a great idea. They allowed investors diversified exposure to a number of markets for minimal fees.

Today, ETFs account for more than 23% of all U.S. trading volume with a total market value over $3 trillion. And the ETF market is forecasted to hit $25 trillion globally by 2025.

And what happens when everyone rushes for the exits?

6. Markets are not perfectly efficient. Because the people who operate them aren’t perfectly reasonable. The debate over efficient markets has raged since the birth of public markets.

7. Patience is the highest yielding asset. Charlie Munger, Warren Buffett’s longtime partner in Berkshire Hathaway, explained the importance of patience this way:

How did Berkshire's track record happen? If you were an observer, you'd see that Warren [Buffett] did most of it sitting on his ass and reading. If you want to be an outlier in achievement, just sit on your ass and read most of your life.

8. Never stand in line to buy anything. In January 1980, at the peak of the Great Inflation of the Jimmy Carter era, a line snaked out of the doors of a lower Manhattan coin dealer. The people in that queue were waiting to buy gold at what proved to be a generational high, $850 an ounce. I was in that queue. I’ve made plenty of mistakes since then. But that particular mistake I’ve subsequently avoided.

9. Leverage is like chocolate cake. Just a little bit, please. Markets will always correct. They corrected after the Dutch tulip mania in 1630s. And they corrected after the subprime mortgage debacle in 2007. What do corrections correct? They correct the errors of a boom.

And when markets correct, they cause the most amount of financial pain to the greatest possible number of people.

10. “Don’t overestimate the courage you will have if things go against you.”

“Consider all the facts – meditate on them. Don’t let what you want to happen influence your judgement.”

“Do your own thinking. Don’t let your emotions enter into it. Keep out of any environment that may affect your acting on your own reason.”

These final three items, which I’ve included as a single lesson, are in quotation marks because I borrowed them from the late Bernard M. Baruch – one of the greatest investors who ever lived.

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