PM Daily Market Commentary - 9/6/2018

davefairtex
By davefairtex on Fri, Sep 7, 2018 - 3:45am

Gold rose +3.01 [+0.25%] to 1207.16 on heavy volume, while silver moved down -0.04 [-0.25%] to 14.18 on moderately heavy volume. The buck fell -0.15%, and the other metals largely moved higher; given that, silver's performance is looking especially weak right now.

Gold tried to rally today but mostly failed. The shooting star candle was bearish (42% reversal) but forecaster moved up +0.16 to -0.15; that's still a downtrend. Gold ended the day below its 9 MA, and remains in a downtrend in all timeframes. Really, there was not much change from yesterday.

COMEX GC open interest rose 6,681 contracts. It looks like shorts won the battle today.

Rate rise chances (September 2018) fell to 99%.

Silver also tried to rally, but then succumbed to some serious selling pressure. The spinning top candle was neutral, while forecaster jumped +0.56 to -0.11. Weekly is also improving, but silver remains in a downtrend in all 3 timeframes.  On the chart - either silver is bottoming, or it is preparing to break down again.  Its really hard to say which.

COMEX SI open interest rose +698 contracts.

The gold/silver ratio rose +0.39 to 85.07. The rising ratio is bearish – but the level suggests PM could be at or near a long term low. I've said that for a few days now, and it remains true. Other than the 1990-1993 time period, this is the highest value for the gold/silver ratio from 1975-preset.

Miners tried to rally today also, but the rally failed. GDX moved down -0.17% on moderately heavy volume, while GDXJ fell -0.37% on heavy volume. XAU fell -0.25%, but managed to avoid making a new low. The long black candle was somewhat bearish, but XAU forecaster moved up +0.14 to -0.74. That's still a strong downtrend. XAU remains in a downtrend in all 3 timeframes.

Noticed after I posted - the RSI-7 of XAU is showing what could be a bullish divergence.  That's when price drops, but the RSI drops a lot less.  If XAU can avoid a further breakdown, then a miner recovery could be imminent.  I know, its been nothing bad bad news for weeks and weeks, but it is during these unpleasant times that we have to dodge those negative emotions and be most on the lookout for reversals.

The GDX:$GOLD ratio fell -0.42%, while the GDXJ:GDX ratio dropped -0.20. That's bearish.

Platinum rose +0.92%, palladium moved up +0.06%, and copper climbed +0.48%. Like gold and silver, copper too had a failed rally, but copper forecaster issued a buy signal, as did platinum and palladium.  That is cause for some cautious optimism.

The buck fell -0.14 [-0.15%] to 94.65. Not much happened today in the buck; the spinning top candle was neutral, while forecaster dipped –0.15 to +0.27; the buck remains in an uptrend on the daily and monthly timeframes, but is in a downtrend on the weekly.

My sense: the weekly downtrend seems to be “winning” right now. This doesn't make sense given the current macro environment – what with emerging market currency issues galore – so the answer probably lies in the realm of domestic politics and confidence. Right now, Trump is looking weak going into the midterms; any real achievements he has accomplished will be overshadowed by outrage of the day, along with “anonymous” editorials, unflattering books, and so on.

Trump will soon have a Democratic House that will immediately start impeachment proceedings against him, and his Republican “friends” in Congress would probably be secretly quite happy to see him swapped out for a President Pence that won't rock the boat in cartel-popular areas like trade, globalization, and immigration. Note: the “impeachment project” doesn't poll very well among independents, so that's why the left isn't advertising this fact, but the market has almost certainly sniffed it out. And, bottom line, that results in a weaker-than-expected dollar.

Crude fell -0.69 [-1.01%] to 67.58. The plunge occurred immediately following what seemed to be a reasonably good EIA report (crude: -4.3m, gasoline: +1.8m, distillates: +3.1m). That's not a good sign. Forecaster plunged -0.51 to -0.56, which is a much steeper downtrend. Crude is now below both the 9 and 50 MA lines. Crude still remains in an uptrend in the weekly and monthly timeframes.

SPX fell -10.55 [-0.37%] to 2878.05. Prices fell starting around 10 am, and managed to recover somewhat by end of day. The spinning top candle was a bearish continuation, and forecaster was unchanged at -0.26. SPX is still in an uptrend in the weekly and monthly timeframes. Sector map has energy (XLE:-1.85%) and tech (XLK:-0.73%) leading down, while utilities (XLU:+0.57%) did best. That's a bearish-looking sector map.

Many of the former leaders in tech are more seriously breaking down now: NFLX, FB, TWTR; even GOOG is now below its 50 MA. The conservatives have finally noticed that the left-leaning tech giants have been hard at work muzzling their voices online. “Well, we ARE a private company, so we can do whatever we want – and besides, we aren't doing that.” But its all very opaque. I'm sure they are hard at work doing just exactly that.

But I think the whole setup is awesome. Conservatives are finally complaining that monopolies are bad – at the same time, they are saying the FBI does bad things to people, and that maybe dialog with Russia is a good idea too. “I'd like three scoops of Irony, please. But hold the perspective.”

VIX +0.74 to 14.65.

TLT rallied today, up +0.37%, printing a swing low (52% bullish). TY agrees, rising +0.19%, also printing a picture-perfect swing low (66% bullish), which caused the forecaster to issue a buy signal for TY. TY is now back in an uptrend in all 3 timeframes, and is also back above the 9 and 50 MA lines. The 10-year yield fell -2.3 bp to 2.88%.

JNK was unchanged, and remains in a relatively strong downtrend.

CRB fell -0.64%, with 3 of 5 sectors moving lower, led by energy (-1.17%). CRB appears headed for a re-test of its recent low, and is below all 3 moving averages. The commodity downtrend isn't helping the metals at all.

There were some faint signs of hope today - but they were faint, and they came from the "other metals" rather than gold, silver, or the miners.  Trump's political weakness is dollar-negative, and that should support the metals to a degree.  Turkish Lira stopped moving higher - Merkel vowed "support for Turkey's economy", whatever that meant.  Europe really doesn't want Turkey to default, but I'm not sure what they can realistically do about it.  Perhaps they can send Erdogan some cash.  Or maybe the ECB can print a bunch of Euros and buy some of that Turkish debt.  Now that's a good idea!

All right, that's about it.  We have Nonfarm Payrolls tomorrow at 8:30 am.  Signs are it will probably be a strong one - thanks to a wave of debt-funded tax cuts thoughtfully provided by all those deficit-hawk Republicans in Congress.  Next on the list: cutbacks for all the social programs due to entirely unrelated budget limitations.

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10 Comments

phusg's picture
phusg
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exiTrump?

Surely Trump being replaced by a more predictable, career polition president who doesn't keep calling for a weaker dollar and appointing supposedly dovish Fed presidents would be dollar positive? Or are you talking about the impeachment period only when the administration is in limbo? (which I gather could be very long, maybe all the way to the next Presidential elections?)

davefairtex's picture
davefairtex
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ex trump

phusg-

Yes, in reviewing the Nixon impeachment process, I noted that the process is long and involved.  And minus a smoking gun, it is unlikely it will lead to the replacement of Trump.  Simply a noisy impeachment process will be seriously dollar negative, but it will ultimately lead nowhere.

A sample smoking gun:

"Hi, Vlad, Donald here.  Listen, I have a favor to ask you.  Uh huh.  So I'd like you to send your people over to the DNC and poke around to see if there's anything juicy.  No, I'm not kidding!  I mean it.  Listen, if you do this, I'll really owe you.  But if you find something, don't give it to me - send it to wikileaks and they'll release it.  That way they can't trace it back to us.  You can?  Perfect!  Let's both pretend this conversation never happened...and see you in Helsinki in two years!"

That's what they need.

I do think that a machine politician would eventually be more dollar-positive - in that they'd return to the usual "world policeman globalized US employment say-nothing-untoward endless war" paradigm we've been enduring for the last 20 years.  Just getting to that point - problematic.  And dollar-negative.

 

thc0655's picture
thc0655
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Don’t forget

1. Collapse is inevitable.

2. The longer it takes for The Collapse to get really rolling along the worse it will be (so let’s get the party started).

3. “We” elected Trump to break The System. I say, “Let’s get to it!”

4. If you think Trump is bad, wait until you see who comes after him.

 

davefairtex's picture
davefairtex
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collapse

I'd prefer the descent be reasonable and orderly.  To that end, having manufacturing come back to the US prior to any collapse seems like it would be a "really nice to have."  And I don't think Machine-Politician-Endless-War President Pence is likely to bring that about.

To paraphrase one of my favorite speeches: we have two admittedly regrettable, but nevertheless, distinguishable post-collapse environments....
... we are rapidly approaching a moment of truth...Now, truth is not always a pleasant thing, but it is necessary now to make a choice, to choose between two admittedly regrettable, but nevertheless, distinguishable post-war environments. One, where you got 20 million people killed, and the other where you got 150 million people killed.  Mr. President, I'm not saying we wouldn't get our hair mussed. But I do say no more than ten to twenty million killed, tops! Uh, depending on the breaks.  [ffwd to 1:47]
 
 
davefairtex's picture
davefairtex
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a really big deal

So this article - forget where I saw it - is a recipe for a 21st century ethnic cleansing re-education repression operation which appears to be extremely successful at changing behavior on the ground.

https://foreignpolicy.com/2018/08/22/chinas-mass-internment-camps-have-no-clear-end-in-sight/

Infrastructure includes:

* standard internment/re-education camps

* heavy police presence

* complete 24/7 video surveillance, backed up by facial recognition systems.

* required state surveillance app to be installed on your phone.

* "big data" AI (presumably using location, contacts, messages, and so on) is used to predict who is most likely to be disloyal.

Implementation details:

* "disloyal" candidates receive in-home visits from the state; if prohibited materials are found, or if the answers aren't loyal enough, you are sent off to a camp.

* if you can't memorize a party speech rapidly enough, you're sent off to a camp.

* if your child reports you for doing something disloyal, you are sent off to a camp.

* if you stop using your phone, you're sent off to a camp

* if you delete the state surveilance app on your phone, you're sent off to a camp

* if your relative overseas complains about the situation, you - and your relatives - are sent off to a camp

* if you are working in another part of China, you are recalled - and sent off to a camp.

* if you are an expat, and you return to China, you are sent off to a camp.

* and of course if the state surveillance app sees evidence of prohibited material on your phone, you are sent off to a camp.

The author concludes with:

The near-complete eradication of privacy and the massive scale of internment appears to be changing Uighurs’ behavior. Ten years ago, bans on the Uighur language in schools, popular novels (often printed by government-run presses), and private prayers and rituals seemed unenforceable. Local teachers ignored rules about language use, banned books were easy to find in private bookstores, and purportedly illegal rituals like Sufi dance remained common. Today Uighurs rush to burn their own books and strain to guess what will make their home visitors view them as loyal, out of fear that they will join the many family members and friends whom they have personally seen disappear over the last 18 months.

The re-education camps also cast their shadows beyond Xinjiang and even China’s borders. Xinjiang security personnel have been calling Uighurs working in the rest of China back to their hometowns, where, more often than not, they disappear. Police track the activities of Uighurs from their locales even when they reside abroad, demanding photographic evidence of their presence at universities or offices. Some are commanded to return home to certain detention. Uighurs comply out of fear for their families. Some who have spoken out about the situation in their homeland have seen large numbers of relatives disappear. Depression is rampant among Uighur exiles. All known cases of Uighurs returning to China in the last year have resulted in the returnee’s disappearance. Across the world, Uighurs with expiring passports or visas are currently weighing whether to claim asylum in foreign lands and never see their families again, or to face near-certain internment upon their return to Xinjiang.

My conclusion: yes, this is unfortunate for the Uighurs, but to me the terrifying thing is, this overall approach really seems to work, where the other approaches failed.  The key enabler: phones, and AI.  I'm sure governments everywhere are watching, and learning.  Stuff that works tends to get re-used, and improved upon.

Facebook is your friend.  So is google.  So is your phone.

Or maybe not.

 

thc0655's picture
thc0655
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Aleksander Solzhenitsyn - Gulag Archipelago

“And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?… The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin’s thirst, the cursed machine would have ground to a halt! If…if…We didn’t love freedom enough. And even more – we had no awareness of the real situation…. We purely and simply deserved everything that happened afterward.”

sand_puppy's picture
sand_puppy
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Holy Doodoo

DaveF, that is the most terrifying article I have ever read.

A full on State Oppression and Control Scheme enable by the technologies that make our world useful and fun.

 

Barnbuilder's picture
Barnbuilder
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Michael_Rudmin's picture
Michael_Rudmin
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The problem is one of legitimacy

Basically, it's hard to raise a government; and non-governments do very badly against governments.

Fifty men are a much more effective army than one.
Aboriginal Australian cave paintings, first testify to battles; and then wars, because of that fact.

5000 are more effective than fifty. An army of 5000000 is more effective than 5000, in general.

But even more than that is the legitimacy of justice; and while there is doubt emplaced by the icon of justice and judgement of the individual's position, than the individual is right to hesitate to raise arms against the state.

So when a state goes bad, giving injustice for justice (read The Law by Bastiat, IIRC) it can be very very bad for quite some time.

And yes, people say like Solzhenitzsien "what if the officers had been unsure of coming home"; but that "what if" depends on the uprising of the many -- in fact, a government. In the words of Chesterton in "the man who was Thursday", of "that law and order that is so critically important to the anarchist" (probably misquoted, but not badly)

So I'm not sure that they deserved what they got; I don't think the problem was that they didn't love freedom. I think the problem was that scoundrels got hold of legitimacy, and turned justice upside down. And the people had no sure legitimate government with which to resist the illegitimate one.

And I'm not sure how to battle that, especially when it seems that the layers above are ALSO upside down.

One man in colorado took a bullldozer, built it into a tank, destroyed his city, and then committed suicide; but the city powerful will have just collected insurance; they won't have missed a beat in their corruption.

Some problems don't really seem solvable. The decline of a country from justice and order into despotism, in light of the decline of the courts of heaven from upholding "peace and goodwill toward man" into an iniquitous upholding of debauchery, drunkenness, murder, and betrayal, seems to be one of them.

And what is a man to do?

And yes, even the Babylonian Epic of Gilgamesh seems to imply that viewpoint.

Mohammed Mast's picture
Mohammed Mast
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