PM Daily Market Commentary - 1/9/2019

davefairtex
By davefairtex on Thu, Jan 10, 2019 - 10:10am

Gold rose +812 [+0.63%] to 1298.72 on very heavy volume, while silver climbed +0.10 [+0.61%] to 15.79 on very heavy volume also. The buck was hit hard, losing -0.72%, and crude shot higher [+4.70%]. Today seemed to be more about large moves in currency, and less about risk.

Gold started its rally a few hours before US market open, moving roughly in sync with the rising Euro. Gold's long white candle was mildly bullish, and forecaster moved back into an uptrend. Gold is really trying to figure out where to go next, issuing back to back trend changes over the past 4 days. Pulling back to the longer term timeframes, it seems clear where gold is headed: higher. Gold is in an uptrend in all 3 timeframes, and the longer term forecasters look fairly strong. Gold also remains above all 3 moving averages. All that said – gold/Euros isn't looking nearly as healthy, so gold's USD performance is at least partially a currency effect.

COMEX GC open interest rose +11,236 contracts. That's a fairly large increase in OI.

Futures are now showing a 6% chance for a rate increase in March, and a split decision (13% rate cut, 14% rate increase) for December. That's a modest decline vs yesterday.

Silver was a lot choppier; while it rallied along with gold, it also ran into some selling pressure of its own. Silver's spinning top was a bearish continuation, and silver forecaster recovered, but not enough for a buy signal. Silver remains in an uptrend in the weekly and monthly timeframes.  On the daily, it looks as though silver may have just completed a 3-day reaction move off a primary uptrend.  If so, that's a positive sign.

COMEX SI open interest rose +2,260 contracts.

The gold/silver ratio rose +0.05 to 82.04. That's neutral.

Miners moved higher, rallying sharply in the first 30 minutes, and managed to keep the gains through end of day. GDX climbed +1.28% on moderately light volume, while GDXJ climbed +1.22% on light volume. XAU rose +1.83%, making a new high; its white marubozu was a bullish continuation, and forecaster jumped higher into uptrend. XAU remains in an uptrend in all 3 timeframes, and with today's new high, it appears to be the strongest of the gold/silver/miner trio.

The GDX:$GOLD ratio rose +0.65%, and the GDXJ:GDX ratio fell -0.06%. That's mildly bullish.

Platinum rose +0.69%, palladium moved up +0.38% (another new all time high), and copper rose +0.42%. All the other metals did relatively well, with palladium easily the strongest of the bunch.

The buck fell -0.69 [-0.72%] to 94.64, making a new low. Today's plunge was enough to trigger a sell signal on the weekly, which puts the buck in a downtrend in all 3 timeframes. That monthly sell signal from December has proven to be prophetic. The bulk of the move came immediately after the US market opened.

Large currency moves include EUR [+0.90%], GBP [+0.60%], and JPY [+0.53%].

Crude rallied all day long, up +2.36 [+4.70%] to 52.60. Crude had some problems immediately following the relatively bearish-looking EIA report at 10:30 (crude: -1.7m, gasoline: +8.1m, distillates: +10.6m), but the brief sell-off just seemed to bring out the dip-buyers, who just ripped prices higher. Crude remains in an uptrend in all 3 timeframes.  Crude is now approaching a resistance zone at roughly 52.50.

SPX moved up +10.55 [+0.41%] to 2584.96. It was another new high, helped by the rally in crude. The short white candle was mildly bearish (29% reversal), but forecaster moved higher into an uptrend. SPX remains in an uptrend in both the daily and weekly timeframes.

Energy led (XLE:+1.58%), along with tech (XLK:+1.29%) while staples (XLP:-0.93%) and utilities (XLU:-0.60%) did worst. This was a relatively bullish sector map.

VIX rose +0.99 to 20.97.

TLT fell -0.16%, making a new low. TLT remains in a short-term downtrend. TY climbed +0.13%, perhaps hinting that its coming to the end of the recent correction. Even so, TY weekly issued a sell signal today, putting TY in a downtrend in both the daily and weekly timeframes. The 10-year yield fell -2.9 bp to 2.70%.

JNK moved up +0.14%, making a new high. The short black candle doesn't look great, but the candle code thinks its a bullish continuation anyway, Forecaster remains in a strong uptrend. Cousin HYB looks more or less the same. JNK continues to support risk-on.

CRB jumped +1.75%, making a new high; only 2 of 5 sectors rallied, led by PM (+1.65%).

Is the SPX rally running out of steam?  It may be.  However the government shutdown may end any day now, and there might well be more progress in the US-China trade talks.  Both parties are motivated at the moment, perhaps China more so than the US.  Tgis is all upside risk to any shorts.  Also, crude continues to rally - the move off yesterday's bearish EIA report was pretty impressive.  Lastly, the Fed seems to have become more dovish since the "Come to Jesus" market move just before Christmas.  And there's always that strong payrolls report.

Yeah.  I wouldn't be short.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

5 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 385
Stocks Rising

It's funny to me how you can get a sharp 10 day selloff and all along the way everyone is looking for it to reverse higher any day.  Don't be short, because you're going to get burned by the big reversal.  Then you get a sharp 10 day rise, one of the biggest in modern history, and you get nobody looking for a reversal.  Don't be short, because it's just going to keep going up.  Why is that?  Is it just harder to reverse uptrends than downtrends?

What has changed, globally or domestically, since December?  We got a strong jobs report.  But other econ data seems to be about the same as it was at that time, maybe worse globally.  The Fed has certainly been jawboning. But can they really afford to not raise rates, especially since the market is rising at an historically rapid pace?  It's really telling how there is zero tolerance for a bear market in stocks anymore.  I'd like to understand the real reason for this. Has the market just become the only real symbol of economic health?  I mean, this "we have to keep the market up at all costs" mentality seems very sucpicious to me.  But I guess, even though it seems like a bear market would eventually happen, they can just stave it off indefinitely.  Obviously, it still responds to jawboning, ignoring hard data, just like it has for the last decade.  What would ever break that, really?

Anyway, I think the Fed raises again in March, especially when the market is still running hard.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 6026
Don't look now...

....but as the powers that be work hard to sell gold in simultaneous sympathy with boosted stock indexes (as they have this morning), which is their signature calling card to signal complete faith in the money masters, a couple of iconic companies stock prices are streaking out the back door.

FNMA and FMCC (Fannie Mae and Freddie Mac) are each down ~ -17% at the moment.

Oops.

I wonder what's going on there?  We'll find out soon enough.

Meanwhile it remains a complete mystery why the market propping efforts of the banksters is getting a complete pass in the US from the left.  Clearly these efforts help Trump, and you'd think that by association such efforts would fall under at least modest scrutiny and even be frowned upon.

Nope.

The media hasn't made that connection for people in the US, so it remains virtually undetectable as 'a thing' in the national conversation.  The media continues to insist that rising stock prices are always a good thing and so that's the opinion of most people.

Meanwhile, in France, the people have it all worked out and are busy arranging such things as mass bank withdrawals and setting up protests in front of the Rothschild bank found in Macron's home city.

There the people are tired of being harvestable battery units for the financial elites and have managed to work out the connections.  Not hard to do, of course, but you have to be willing to think for yourself and not only derive one's opinions from the media's own super narrow Overton Window.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5736
risks

Right now, to my mind, there are a lot of upside risks - news events that could cause a large rise in prices.  The largest of these is the tariff settlement.  I mean, you know we will get a trade settlement, right?  Trump has the stage all set for this to happen.  He got the NAFTA thng done, and now he's working on China.  So why stand in front of that train?  If you are looking to sell, its after that news hits the wires.  Same goes for the government shutdown.  At some point, that ends.  When it does, it will probably result in a relief rally higher in risk assets.

You really want to take a position prior to any of these events when you know they are on the way?

Wait for the news to hit, and then see how the market handles the news.

We also have a significantly more dovish Fed.  It went from "we're going to QT forever, and we're going to raise rates like clockwork every other meeting" to "well of course we can adjust the QT thing if need be, and we will be 'patient' with the rate increase path."

That's a big change.

Lastly, we don't really have any poor near-term macroeconomic data for the US.  There's "carmageddon", but there's also the very strong payrolls report.  A 5% (annualized) m/m wage increase is nothing to sneeze at.

The crude oil sell-off appears to be over too.  Whatever caused that dramatic move lower (and I still think it was the market's concern that the Saudis were no longer going to be the swing producer - which is now corrected) has now eased.  So that pressure is off now too.

That's what I see.

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 385
davefairtex wrote: Right
davefairtex wrote:

Right now, to my mind, there are a lot of upside risks - news events that could cause a large rise in prices.  The largest of these is the tariff settlement.  I mean, you know we will get a trade settlement, right?  Trump has the stage all set for this to happen.  He got the NAFTA thng done, and now he's working on China.  So why stand in front of that train?  If you are looking to sell, its after that news hits the wires.  Same goes for the government shutdown.  At some point, that ends.  When it does, it will probably result in a relief rally higher in risk assets.

You really want to take a position prior to any of these events when you know they are on the way?

Wait for the news to hit, and then see how the market handles the news.

We also have a significantly more dovish Fed.  It went from "we're going to QT forever, and we're going to raise rates like clockwork every other meeting" to "well of course we can adjust the QT thing if need be, and we will be 'patient' with the rate increase path."

That's a big change.

Lastly, we don't really have any poor near-term macroeconomic data for the US.  There's "carmageddon", but there's also the very strong payrolls report.  A 5% (annualized) m/m wage increase is nothing to sneeze at.

The crude oil sell-off appears to be over too.  Whatever caused that dramatic move lower (and I still think it was the market's concern that the Saudis were no longer going to be the swing producer - which is now corrected) has now eased.  So that pressure is off now too.

That's what I see.

That's a great analysis, and although I directionally agree, I'm still not sure what justifies the current valuations.  Any way you slice it, the macro situation deteriorated over the last couple of years, risks have gone up, liquidity has been (and is continuing to be drained), earnings have probably peaked, and we're just a good sneeze off the lofty all time highs.  Stocks have been up almost the entirety of the governent shutdown.  It can't be adding anything positive to the economy, so I can't see a strong, lasting reaction from that ending.  And I doubt very much that the China deal will be this utopia of awesomeness.  Regardless, I do believe we get a pop out of those thing, justified or not.  But there's still the specter of Mueller and something happening to Trump.  I can't imagine that wouldn't be a big problem for the market, should that occur.

hammer6166's picture
hammer6166
Status: Bronze Member (Offline)
Joined: Apr 30 2010
Posts: 33
Nice one Dave

'since the "Come to Jesus" market move just before Christmas.'  :-)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments