PM Daily Market Commentary - 2/13/2019

davefairtex
By davefairtex on Thu, Feb 14, 2019 - 6:54am

Gold fell -4.95 [-0.38%] to 1310.87 on moderately heavy volume, while silver dropped -0.14 [-0.89%] to 15.55 on extremely heavy volume. The buck rallied strongly [+0.45%], crude moved higher [+1.28%], while equities moved up just a little [+0.30%].

The large currency move today seemed to be all about BRExit and its uncertainty.

Gold looked a bit odd today, spiking higher at the open in New York, topping out at 1321.70, and then plunging $13 soon thereafter. The spinning top candle was a bearish continuation, while forecaster was largely unchanged, remaining in a modest downtrend. While gold remains in an uptrend in both the weekly and monthly timeframes, the weekly is approaching a possible bearish reversal. That said, gold/Euros remains in an uptrend in all 3 timeframes, so viewed from the international perspective, gold's mild downtrend in USD is just a currency effect.

COMEX GC open interest rose +6,368 contracts.

Futures are showing a 1% chance of a cut in March, and a split in December (12% increase, 6% cut).

Silver's intraday chart looked similar to gold, but the spike up was less pronounced, and the subsequent sell-off was substantially stronger. Silver also made a new low on today's move. Silver's long black candle was a bearish continuation, and forecaster moved slightly deeper into a downtrend. Silver remains in a downtrend in both the daily and weekly timeframes.  The volume is increasing as price drops, which is not a good sign.

COMEX SI open interest rose +5,228 contracts. That's 11 days of global production in new paper silver. Perhaps that's why silver did so poorly today. Someone is loading up short, it would seem.

The gold/silver ratio rose +0.48 to 83.92. That's bearish.

Miners rallied sharply this morning along with the metals, and then sold off for the remainder of the day, closing at the lows. GDX fell -0.59% on moderately heavy volume, while GDXJ dropped -0.25% on light volume. XAU fell -0.32%, the spinning top candle was a bearish continuation. Daily forecaster inched higher, but remains in a slight downtrend. XAU is in an uptrend in the weekly and monthly timeframes. I think the miners did fairly well given the large rise in the buck, and the relatively large drop in silver.  According to the daily forecaster, the XAU downtrend remains fairly mild.

The GDX:$GOLD ratio fell -0.21%, while the GDXJ:GDX ratio climbed +0.34%. That's neutral.

Platinum fell -0.62%, palladium dropped -0.44%, while copper rose +0.18%. Mixed messages in the other metals; platinum continues to look very weak, palladium is just below the all-time highs, while copper is figuring out where to go next after a 3-day reaction decline.

The buck rose +0.43 [+0.45%] to 96.57, easily wiping out yesterday's losses. This is the third day of strong movement in the buck – up, then down, now back up again. The long white candle was a bullish continuation, and forecaster jumped even higher into an uptrend - which is now very strong. The buck is in an uptrend in both the daily and weekly timeframes, with the monthly right on the edge of a buy.  The buck may be preparing to break out above 97.  If so, BRExit would probably be the reason why.

The big currency moves today were: EUR [-0.57%], GBP [-0.39%], JPY [-0.49%].

Crude rose +0.69 [+1.28%] to 54.62. Crude rallied going into the EIA report, but then chopped sideways and slightly downhill after the report actually came out. The EIA report was a bit bearish (crude: +3.6m, gasoline: +0.4m, distillates: +1.2m); it looked like traders were expecting a more positive outcome. Still oil made a new high, the spinning top was a bullish continuation, and forecaster remained in a relatively mild uptrend. Today's move took crude back above its 9 MA. Crude is in an uptrend in all 3 timeframes.

SPX rose +8.30 [+0.30%] to 2753.03. All of the gains came in the futures markets overnight. SPX made a new high to 2762, but then fell back. The close was fairly unpleasant, losing 10 points in 25 minutes. Even so, today's move took SPX over its 200 MA, which is a bullish milestone. The spinning top was a bullish continuation, and forecaster inched higher, remaining in a fairly strong uptrend. SPX is in an uptrend in all 3 timeframes.

Energy was the leader today (XLE:+1.25%) along with consumer discretionary (XLY:+0.68%), while utilities (XLU:-0.29%) and communications (XLC:+0.07) did worst. Call today somewhat bullish.

VIX rose +0.22 to 15.65. It looks as though the VIX is bottoming out.

TLT fell -0.37%, making a new low. The doji star candle was a bearish continuation, and forecaster remains in a downtrend. TY fell -0.13% making a new low, the long black candle a bearish continuation, and forecaster inching lower, remaining in a slight downtrend. TY remains in an uptrend in both the weekly and monthly timeframes. The 10-year treasury fell -2.4 bp to 2.71%.

JNK fell -0.11%, the long black candle was a bullish continuation, and forecaster also fell but remained (just barely) in an uptrend. HYB looked similar. The junky debt uptrend is fading – perhaps a tell for SPX, although its a bit too soon to be sure, since no reversal has happened yet.

CRB rose +0.28%, with 4 of 5 sectors rising, led by energy (+1.71%). Energy appears to be breaking out to the upside.

To me it looks like the markets were relieved by the US delegation's trip to China that included our two senior negotiators, as well as Trump's comments suggesting that if a trade deal was getting closer, he was willing to let the tariff deadline slide for a time.  Perhaps as a result, crude also appears to have reversed direction; the longer term forecasters for crude suggest the momentum is to the upside.

The buck is in transition right now. If it does break out above 97, what will happen to gold?  Based on recent price action I suspect gold will be ok, but I'm less sanguine about silver.

Both gold and the miners continue to hold up fairly well.  So far, at least, it looks as though traders are buying the dips.  I think there is some risk to gold with a tariff settlement, but the overall economic climate will probably override any near-term damage to gold from a settlement.

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