PM Daily Market Commentary - 3/21/2019

davefairtex
By davefairtex on Fri, Mar 22, 2019 - 9:05am

Gold fell -3.48 [-0.26%] to 1314.54 on extremely heavy volume, while silver dropped -0.01 [-0.03%] to 15.47 on moderately heavy volume. The buck made a dramatic recovery [+0.82%] along with SPX [+1.09%]. Those are some decent-sized moves.

Gold made a new high in Asia, then it starting to fall, and didn't stop until the day low right around 12:30, after which it bounced back into the close. The trading range was fairly large, but the actual change was not. The moves in gold did seem influenced by the big dollar rally. The spinning top candle was a bullish continuation, and gold forecaster moved sideways, and remains in a mild uptrend. Gold remains in an uptrend in all 3 timeframes. Given the massive move higher in the buck, gold actually did pretty well today.

COMEX GC open interest rose +2,267 contracts today.

Futures are showing a 2% chance of a rate cut in May, and a 45% chance of a rate-cut by December. That's a 3% increase in rate-cut chances over yesterday. How does this line up with the SPX rally?

Silver rallied more strongly than gold in Asia, rising almost 18 cents, before it topped out and plunged, moving lower alongside gold, and bouncing into the close. The northern doji was somewhat bearish (38% reversal), and forecaster inched lower, but remains in an uptrend. Silver remains in an uptrend in all 3 timeframes – but the monthly is looking like it could tip over at any moment.

COMEX SI open interest rose +720 contracts.

The gold/silver ratio fell -0.17 to 84.81. That's mildly bullish.

Miners sold off in the morning, but rallied right back as gold bottomed out and recovered, bouncing strongly into the close. GDX moved up +0.53% on moderate volume, and GDXJ rose +0.06% on moderately heavy volume. XAU climbed +0.61%, making a new high. The high wave candle was a bullish continuation, and forecaster jumped higher, moving into a strong uptrend. XAU remains in an uptrend in all 3 timeframes. The intraday moves by the miners looked very strong to me.

The GDX:gold ratio rose +0.80%, and the GDXJ:GDX ratio fell -0.47%. That's somewhat bullish

Platinum fell -0.07%, palladium rallied +0.37%, while copper dropped -0.58%. Mostly, the other metals had similar patterns to gold – up in Asia, then down into the US through mid-day. Palladium made another new all time closing high – it is up $500 since mid-October 2018. That's a 50% gain for those keeping track. Wow.

The buck shot up +0.78 [+0.82%] to 95.94, erasing all of yesterday's big plunge and a little more besides. The move down started after Asia closed, and it didn't stop until...right around mid-day in the US. The long white candle was unrated, and forecaster moved higher but remains in a strong downtrend. The rally did bring the buck back above both the 200 and the 50 MA. The buck remains in a downtrend in both the daily and weekly timeframes,

Large currency moves included: EUR [+0.33%], GBP [-0.55%]. Hmm. Clearly the closing times are different for DX vs the currencies.

The move was all about BRExit, of course; the EU has declared that if Unconditional Surrender isn't approved by Commons, then BRExit will only be delayed until April 12th. May appears shockingly out of her depth, at least according to one EU observer:

“She didn’t even give clarity if she is organising a vote,” said one aide to a leader. “Asked three times what she would do if she lost the vote, she couldn’t say. It was awful. Dreadful. Evasive even by her standards.”

https://www.theguardian.com/politics/2019/mar/21/mays-appeal-falls-flat-as-eu-seizes-control-of-brexit-date

Crude dropped -0.14 [-0.23%] to 60.02. Crude more or less just chopped sideways, after first making a modest new high. The spinning top candle was a bullish continuation, but forecaster moved lower, issuing a tentative sell signal for crude. It appears on the daily chart that crude's upside momentum has stalled out, at least for now, right around the 60 level. Crude remains in an uptrend in both the weekly and monthly timeframes.

SPX jumped +30.65 [+1.09%] to 2854.88. SPX moved lower in the futures markets overnight, but then took off like a shot at the open and just never looked back, closing at the highs. This was a new closing high for SPX.  The long white candle was a bullish continuation, and forecaster moved slightly lower, but remains in an uptrend. SPX remains in an uptrend in all 3 timeframes.

Sector map provides some clues as to what happened: tech led by a lot (XLK:+2.51%) along with REITs (XLRE:+1.78%), while financials did worst (XLF:-0.31%). Some of the big tech movers included AAPL (+3.68%), WD (+9.77%), AMD (+8.52%), Micron (+8.52%), NVIDIA (+5.48%).  This is one confused sector map today.

VIX fell -0.28 to 13.63.

TLT rose +0.22%, making a new high; it remains in a very strong uptrend. TY fell -0.02%, but it too made a new high intraday. The shooting star candle was a bullish continuation, and forecaster inched lower but remains in a relatively strong uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield rose +0.2 bp to 2.54%; the day low for the 10-year was 2.50%.

JNK was unchanged, and remains in an uptrend.

CRB fell -0.12%, with only 2 of 5 sectors falling, led by industrial metals (-1.15%).

For me, the remarkable thing about today is that both equities and the 10-year made new highs.  What is going on?  A trader friend of mine pointed out that the 28-day t-bill (2.51%) was yielding more than the 3-month (2.49%).  And yields on both instruments have shot higher in recent days, while yields on the 10-year have plunged.  That's money flowing from short term debt into longer term debt.  That says traders are worried about recession - money is trying to lock in the current rate for longer "while it still can."

We know that the Fed stops being a seller in about six months.  That's a positive for bonds.  And that's also about the time when the market is predicting the rate cuts to start.

Meanwhile equities just made new highs, led by tech!

I dunno what to say.  Someone is wrong about where things go next.  Usually, it isn't the bond traders.

Oh, and since this is a gold report, I should probably mention - gold looked strong today, especially in light of the huge dollar rally.  Miners look even stronger.  That morning sell-off was bought hard.  Traders really don't want to miss out on any of the dips right now.

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2 Comments

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 2141
What's wrong with the stock market this morning?

I am not used to seeing red before the open or downward movement after the open.

Gold and the price of the 10Y US bond are up (yield has fallen 3.5%!).

Is this a flight to safety?  Why the nervousness?

lambertad's picture
lambertad
Status: Silver Member (Offline)
Joined: Aug 31 2013
Posts: 194
nervousness

https://www.marketwatch.com/story/the-feds-total-capitulation-is-a-bad-o...

Northmantrader nailed it. If the market is doing so hot, why stop rate increases and why announce the end of balance sheet runoff. The Fed is capitulating in front of our eyes. Actions speak louder than words. They're scared, so the market better take note. When the capitulation stops boosting stocks, like today, they're going to get really worried. I wonder how long it takes until they start trotting out trial balloons for QE4? September?

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