PM Daily Market Commentary - 7/18/2016

By davefairtex on Tue, Jul 19, 2016 - 2:30am

Gold fell -8.40 to 1329.30 on moderately light volume, while silver dropped -0.22 to 20.08 on moderate volume.  Silver was hit about five minutes after the open in Shanghai; price headed lower until mid-day in London, when buyers appeared driving price back up.

Gold continued moving lower today; the BRExit premium is continuing to unwind slowly.  The candle print on the day was a short spinning top, which does not provide any indication for a trend change.  While support at 1320 remains intact, the falling 9 EMA is now acting as resistance.  Gold needs a close above the 9 EMA (about 1338) to start to regain its bullish momentum.  Until that happens, trend will remain down.

As I said last week, gold does not appear to be in any hurry to sell off.

Gold's OI increased by +3473 contracts, and GLD saw inflows of +2.37 tons.

Silver sold off relatively hard in Asia, but found buyers in London and New York, printing a bullish-looking hammer candle on the day.  However, my code tells me that this particular hammer is relatively low percentage, marking a low only 20% of the time.  This was silver's first significant intraday spike through the 9 EMA in the past six weeks.  That seems like a warning sign.  If silver can close above 20.30 that would mark a low; if not, I suspect we will see lower prices ahead.  It feels to me like risk is high right now for silver.

Miners rallied slightly, with GDX up +0.37% on light volume, while GDXJ fell -0.04% on light volume also.  Not much happened.  Miners remain within their two-week trading range.  Since gold declined on the day, it is bullish for the miners to have moved higher the way they did.

Platinum rose +0.24%, palladium fell -0.63%, and copper rose +0.18%.

The buck rose just +0.02 to 96.59, trading in a very narrow range today.  Buck is above its 200 MA, and looking mildly bullish.

WTIC had a contract roll today; contango is about 70 cents, so while stockcharts shows a drop of -0.34, oil actually fell -1.04 [-2.25%].  The current front-month closed at 45.94.  Oil remains below its 9 EMA, and in a downtrend.  All that said - oil equities are behaving quite well.  Big money appears to be accumulating energy equities in spite of the current set of issues with the underlying commodity.

SPX inched slowly higher today, up +5.15 to 2166.89.   VIX fell -0.23 to 12.44.  All seems well - the only fly in the ointment is that the dumb money sentiment index has now moved to extremes of optimism that are usually seen near the tops.  That doesn't mean a crash happens tomorrow - but it does suggest that this rally is living on borrowed time.

TLT drifted lower today, down -0.13%, making a new low but looking more like it is now trying to put in a low.  TLT might be sniffing out a top in SPX.

JNK rose +0.42%; it remains in a strong uptrend in spite of the weakness in oil.

CRB fell -0.35%, dropping below its 50 MA.  The drop in the CRB today was all about energy, which continues to look weak.

Existing short-term trends remain in place; downtrend for gold, silver, oil, and bonds, uptrend for SPX, USD, and JNK.  Silver is looking a bit iffy right now; if the commodity downtrend continues, silver could sell off in a hurry once it cracks the 9 EMA.  To underscore this, the gold/silver ratio might be putting in a low.  It might also be time to start looking at buying puts again for SPX; VIX at 12.44 is pretty cheap.

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