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PM Daily Market Commentary – 01/28/2020

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  • Wed, Jan 29, 2020 - 03:08am

    #1

    davefairtex

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    PM Daily Market Commentary – 01/28/2020

PM Daily Market Commentary – 01/28/2020

Gold dropped -15.30 [-0.96%] to 1572.00 on very heavy volume, and silver cratered, plunging -0.65 [-3.58%] to 17.50 on moderately heavy volume. The buck inched up +0.07%, SPX rallied [+1.01%], crude moved higher too [+2.14%], while bonds fell [10-Year yield rose +4.0 bp].

Today’s move unwound a chunk of Monday’s Wuhan-virus-driven risk-off move, with gold and especially silver being hit fairly hard.

Gold moved lower all day long, with the bulk of the move happening after the US market opened. The strong line/swing high candle pattern was a probable bearish reversal (55%), and forecaster dropped hard, but remains (just barely) in an uptrend. Gold remains in an uptrend in all three timeframes, but both daily and weekly uptrends look more than a little frail.  Still, gold remains above all 3 moving averages, which is a positive sign.

COMEX GC open interest fell -31K contracts. That was -10 days of global annual production in paper removed from the market. Current open interest for GC: 67% of global annual production, down -2.84% today. The past two days have seen some very large drops in open interest. Perhaps that has to do with the contract roll which happened today.

Silver edged lower in Asia, but fell off a cliff during the London session, and the selling didn’t stop literally until the close in New York. The strong line/swing high candle pattern was a probable bearish reversal (51%), and forecaster cratered, plunging silver into a downtrend. Silver is now in a downtrend in both the daily and weekly timeframes. Silver’s plunge took it clean through the 9 MA, right down to the 50 MA.  That’s bearish.

COMEX SI open interest fell -6.2K contracts. That was -13 days of global annual production in paper removed from the market. Current open interest for SI: 133% of global annual production, down -3.57% today.

The gold/silver ratio climbed +2.37 to 89.83. That’s very bearish.

The miners moved lower for most of the day, managing to bounce slightly into the close. GDX fell -2.65% on moderate volume, while GDXJ dropped -2.61% on moderate volume. XAU moved down -2.30%, the swing high candle was a likely bearish reversal (62%), and forecaster dropped, moving deeper into its downtrend. XAU is in a downtrend in both the daily and weekly timeframes. Today’s move took the miners below the 9 MA, which is a bearish sign, although they have yet to make a new low.

The GDX:gold ratio dropped -1.73%, and the GDXJ:GDX ratio climbed +0.03%. That’s bearish.

Platinum rose +3.00 [+0.30%], palladium rose +19.35 [+0.89%], while copper fell -0.02 [-0.85%]. Copper’s decline did slow down, but copper’s new low didn’t align with the bounce in the other “risk” sectors.

The buck moved up +0.07 [+0.07%] to 97.64 on moderate volume. The spinning top candle was a possible bearish reversal (36%), forecaster climbed, moving higher into its uptrend. The buck is in an uptrend in all three timeframes. This was a new 2-month high for the buck.

There were no major currency moves today.

Crude rallied +1.13 [+2.14%] to 54.00 on moderate volume. The bullish engulfing/swing low2 candle was a reasonably strong bullish reversal (48%), and forecaster climbed, but remains in a downtrend. Crude is in a downtrend in both the daily and weekly timeframes, and a no-trend state on the monthly.

SPX rallied +32.61 [+1.01%] to 3276.24 on moderate volume. Perhaps 40% of today’s rally took place in the futures markets overnight. The bullish tasuki line candle was a probable bullish reversal (58%), forecaster climbed, but remains in a downtrend. SPX remains in an uptrend in the weekly and monthly timeframes.

Tech [+1.88%] led, along with financials [+1.16%], while staples [+0.13%] and REITs [+0.25%] did worst. This was a bullish sector map.

The VIX fell -1.95 to 16.28.

TLT fell -0.78%. The swing high candle pattern was a possible bullish reversal (37%), and forecaster dropped, but remains in an uptrend. TLT remains in a strong uptrend in the daily and weekly timeframes. The 30-Year yield rose +5.0 bp to +2.10%.

TY moved down -0.26%. The bearish tasuki line candle pattern was a probable bearish reversal (52%), and forecaster dropped hard, but remains in an uptrend. TY remains in an uptrend in all three timeframes. The 10-Year yield rose +4.0 bp to +1.65%.

JNK jumped up +0.86%. The swing low candle was a likely bullish reversal (61%), and forecaster climbed, but remains in a downtrend. JNK remains in a downtrend in both the daily and weekly timeframes. Today’s strong rally in JNK wiped out yesterday’s decline and a little bit more.

Recession Watch

Yield Curve Inversion: the 1-10 spread rose +3 bp to +11 bp today. 1Y: 1.54% (+1 bp), 10Y: 1.65% (+4 bp).

Durable Goods, new orders: headline +2.31% m/m (prior -3.18% m/m), capital goods new orders (excl aircraft): -0.93% m/m (prior +0.06% m/m), shipments: -0.20% m/m (prior -0.14% m/m). New orders forecast expansion for next month, and declining shipments say that this month is contractionary.

Summary

Well I have to say, yesterday the candle code had some low-to-medium percentage predictions of bounces on all the items that had sold off heavily. What do you know – that’s what ended up happening across the board. Whether these bounces turn into actual reversals, or they are simply the usual volatility that happens in a downtrend – that remains to be seen.

Gold, silver, and the miners all printed swing highs today, and both silver and the miners are now in daily-chart downtrends. This all looks pretty disagreeable.

JNK and SPX both printed some strong-looking candles, but forecasters have yet to bounce back, and bonds fell, but not substantially.

Are the reversals in PM durable? Does this mark the top for gold?

Longer term, this would seem to depend on the answer to this question: is the pandemic threat over?

I don’t think it is. Do you? To me, copper is providing the tell. While many risk assets rallied today, the best copper could do was print a spinning top candle (bearish continuation) which marked a new low. Copper = China, and China is in deep doo doo.

However, this will take a while to play out. Just looking at the news, “Impeachment” is deemed to be more critical than the threat of pandemic. And people are pointing out that the 2019-2020 “flu season” has killed off from 8k-20k people in the US.

https://www.cdc.gov/flu/about/burden/preliminary-in-season-estimates.htm

[CDC says: in the US this season, there were an estimated [using upper-end estimates] 21M flu infections, 250k hospitalizations, resulting in 20k deaths. So with the flu, if its bad enough to get you checked into the hospital, you end up dying maybe 8% of the time. Roughly speaking.]

The ability to do simple math seems to be in short supply, however; if the same number of people get the Wuhan virus, a lot more people will die than just 20k.  And the actions taken to prevent transmission will take a large toll on the global economy also.

But for now, the good news is, if you want to enter short, it looks like there may be another opportunity to so do. I can’t tell you how much longer the bounce will last. But I do think its just a bounce. FWIW.

We do have the FOMC meeting coming up tomorrow as well. What will they say?

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 conversations on the developments most likely to impact gold & silver. Simply go here and enjoy the daily reports & discussion.

 

  • Wed, Jan 29, 2020 - 06:36am

    #2

    JAG

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    Hindenburg Omen -vs- Apple's Earnings

This is going to be really interesting. I may have to join the lone wolf trader on this bounce today….

  • Wed, Jan 29, 2020 - 08:48am   (Reply to #2)

    #3

    davefairtex

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    re: Hindenburg Omen -vs- Apple's Earnings

Armstrong notes that “reaction rallies” during downtrends last 1-3 days.

 

  • Wed, Jan 29, 2020 - 11:53am

    #4
    ao

    ao

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    thar she blows

24 hr gold chart

See Cold Rain.  Now you can cheer the pops as well as the drops.;-)

  • Wed, Jan 29, 2020 - 01:09pm   (Reply to #4)

    #5

    Cold Rain

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    re: thar she blows

@AO,

You are not wrong!  I was actually going to wait till the equity market closed before posting, because of the EKG configuration markets usually find themselves in on or just after Fed days.  Certainly good to see. Hopefully, this will mark a bottom.  Powell’s testimony was less than risk-on inspiring but didn’t appear to be overly bullish for PMs in and of itself.

The Fed is pretty much trapped and they know it.  Assuming nCov doesn’t just blow over and dissipate, there are going to be substantial global repercussions.  I’m not sure how that’s not positive for PMs.  I suspect stocks are in for a few days of selling pretty soon.  The close today wasn’t pretty.

Also, it will be nice when we see gold break over the recent Iran highs and hold and silver move higher and hold.  Miners have moved steadily higher, but they haven’t really shot up in big surges like we’ve seen previously.  That is a little bit of a red flag to me, but it was nice to see some short covering in the metals over the last couple of days.

Who knows.  Anyway, thanks for the post.

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