PM Daily Market Commentary – 02/22/2021

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  • Tue, Feb 23, 2021 - 02:42am

    #1
    davefairtex

    davefairtex

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    PM Daily Market Commentary – 02/22/2021

Gold rallied +25.55 [+1.43%] to 1810.09 on moderate volume, and silver shot up +0.85 [+3.10%] to 28.26 on moderately heavy volume also. The buck dropped hard [-0.40%], SPX fell also [-0.77%], while crude screamed higher [+5.29%], and bonds fell [the 10-Year yield rose +3.0 bp].

Gold rallied all day long, closing quite near the highs. The swing low2 candle was a likely bullish reversal (70%), forecaster dropped, but remains in an uptrend. Gold is in an uptrend in the daily and weekly timeframes.

Gold/euros rallied +17.49 [+1.19%] to 1487.94 on moderate volume. The swing low2 candle was a probable bullish reversal (53%), forecaster climbed, rising into an uptrend. Gold/euros is in a downtrend in both the weekly and monthly timeframes.

COMEX GC open interest fell -5.3K contracts. Current open interest for GC: 45% of global annual production, down -0.49% today. 334 GC contracts stood for delivery at COMEX today.

Gold printed an extremely bullish swing low today; there was even some short-covering to add to the positivity. Gold ended the day (just barely) back above the 9 MA. It looks like we have at least a near-term low for gold.

Silver chopped sideways until just after the US opened, after which it shot higher, then rallied steadily through end of day, closing at the highs. The swing low2 candle was a probable bullish reversal (53%), forecaster climbed, rising into an uptrend. Silver is in an uptrend in all three timeframes.

COMEX SI open interest fell -1.5K contracts. That was -3 days of global annual production in paper removed from the market. Current open interest for SI: 102% of global annual production, down -0.86% today. 171 SI contracts stood for delivery at COMEX today.

The gold/silver ratio dropped -1.05 to 64.05. That’s very bullish.

While silver’s candle print wasn’t as highly rated, it was still pretty strong. Today’s move was enough to bring silver back to an uptrend. The gold/silver ratio also looks quite bullish, as does the short-covering – which is quite uncommon to see on strong rally days like this. Normally, the (bankster) shorts pile in on rally days (that’s how the usual wash-and-rinse cycle works), but today was an exception. There are times when this happens – when the banksters cover during rallies – but it is a rare thing. It happened in 2011, for instance. That could be where we are now. 2011. We need more days when this happens to be certain, but it is definitely a positive sign. Short-covering into a rally, for PM, just screams “Short Squeeze.”

The miners gapped up at the open, then rallied all day long, closing near the highs. GDX raced higher today, up +4.49% on moderately heavy volume, and GDXJ screamed higher, rising +5.83% on very heavy volume. XAU rallied +5.04%, the strong line candle was a probable bullish reversal (57%), forecaster climbed, moving higher into its uptrend. XAU is in a downtrend in both the weekly and monthly timeframes.

The GDX:gold ratio climbed +2.93%, and the GDXJ:GDX ratio climbed +1.26%. That’s very bullish.

You can’t get much stronger than what happened today for the mining shares. How much of this was short-covering and how much was buying? Its hard to know. XAU blew through 3 different moving averages today – it is now back in uptrend territory, at least in the near term anyway. I hate to sound like a perennially optimistic goldbug (wait? Isn’t this a goldbug column?) but the miners have been stepped on for a very, very long time. A “reversion to the mean” move for the miners could end up with a whole lot of upside. The short-covering by the hedge funds would be the fuel for this move. I mean, I’m long so I’m talking my book. But – this is why I’m long. [Not financial advice.]

Platinum rose +1.00 [+0.08%], while palladium climbed 18.35 [+0.76%]. Well this is a bit of a reversal. Today platinum looked tired (northern doji: 45% bearish), and palladium moved higher. Hmm. Not sure what it means.

Copper shot up +0.09 [+2.22%] to 4.15 on extremely heavy volume. The opening white marubozu candle was a low-percentage bearish reversal (23%), forecaster climbed, moving higher into its uptrend. Copper is in an uptrend in all three timeframes.

Copper just continues to go nuts. The 2011 all time high was 4.65, so we aren’t quite there yet. But we are definitely getting there. And silver tends to move alongside copper. Not always, but often.

The buck dropped -0.36 [-0.40%] to 89.98 on heavy volume. The closing black marubozu candle was a bearish continuation, forecaster climbed, but remains in a downtrend. The buck is in a downtrend in both the daily and weekly timeframes.

Major currency moves included: GBP [+0.41%], JPY [+0.50%], AUD [+0.58%].

The dollar plunge started in London, and ran through about mid-day. The buck is now well below the 9 MA, and it is in a pronounced downtrend. Today’s move did seem to help gold; that is, at least part of the move in gold came right alongside the move down in the buck.

Crude screamed higher, up a huge +3.12 [+5.29%] to 62.15 on moderate volume. The bullish engulfing candle was a reasonably strong bullish reversal (40%), forecaster climbed, rising into an uptrend. Crude is in an uptrend in all three timeframes.

Well, so much for last week’s crude correction – it was all wiped out by today’s monster move. Today marked a new post-pandemic high for crude. Are those shale drillers making money yet? I doubt it – not if you factor in them paying back their debts. But at least they are going broke more slowly now.

WCRFPUS2: down -200 kbpd to 10.8 mbpd. The decline in production is positive for price. Something to watch.

SPX fell -30.21 [-0.77%] to 3876.50 on moderate volume. The long black candle was a bearish continuation, forecaster fell, dropping into a downtrend. SPX is in an uptrend in the weekly and monthly timeframes.

Tech [-2.25%] led the market lower, along with discretionary [-2.16%], while energy [+3.35%] and financials [+0.92%] did best. This was a somewhat bearish sector map.

The VIX jumped higher, up +1.40 to 23.45.

NYSE advance ratio was 48%; feels like today’s decline were a few big issues selling off. From the view of the sector map, it looks more like sector rotation rather than some sort of impending collapse. Tech is falling, while energy is rallying. This is my oft-repeated (and perhaps now, boring) claim of the “pandemic end” trade, with Wall Street theoretically front-running anticipated spending pattern changes away from “lockdown products” (tech) into “experiences” (travel).

How will the Resetters respond to an explosion of travel? Will such an explosion take place? My friends who live in New York (and got COVID early) are now posting pictures of travel around the US. Florida was their most recent post. Before that, it was the Grand Canyon. Perhaps they don’t watch CNN. So – maybe.

There were some other pandemic-end moves too; MRNA [-8.8%], and possibly TSLA [-8.55%]. I’m still not sure why TSLA would be a “pandemic” trade, except – perhaps – money sees better returns elsewhere. Energy, for instance.

TLT dropped -0.76%. The long black candle was a reasonably strong bullish reversal (43%), forecaster climbed, but remains in a downtrend. TLT is in a downtrend in both the daily and weekly timeframes. The 30-Year yield rose +4.0 bp to +2.18%.

TY inched down -0.07%. The high wave candle was a reasonably strong bullish reversal (42%), forecaster dropped, moving deeper into its downtrend. TY is in a downtrend in all three timeframes. The 10-Year yield rose +3.0 bp to +1.37%.

D/W/M RSI7 for TLT is 17/16/30. That’s quite oversold. Might this really be a bullish reversal? Bonds are oversold, as I said. But – a trader I respect used to tell us all, “oversold sometimes gets oversolder, then oversoldest. And then it drops some more.” So, maybe. Probably best to wait for confirmation.

JNK fell -0.33%. The closing black marubozu candle was a low-percentage bullish reversal (24%), forecaster dropped, moving deeper into its downtrend. JNK is in a downtrend in both the daily and weekly timeframes.

While equities didn’t look all that bad today, crappy debt is starting to look relatively unhappy. Perhaps it doesn’t like all the selling over on the Treasury side. This is perhaps partly “risk off” and, maybe more about a “rising rate environment.”

Physical Supply

The GLD ETF tonnage on hand dropped -12.24 tons, with 1115 tons remaining in inventory.

ETF Discount to NAV:
* CEF -2.39%
* PHYS -1.20%
* PSLV +0.74%
Gold dealer big bar premiums:
* gold [1kg]: +1.88%
* silver [100 oz]: +13.37%

Silver and gold physical ETFs have diverged – gold is back in discount, while silver has moved into premium. Big bar gold and silver at retail remain at reasonably high premiums.

Volume for PSLV was more than 31M shares, which is approximately 12x normal, and 2nd highest volume day in history. As a reminder, JimH has the Silver Squeeze thread and he along with others are keeping an eye on what is going on. One tweet caught my eye: from Eric Sprott (manager of PSLV) via Jim: “Sprott Physical Silver Trust adds a whopping 4,700,000 ounces of physical silver today!”

https://www.peakprosperity.com/forum-topic/silver-squeeze-is-this-the-big-one/page/3/#post-608031

That’s 4700 of those 1000 oz COMEX bars, for those keeping track at home.

One way to make it more difficult for the bad guys is to tell your broker that you don’t want anyone to be able to “borrow” your PSLV shares. This might require you to go off “margin” in your account. I’m going to do this for my IRA today, which has a “sizeable” amount of PSLV in it. If its a margin account, they can lend it out for sale.

You can do that also for your miners too, I imagine.

As CAF might say: “First step: stop feeding the tapeworm.”

Summary

Well gold, silver, and the miners all shot higher today, with the miners in the lead. This is exactly what we like to see in a PM rally. The mining shares have the highest leverage exposure to PM prices, and so they tend to be the most volatile. This feels a bit like an inflation trade. It also could be a “commodity boom” trade too. The short-covering into the rallies for both gold and silver were notable, and very positive for price. Mostly, the banksters don’t do this. This suggests the current move may be “special” rather than just the usual “goldbug disappointment vehicle.”

Bonds made another new low. Rising rate environment = falling bond prices.

The buck fell also. Money is leaving the USD. Perhaps – this is a risk on move, at least to some extent. When the first world recovers, money flees the safe havens for the more risky developing world, since that’s where the higher returns tend to be.

Risk assets were mixed; equities and crappy debt fell, while crude and copper both shot higher. Are the commodities really “risk assets”? Or is this just “commodity bull market” and or “commodity shortages” effects? I think the equity move was about sector rotation, at least in part. The big fat tech giants have huge market caps, and so moves down by them will drag the entire index lower.

I still believe this is the “pandemic end” trade playing out. With the possible end of Lockdown America, people may not be as glued to twitter/facebook/google, and the thought of this potential calamity results in falling share prices for the tech monsters.

tech: AMZN -2.13%, GOOG -1.73%, FB -0.47%, TWTR -2.48%.
energy: OXY +4.13%, APA +5.88%, XOM +3.69%.

That’s sector rotation. And its also a reason why the tech monsters are enthusiastic about lockdowns. Show me the incentive, and I’ll show you the policy.

And that’s why the tech monsters are Biden Donors. And that explains – at least in part – why Old White Joe will happily “listen to the scientists” and continue with restrictive COVID policies (that don’t work) in spite of the following chart:

Note that this chart is in SPITE of no widespread use of ivermectin! Or hydroxychloroquine. Or any of the other low-cost medicines which have been shown to work in developing-nation RCTs that the “First World” has yet to deign to notice. Turns out the hopelessly “woke” Biden Administration (first female Treasury Secretary!) doesn’t respect science unless it comes from White People. Brown Science? Nope. Sorry. And we all suffer for their medical-research racism. Thousands die each day because, medical racism.

Ok, you know I’m just kidding about the racism. All the Biden Donor race-baiting and “wokeness” is just utterly hypocritical theater. They want to keep the current fear-inducing situation in place: “there are no treatments – wear a mask, follow orders, lock down your business, and hope you don’t die.” That appears to be the imperative. Want more evidence of this?

Here is Dr Kory, knocking it clean out of the park in a must-see segment contrasting the current meta-evidence for ivermectin for COVID19 vs the meta-evidence for ivermectin that the WHO reviewed before approving ivermectin for scabies. [Dr Kory even gives a shout-out to Chris in the video. Watch the whole thing if you have time. From Feb 11th, h/t Covid19Crusher.]

https://youtu.be/xy85K1hENn4?t=1793

Same medicine: ivermectin. Very different review outcomes. The scabies evidence was incredibly thin by comparison.

I contend that every RCT done today for ivermectin that leads to the death of a patient must be laid at the feet of the scumbags at the WHO, due to their utterly indefensible refusal to “follow the science.” They managed to “follow the science” for scabies on much thinner evidence so that people don’t have an itchy outcome, but – for some reason – they are totally unable to “follow the science” with much stronger evidence, in a deadly, global pandemic where thousands die every day.

Why are they acting so unethically? Sociopathically, even?

You tell me.

But Old White Joe, under orders from the Biden Donors (and perhaps – influenced by the “10 held by H for the big guy”), we’ve rejoined the CCP-controlled WHO, at a cost of $200 million dollars, paid for by You and Me, and “scientists applaud” our action.

Fortunately, the human immune system appears to be winning the day all on its own (with no help from our “health” authorities), in spite of known, systemic, uncorrected, and at times severe nutritional deficiencies in the population, a truly astonishing level of obesity, and the addition of lockdown stress applied by all those “helpful” western governments that serve only to weaken the immune system. In spite of the best efforts of our “health” authorities, the lab-leak gain-of-function pandemic is coming to an end. Spring is coming. What will come next? How long can they keep ivermectin from us?

I’m still seeing early March. Or maybe mid-March. I am, after all, an optimist. 🙂

Fourth Turning, in the Year of the Ox.

  • Tue, Feb 23, 2021 - 06:50am

    #2

    JAG

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    The Smell of Deflation in the Morning

If stocks go up when COVID numbers go up, do they go down when COVID declines?

Maybe they do!

My theory is that there is nobody left to buy the dip. Margin is at a record high, mutual funds have the lowest cash in 20 years, and everybody was forced into very illiquid assets because of the Fed printing.

My TLT call options are up 1000% this morning. I’m not joking.

  • Tue, Feb 23, 2021 - 07:05am

    #3
    EddieLarry

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    PM Daily Market Commentary – 02/22/2021

Dave queried, “How will the Resetters respond to an explosion of travel? Will such an explosion take place? My friends who live in New York (and got COVID early) are now posting pictures of travel around the US. Florida was their most recent post. Before that, it was the Grand Canyon. Perhaps they don’t watch CNN. So – maybe.”

The resetters are selling their massive Tesla and Tech profits and will use their profits to travel everywhere.  Some will buy houses in the South of France, others, the south of Florida.  Life is good when you don’t fight the American people.

Life will be very good and Biden will get all the credit.  It is a shame about ivermectin but Covid will probably be crushed by the time it is approved.  But I certainly hope that the Docs prove its efficacy before the next pandemic.

PS, my inflation portfolio did great yesterday.  But the market seems to want a general correction, that started with a tech correction.  So all risk assets can be seen as dicey now.
Stay safe out there.

  • Tue, Feb 23, 2021 - 07:29am

    #4
    wotthecurtains

    wotthecurtains

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    PM Daily Market Commentary – 02/22/2021

Perhaps I’m a child, but dammit I find these ZeroHedge headlines hilarious

https://www.zerohedge.com/markets/welcome-unclenching-markets-have-lost-insulation-dealers-turn-short-gamma

 

Recently Grant Williams interviewed Jim Stack on his (now paywalled) podcast.   Most of his interviews are with different analysts predicting how and when the current bubble will pop.   Stack points out that from the dotcom bubble peak it took about 2.5 years for the markets to deflate.

 

He argued that the last tech bubble ended when the high flyers started to fall and they fell faster and further than anything.  He thought the same would happen this time around.  I keep looking at Tesla for this reason.

  • Tue, Feb 23, 2021 - 08:04am

    #5

    JAG

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    PM Daily Market Commentary – 02/22/2021

Nice link wotthecurtains, thanks.

I’m positioned well for a ‘broken vol accident’, which means it probably won’t happen, lol.

DF, thanks for the Dr. Kory video.

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