PM Daily Market Commentary – 02/23/2021

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  • Wed, Feb 24, 2021 - 03:17am

    #1

    davefairtex

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    PM Daily Market Commentary – 02/23/2021

Gold chopped sideways in Asia and London, spiked down hard about 20 minutes after the US open, mostly recovered, and then chopped sideways into the close. The long black candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Gold is in a downtrend in both the weekly and monthly timeframes.

Gold/euros inched down -0.80 [-0.05%] to 1487.14 on moderately light volume. The long black candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Gold/euros is in a downtrend in both the weekly and monthly timeframes.

COMEX GC open interest fell -8.9K contracts. That was -3 days of global annual production in paper removed from the market. Current open interest for GC: 45% of global annual production, down -0.83% today. 1818 GC contracts stood for delivery at COMEX today.

There was a fair amount of movement today, but no real change in trend. In fact, gold looks a bit stronger than it did yesterday. To me there appeared to be a fair amount of dip-buying – and that showed up perhaps in the short-covering that happened today. Gold open interest remains at 8-month lows – and the short-covering is continuing.

My read: the ongoing short-covering over the past six weeks strongly suggests to me that the banksters are nervous. They don’t want to be leaning short going into this next phase – whatever it is. Either its a massive gold rally (which happened following March 2020), or a big deflationary crash, and they are deleveraging in advance. The chart doesn’t look great right now, but the banksters are covering – when prices fall, and also when prices rise too.

Silver moved sideways in Asia, fell in London, then plunged right at the open in the US, bouncing back somewhat and then chopping sideways into the close. The dark cloud cover candle was a possible bearish reversal (38%), forecaster dropped, falling into a state of no-trend. Silver is still in an uptrend in the weekly and monthly timeframes.

COMEX SI open interest fell -6.3K contracts. That was -13 days of global annual production in paper removed from the market. Current open interest for SI: 99% of global annual production, down -3.63% today. 15 SI contracts stood for delivery at COMEX today.

The gold/silver ratio climbed +0.97 to 65.02. That’s bearish.

Well, today was a big short-covering day for silver. It is especially unusual for the banksters to be covering in an uptrend like this. They just don’t do this very often. In spite of today’s dip, I read this as excellent news. Today’s smash – quite possibly – was engineered to give the weasely banksters a chance to bail out at the day lows – rather than having to cover on breakouts, thus contributing to the uptrend. Today’s engulfing candle print wasn’t all that bad, and the move lower wasn’t nearly strong enough to erase yesterday’s big rally. Silver remains above all 3 moving averages.

Note: the banksters cannot control the trend. All they can do is try to convince us to stampede in the direction they want us to go.

Miners gapped down at the open, dropped hard in the first 20 minutes of trading, rebounded sharply, then chopped sideways into the close. GDX fell -2.25% on moderately heavy volume, and GDXJ moved down -1.93% on moderate volume. XAU dropped -1.93%, the takuri line candle was a probable bullish reversal (51%), forecaster dropped, but remains in an uptrend. XAU is in an uptrend in the daily timeframe.

The GDX:gold ratio dropped -2.12%, and the GDXJ:GDX ratio climbed +0.33%. That’s bearish.

Well it sounds like a bad day for the miners, but this could also be one of those “escape from the short positions” campaigns. The mechanism: terrify all the small holders to sell in that first half-hour of trading with a big move down. Then cover your short positions at the day lows. There was a very strong bounce off the lows. The “takuri line” print tells you it was a long lower shadow – a big dip that was bought. It was a highly-rated print; the tea leaves liked what they saw, at least for the most part.

The miners did drop back below the 50 MA, which is a negative sign, but I keep coming back to the strong dip-buying we saw today. Again, the banksters can’t control the trend, all they can do is convince us to stampede in the direction they want us to go.

Platinum fell -34.52 [-2.76%], and palladium dropped -57.97 [-2.47%]. Well, that was a bearish print today for platinum: swing high (63% bearish reversal), a plunge through the 9 MA, and forecaster is in a downtrend. Platinum appears to have reversed here. Palladium: same thing, although the bearish reversal for palladium is less emphatic.

Copper rallied +0.07 [+1.69%] to 4.22 on extremely heavy volume. The long white candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Copper is in an uptrend in all three timeframes.

Copper just keeps screaming higher. It is what it is. Uptrend remains incredibly strong. How does this line up with platinum and palladium? I really don’t know. D/W/M RSI-7 = 94/96/90. Copper is extremely overbought. We’re talking bitcoin territory here. Well, maybe not that bad. But close.

The buck rose +0.16 [+0.18%] to 90.14 on moderate volume. The thrusting 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.

There were no major currency moves today.

The near-term dollar downtrend continues, in spite of today’s modest rally.

Crude fell -0.99 [-1.59%] to 61.16 on moderate volume. The long black candle was a possible bearish reversal (39%), forecaster dropped, but remains in an uptrend. Crude is in an uptrend in all three timeframes.

The candle print looked fairly ugly, but it wasn’t enough to cause a reversal for crude just yet. Crude does appear to have run into resistance here in the early $60s. Upside momentum appears to be waning.

SPX was mostly unchanged, up +4.87 [+0.13%] to 3881.37 on moderately heavy volume. The hammer candle was a possible bullish reversal (33%), forecaster dropped, moving deeper into its downtrend. SPX is in an uptrend in the weekly and monthly timeframes.

Energy [+1.63%] led, along with utilities [+0.82%], while discretionary [-0.66%] and tech [-0.28%] did worst. This was a bearish sector map.

The VIX fell -0.34 to 23.11.

SPX fell in the futures markets overnight, and then staged a huge drop right at the open – the same time those miners sold off – but then bounced back and by end of day had regained all its losses. That’s what the “hammer candle” tells us: hammers have a long lower shadow, with a very small daily price change. Also, you can see how price seemed to bounce off the 50 MA. In spite of the possible bullish reversal, SPX remains in a short-term downtrend.

NYSE advance ratio was 39%, which suggests that most issues fell today. That’s bearish.

TLT fell -0.29%. The long white candle was a possible bullish reversal (37%), forecaster climbed, but remains in a downtrend. TLT is in a downtrend in both the daily and weekly timeframes. The 30-Year yield fell -1.0 bp to +2.18%.

TY climbed +0.18%. The long white candle was unrated, forecaster climbed, but remains in a downtrend. TY is in a downtrend in all three timeframes. The 10-Year yield fell -2.0 bp to +1.35%.

A new low for TLT today; a reversal for bonds? I think it depends on where SPX goes next.

JNK climbed +0.33%. The long white candle was a reasonably strong bullish reversal (48%), forecaster climbed, but remains in a downtrend. JNK is in an uptrend in the weekly timeframe.

Strong move for crappy debt today. It fell along with most everything else at the open, but then rallied strongly through end of day. It remains in a downtrend, but not by very much.

Physical Supply

The GLD ETF tonnage on hand dropped -4.96 tons, with 1110 tons remaining in inventory.

ETF Discount to NAV:
* CEF -2.19%
* PHYS -0.50%
* PSLV +1.62%
Gold dealer big bar premiums:
* gold [1kg]: +1.59%
* silver [100 oz]: +13.48%

Physical ETFs show a wide divergence; PSLV is in strong premium, while PHYS remains in discount. Premiums on gold big bars at retail have fallen somewhat, but premiums on silver big bars remains high.

While “paper silver” at COMEX fell by -1.66%, PSLV – containing actual silver – dropped just -0.78%. Volume was lower today; it is down to 15M shares/day, “only” 9x normal trading volume.

Each day, Eric Sprott runs out and buys some more physical silver, stuffs it into the vaults in Canada, and issues new shares of PSLV. Buying PSLV really does appear to be effectively “standing for delivery” at COMEX. Today: 500 bars. And that was a small day.

https://twitter.com/Sprott

[FD: I’m long PSLV]

Summary

Prices of most everything I watch were dragged down right at the open in New York. Equities, gold, silver, the miners, crude, palladium, platinum, crappy debt – copper was slightly affected, and bonds jumped higher. Some equities had substantial drops: TSLA and MRNA were both down around 15% at the lows. What did it mean? Did it mean anything at all? I don’t know, neither did my friends.

Powell testified before Congress today. Coincidence? NBC pointed out that Powell did have some medical advice for us all:

https://www.nbcnews.com/business/economy/fed-chair-powell-s-congressional-testimony-stimulus-job-losses-inflation-n1258596

While Powell did not weigh in on the form and size of a relief package, he provided a snapshot of the economy rendered in broad brushstrokes while maintaining that “nothing is more important” than widespread vaccination.

Team Reset speaks. Vaccinate early, vaccinate often. What is there to lose? Well sure, we don’t know what’s in it. “Its Proprietary.” And the company has been given a get-out-of-jail-free liability waiver, courtesy of Uncle Sam. And yes, there may have been a few deaths – more than 800, actually. And this is mostly first-dose stuff. Second dose is supposedly even more exciting. For some reason, they want to put off giving dose #2. (Something about “science”, I think.) But apart from those indicators – what could possibly go wrong? Powell says “nothing is more important.”

Gold, silver, and the miners all moved lower today, with all the losses coming from that big at-market-open plunge. The banksters most likely used the big drop as an opportunity to close a bunch of paper shorts at the COMEX; both gold and silver OI dropped substantially, with silver’s OI dropping the most. I interpret short-covering as a distinctly positive sign.

The buck bounced up modestly, but the dollar downtrend remains in place.

Risk assets were mixed; equities sold off hard but then completely recovered, crappy debt also fell early, but ended up rallying hard through end of day. Copper made yet another new 10-year high, while crude fell. Is crude in the process of putting in a near-term top? I’m thinking it might be, but I do go back and forth.

Tech did poorly again today; is it just the impact of the near-term pandemic end? Or a signal of a more general correction ahead?

Bonds made a new low again today. They could be putting in a low any day now. I think we’ll need an equity market correction for that to happen.

And now for the news items that caught my eye:

Team Apocalypse is finding it harder and harder to dredge up end-of-the-world scenarios. The current one centers on a new variant in California. “The devil is already here. I wish it were different. But the science is the science”, said Charles Chiu, MD/PHD, a researcher whose grants are funded by NIH, Abbot Labs, and a collection of other institutions.

California’s coronavirus strain looks increasingly dangerous: ‘The devil is already here’

https://news.yahoo.com/californias-coronavirus-strain-looks-increasingly-130055544.html
https://profiles.ucsf.edu/charles.chiu

Ah, science, that gift that just keeps on giving. Two-Mask Fauci tells us that our only hope is to get vaccinated, wear two masks, and hide in the basement. [Still no mention of catastrophic, widespread, and well-known nutritional deficiencies, and – of course – nothing about ivermectin. Turns out “the science is the science” only when it serves the ends of the Gang In Charge.]

But here’s the funny part. Although 50% of all samples reported are now the dreaded “California strain” (which may or may not be more infectious, and may or may not be more lethal), take a look at infections right now in California. Are you terrified yet? Does the data in real life match with the claims in the article?

Positive tests are down 85% over the past 41 days.

They really look desperate now, apparently trying to milk the very last few drops out of the Great Pandemic Terror Cow that has all but run dry. Why the urgency? For what purpose? Only they know for sure.

They do seem to be saying the word “vaccinate” a lot though. And, of course, uttering the talisman-word “science” to justify it all.

You keep using that word. I do not think it means what you think it means.

https://www.youtube.com/watch?v=dTRKCXC0JFg

The question on my mind: what comes next? Surely they aren’t done with us yet.

  • Wed, Feb 24, 2021 - 03:25am

    #2

    davefairtex

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    tues bitcoin update – all is well

After a terrifying 10k drop – the model still looks positive.  Longer term model looks positive too.  Future so bright, you gotta wear shades.  Still.

  • Wed, Feb 24, 2021 - 06:03am

    #3

    JAG

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    Despair

Well, if the crash was going to happen, yesterday would have been my pick for the start of it….and…it didn’t happen.

The reversal in the Nasdaq was the most impressive move I have ever seen in a major index. In fact, Sentimentrader says the last time a bullish reversal like that occurred was about a month away from the top of the Dotcom bubble in 2000.

I really want to stick it out, but it’s getting harder and harder to take these loses each day. I guess I should just let it go until I lose everything, that way I confirm that my strategy no longer works and can step away from trading for good.

 

  • Wed, Feb 24, 2021 - 06:31am

    #4

    davefairtex

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    rotation vs crash

I still think we’re going to see rotation rather than a crash, at least right now.  It is hard to see how a crash happens when the pandemic is ending.

My best guess for pandemic-end is an increase in the velocity of money.  Someone yesterday (EL?) suggested the locked-down RH traders, now that things will be opening up again, will sell their high-flying winners and run off to have a much-needed vacation.

So tech gets whacked, but lots of money will get spent, money velocity charges higher – I mean, theoretically, right?  How do we get a deflationary crash out of that?

I could see an argument for a transition from “pandemic fear” to “depression fear” – they really want us to be in fear right now – and the pandemic thing is fast coming to an end.  Timing?  Who knows.

The big pandemic plunge trade had a known timing to it.  That’s very rare.  Mostly, it just doesn’t happen.

Often, there isn’t a trade setting up.  This is why I don’t trade options.  You have to be right, and right in a particular timeframe.  That’s really hard.  Mostly, it doesn’t work out.

 

 

  • Wed, Feb 24, 2021 - 06:31am

    #5
    VTGothic

    VTGothic

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    Alternative option…

JAG, how about cash out today, and put the remained in bitcoin? Then forget it for 5 years. Hey, if you lose it all you’re no worse off; if not, you’ve gained.

Either you’ll gain much or confirm your suspicion you can’t make money holding btc over extended time periods. At this point, what do you have to lose?

  • Wed, Feb 24, 2021 - 06:50am

    #6
    VTGothic

    VTGothic

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    Just part of the trippy trip…

Hey, Dave, to those of us who’ve been on this roller coaster ride a couple of times before, that $10,000 drop was not scary, just a buying opportunity. Four or five 20-40% pullbacks are normal in btc bull runs. (See chart [screenshot on 1.11.21].) BTC’s going to at least double today’s price before topping out.

Tangentially, Square reported yesterday it bought 3318 additional btc at an average $51,230.

 

  • Wed, Feb 24, 2021 - 07:12am

    #7
    brushhog

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    PM Daily Market Commentary – 02/23/2021

I can easily see the scenario of a crash happening. Remember alot of people are waiting for the pandemic to end so life can “get back to normal”. The expectation is that things are going to come back all at once.

Meanwhile, 50% of small businesses have gone under? Unemployment claims are getting scary. I just read something about 92% of private restaurants in NYC have gone under. Those things arent just going to come back. When the realization that we are very badly damaged [and not just in a temporary “holding pattern”] dawns on the average person….I can see alot of people trying to “take profits” while the markets are at historically high levels.

  • Wed, Feb 24, 2021 - 07:55am

    #8

    JAG

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    It sucks to be JAG right now…

DF: Often, there isn’t a trade setting up.  This is why I don’t trade options.  You have to be right, and right in a particular timeframe.  That’s really hard.  Mostly, it doesn’t work out.

You are correct, of course. But I have this misguided belief that I can time market sell-offs using “dumb money” sentiment extremes.

At the risk of sounding even more stupid, I didn’t get ‘short’ the market in Feb 2020 because of COVID, I got short because the dumb money was crazy bullish and the smart money was showing bearish sentiment, well before COVID became the narrative.

I don’t actually believe that anything exogenous to the market causes the market to move. I mean we just saw the greatest bull market in history during the worst (hopefully) of the pandemic.

I know you place a lot of emphasis on narrative, and with the dominance of social media and memes today, you could be right. Which is why I enjoy reading your reports.

VT: that is probably wise advice that I should heed. I just can’t do it (and I’ve tried).

Thanks for the feedback.

It sucks to be JAG right now.

  • Wed, Feb 24, 2021 - 08:22am

    #9

    Jim H

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    While you guys (and gals?) are talking BTC, you are missing the Ag action

The miners are screaming this morning in the face of a flat Silver price.  I just posted a max range Comex Silver deliveries chart in my, “Big One” thread that tells part of the tale.  Because of shortages, the Comex is being used more and more for physical delivers. which is equivalent to calling it’s bluff in terms of the pricing.  WallStreetSilver on Reddit up to 33.5 K members and growing.  New stackers entering the fray.  Inflation is here, and a commodity supercycle is started.  Silver is the most asymmetric/left behind commodity in the commodity universe, and we all know exactly why….

It’s going to break this time.  Silver can easily double in the next few months.  Fortunes will be made in the miners.  Ground floor is pretty much NOW.

  • Wed, Feb 24, 2021 - 08:35am   (Reply to #9)

    #10
    MarkM

    MarkM

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    PM Daily Market Commentary – 02/23/2021

Jim, I have held physical silver for a long time. I have recently taken a position in PSLV based on your thoughts.

Is there a primer somewhere for newbies to get some info on miners?

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