PM Daily Market Commentary – 02/24/2021

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  • Thu, Feb 25, 2021 - 02:24am

    #1

    davefairtex

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    PM Daily Market Commentary – 02/24/2021

Gold moved lower, down -1.30 [-0.07%] to 1805.52 on moderate volume, while silver climbed +0.28 [+1.01%] to 28.07 on moderate volume also. The buck was unchanged, SPX moved higher [+1.14%], crude shot up too [+3.66%], while bonds were unchanged [the 10-Year yield closed at +1.37%].

Gold chopped sideways in Asia and London, but then dropped hard starting around 8 am, finally bottoming out around 9:50 am, and then bouncing back, erasing most of the losses by end of day. The doji candle was a bearish continuation, and forecaster fell, dropping into a downtrend. Gold is now back in a downtrend in all three timeframes.

Gold/euros inched down -0.25 [-0.02%] to 1486.89 on moderate volume. The doji candle was a bearish continuation, forecaster fell, dropping into a downtrend. Gold/euros is in a downtrend in all three timeframes.

COMEX GC open interest fell -9.4K contracts. That was -3 days of global annual production in paper removed from the market. Current open interest for GC: 44% of global annual production, down -0.87% today. 15 GC contracts stood for delivery at COMEX today.

While gold is now back in a downtrend, to me, price action actually looked pretty good today to me. Somebody seemed to be working hard to crater price prior to the open in New York, and it worked for a time, but then the dip-buyers appeared (and/or the shorts covered), and price moved right back up to where it started.

As we approach first notice day, the bankster shorts appear to be fleeing. Open interest is rapidly approaching the June 2020 lows – the short-covering is really beginning to accelerate. It may be that “somebody” doesn’t want to be on the hook for having to deliver actual gold bars in the near future.

Silver chopped mostly higher in Asia and London; it then fell just after 8 am, bottoming out at 9:40 am, and then promptly rallied strongly back, finally ending the day near the highs. The spinning top candle was unrated, forecaster climbed, moving higher into its uptrend. Silver is in an uptrend in all three timeframes.

COMEX SI open interest fell -6.5K contracts. That was -13 days of global annual production in paper removed from the market. Current open interest for SI: 95% of global annual production, down -3.77% today. 115 SI contracts stood for delivery at COMEX today.

The gold/silver ratio dropped -0.69 to 64.32. That’s quite bullish.

Silver seemed mostly unaffected today by whatever forces pounded gold. While the candle print was not a recognized pattern, it looked pretty positive to me; the modest dip was bought quite strongly at the open in New York. There was also a great deal of short covering in silver – far more on a percentagewise basis than in gold. Once again, banksters generally don’t do this – mostly they don’t close out their positions as prices rise.

Silver’s longer-term uptrend remains strong; the short term trend is still iffy, although price remains comfortably above the 9 MA.

Miners gapped down at the open – due probably to the sell-fest that happened in gold immediately prior – and then the miners rallied sharply through mid-day, then finally closing near the highs. GDX climbed +0.78% on moderate volume, and GDXJ rallied +1.60% on moderate volume. XAU moved up +1.74%, the confirmed takuri line candle was a likely bullish reversal (69%), forecaster climbed, moving higher into its uptrend. XAU is in an uptrend in the daily timeframe.

The GDX:gold ratio climbed +0.84%, and the GDXJ:GDX ratio climbed +0.81%. That’s bullish.

Today’s strange-looking candle pattern was quite bullish. Could this whole sell-before-the-open operation in gold be about short-covering for the miners too? The rally post-open was quite strong. Miners are now back above all 3 moving averages, and also back in a short-term uptrend.

It sure appeared that traders bought the dip in the miners in the morning, and/or, the funds who were short miners got a chance to cover at lower prices. The price action looks quite bullish to me.

Platinum rose +27.02 [+2.11%], and palladium climbed +93.94 [+3.84%]. It was a decent rally in platinum (which is now back in an uptrend), and a very strong rally for palladium, which made a new 6-week high on today’s strong move.

Copper shot up +0.10 [+2.37%] to 4.32 on very heavy volume. The closing white marubozu candle was a bullish continuation, forecaster dropped, but remains in an uptrend. Copper is in an uptrend in all three timeframes.

Right. Copper is about 30 cents from the all time high set back in 2011. D/W/M RSI7 = 96/87/91. That’s overbought. Copper’s very strong uptrend remains in place.

The buck was unchanged at 90.14 on moderately heavy volume. The high wave candle was a bullish continuation, forecaster climbed, rising into an uptrend. The buck is in an uptrend in the daily and monthly timeframes.

Major currency moves included: CAD [+0.61%], JPY [-0.63%], AUD [+0.47%].

Well, it didn’t look like much to me, but forecaster thought it was positive. The buck remains below all 3 moving averages, but it is now in a slight uptrend.

Crude shot up +2.24 [+3.66%] to 63.40 on moderate volume. The closing white marubozu candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in all three timeframes.

EIA Report: crude +1.3m, gasoline unchanged, distillates -5.0m.

Crude just moved relentlessly higher all day long; it did seem to get some extra enthusiasm from the EIA report at 10:30 am also. Today marks a new 13-month high for crude. Just when I think its about to correct, it moves even higher.

SPX rallied +44.06 [+1.14%] to 3925.43 on moderately heavy volume. The swing low candle was a reasonably strong bullish reversal (47%), and forecaster climbed, rising into an uptrend. SPX is in an uptrend in all three timeframes.

Energy [+3.42%] led, along with financials [+1.91%], while utilities [-1.18%] and staples [-0.06%] did worst. This was a bullish sector map.

The VIX plunged -1.77 to 21.34.

So that strong crude rally appeared to really help SPX. Equities are now back above the 9 MA, and also back in an uptrend. Today wasn’t a new all time high, but one is not far away. NYSE advance ratio was 66%, which suggests the rally was moderately broad-based. As a basis of comparison – rallies off the March 2020 lows had advance ratios in the 80s-90s. So today was “good, but not great” for breadth.

TLT dropped -0.66%. The long white candle was a reasonably strong bullish reversal (48%), forecaster climbed, but remains in a downtrend. TLT is in a downtrend in both the daily and weekly timeframes. The 30-Year yield rose +2.0 bp to +2.23%.

TY dropped -0.22%. The spinning top candle was a reasonably strong bullish reversal (47%), forecaster dropped, moving deeper into its downtrend. TY is in a downtrend in all three timeframes. The 10-Year yield was unchanged at +0.0 bp to +1.37%.

Bonds also sold off overnight, but then rallied, starting right at the open through until about noon. Perhaps that’s why the candle code looked so favorably on what happened with TLT today. Is this really a reversal?

D/W/M RSI7 for TLT = 14/14/30. That’s definitely oversold. Maybe that’s also why the candle code liked today’s print.

JNK inched up +0.02%. The long white candle was unrated, forecaster dropped, moving deeper into its downtrend. JNK is in an uptrend in the weekly timeframe.

Well crappy debt didn’t really confirm the rally in equities; perhaps traders are more worried about the rising rates over in the treasury bond market.

Physical Supply

The GLD ETF tonnage on hand dropped -4.08 tons, with 1106 tons remaining in inventory.

ETF Discount to NAV:
* CEF -2.75%
* PHYS -0.46%
* PSLV +0.82%
Gold dealer big bar premiums:
* gold [1kg]: +1.53%
* silver [100 oz]: +14.25%

Physical ETFs remain split; PHYS is in discount, while PSLV remains in premium. Big bar gold premiums are moderate, while big bar silver premiums remain high.

Eric Sprott did not buy any more of those big silver bars today. Volume of PSLV fell vs yesterday, but remains 5x above the 1-year volume moving average.

As a reminder, here is the link to the “silver squeeze” thread:

https://www.peakprosperity.com/forum-topic/silver-squeeze-is-this-the-big-one/

Economic Reports

Median new home sales price: headline 346K, -6.7K (-1.93% m/m), SF new home sales: 923K, +38K (+4.12% m/m), monthly home supply: 4.00, -0.10. Prices fell, while number of home sales increased. Home inventory remains dreadfully low.

Summary

Today, gold went nowhere, while silver and the miners moved higher. There was short-covering in both metals today, with by far the largest effort happening in silver, at least on a percentage-wise basis. This is all happening in the leadup to first notice day – the day after which the owner of a paper contract can take physical delivery.

First notice day for gold and silver is this coming Friday.

Given the “silver squeeze” now under way, this impending deadline could be a critical inflection point; it is on this date when any banksters who are short SI contracts at COMEX will have to cough up actual physical silver to anyone that is still long the current delivery month.

SIH21 (March 2021) was the current front-month contract; as it moves towards FND, anyone who wants to avoid delivery will “roll” the contract forward – in this case, to the SIK21 (May 2021) contract. That happened today – most of the volume shifted to SIK21. Currently, there are 28k contracts still active for March (SIH21).

For reference, the largest delivery day I’ve seen was in June 2020, when 11458 contracts took delivery on that day. I didn’t gather data on deliveries before last summer – but here’s why they are significant. Check out the rally that happened following this massive delivery date in June:

How many of the 28k contracts will remain active going into FND Friday? That’s the question. The banksters desperately hope the answer will be “as few as possible.” If they lose their silver stash, they will not be able to execute the very profitable “wash and rinse” cycle on silver any longer.

Friday could be a very exciting day.

Risk assets all looked reasonably strong; equities shot higher, along with crude and copper, while crappy debt went nowhere. Energy looks to be driving the equity market higher right now – which I take to mean, either “pandemic end”, and/or “crude oil shortage in the offing.”

The buck went nowhere.

Bonds moved lower, although there was a lot of buying that happened after the open, which made the daily candle print look pretty strong. Bonds are heavily oversold right now – kind of like copper & crude are overbought.

And now, your favorite section: news items that caught my eye.

Daily Caller: “My Income Has Dropped to Zero”

https://dailycaller.com/2021/02/24/small-business-closure-coronavirus-pandemic-first-fiscal-quarter/

Forty-four percent of the country’s 31.7 million small businesses are at risk of closing by the end of the first quarter, according to small business group Alignable. Small businesses on the brink of closure expect to earn less revenue than their owners estimate is needed to stay afloat.

Meanwhile, companies like Walmart and Amazon were able to generate record revenues in 2020. In the middle of the pandemic 45 out of the 50 most valuable public corporations profited, even as the U.S. unemployment rate jumped to a record 14.7%.

Small business revenue plummeted 33.1% as of Feb. 10 compared to January 2020, according to Harvard University’s Economic Tracker. Between Jan. 1, 2020, and Dec. 31, 2020, about 30% of U.S. small businesses closed.

It turns out that lockdowns aren’t just useful for lowering your target population’s immune system while raising vaccine demand – they are also fantastic for retargeting all that consumer spending that used to go towards small business over to Oligarch-owned megastores, thus centralizing profits. But not only that – it also makes all those former small business owners now dependent on government handouts!

Lockdowns are a win-win-win proposition for all the Biden Donors, and their “Build Back Better” efforts.

“Show me the incentive, and I’ll show you the outcome.” — Charlie Munger.

There is a slight upward blip in positive tests in the US today – that is due primarily to an noticeable increase in positive tests in Texas. My guess: this was caused by fewer people getting tested during the Texas power difficulties 8 days ago – and they are just now getting caught up.

Last one: in an ironic turn of events, Israel’s government is now constructing a “papers, please” environment inside the country. History does tend to rhyme, but sometimes in quite unexpected ways. You must have a “green pass” to go to the gym, or eat indoors. And now, the government is ratcheting up the pressure on the non-compliant unvaccinated:

https://news.yahoo.com/israel-adopts-law-allowing-names-153232886.html

Israel’s parliament passed a law Wednesday allowing the government to share the identities of people not vaccinated against the coronavirus with other authorities, raising privacy concerns for those opting out of inoculation.

The measure, which passed with 30 votes for and 13 against, gives local governments, the director general of the education ministry and some in the welfare ministry the right to receive the names, addresses and phone numbers of unvaccinated citizens.

Alex Berenson asked, rhetorically:

https://twitter.com/AlexBerenson/status/1364589810053185538

And Israel is moving towards shaming people who don’t want to be vaccinated by disclosing their personal information to local hospitals so they can be “urged” to get their shots.

Hey, why not just make them wear a yellow star?

As they say, Fourth Turning.

  • Thu, Feb 25, 2021 - 02:31am

    #2

    davefairtex

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    wed bitcoin update

Near term model isn’t sure.  Long term model is now bearish.

  • Thu, Feb 25, 2021 - 07:14am

    #3

    JAG

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    Woonomics?

Nice silver delivery chart Boss. Now I see why there is so much excitement around silver.

It looks like Gamestop is getting play again.

I woke at 2am and couldn’t go back to sleep. The YouTube algo that I would enjoy this Woonomics video:

This seemed more interesting at 2 am, but I thought I would share it.

Some highlights:

  • Bitcoin becomes “unbuyable” at $64K, then everyone moves to physical silver.
  • Bullion banks go down in the next month…
  • Something about web bots analyzing language on the internet.
  • The end of the US dollar this summer…

Not really my thing but I thought some people here might enjoy it.

  • Thu, Feb 25, 2021 - 08:36am

    #4

    Jim H

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    Paging Dave.. Paging Dave…

Two things;

1)  Sprott bought 1.5M ounces of Silver for PSLV yesterday.  See here;

2)  I am old enough to remember when the FED used to report Eurodollars.. now this?  What is your read here Dave?

  • Thu, Feb 25, 2021 - 09:55am

    #5
    EddieLarry

    EddieLarry

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    PM Daily Market Commentary – 02/24/2021 – Correction coming?

Ho boy, I kept saying we were overdo for a correction.  Well, just maybe, one starts today.  Market interest rates have been jumping.  I suspect they will increase until we get that correction.  Stay safe out there.

GME roaring higher.  Tells you the type of market we have.  Crazy!

  • Thu, Feb 25, 2021 - 10:19am

    #6
    MarkM

    MarkM

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    PM Daily Market Commentary – 02/24/2021

https://www.zerohedge.com/markets/treasury-yields-soar-after-catastrophic-tailing-7y-auction

 

In short- this was an absolutely catastrophic 7Y auction, the ugliest in years, and it came at the worst possible time – just as the curve was selling off on inflation fears.

  • Thu, Feb 25, 2021 - 10:35am   (Reply to #4)

    #7
    VTGothic

    VTGothic

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    M2 Report Discontinued?

I don’t follow this super closely, but didn’t the Fed cancel M3 reporting for the same reason?

These guys…

  • Thu, Feb 25, 2021 - 11:06am

    #8
    DennisC

    DennisC

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    Jerónimo et al

Coming to any conclusions, based on available (or potentially embarrassing) data, will not be allowed if it goes against the narrative du jour.  Alternately, maybe the latest batch of interns are not master-level spreadsheet prognosticators (like some of the PP tribe) nor particularly gifted bureaucratic data plotters (or plodders).

  • Thu, Feb 25, 2021 - 11:35am

    #9

    davefairtex

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    here’s the alternate M2

From what I read, they were just discontinuing the seasonally adjusted version.  There is still an NSA M2.  It still appears that you can get your weekly M2 here which will still get updated.

https://fred.stlouisfed.org/series/WM2NS

JimH-

Thanks for the Sprott info.  When I looked (much earlier in the day) I didn’t see that tweet.  Or – maybe I just missed it.  Certainly happy to see he bought some.  Thanks for the correction.  I’d correct my post, except there’s a nonzero chance it would end up deleting the entire forum post.

I’m excited to see what the front-month silver contract OI looks like after today’s close!

  • Thu, Feb 25, 2021 - 12:31pm

    #10
    wotthecurtains

    wotthecurtains

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    PM Daily Market Commentary – 02/24/2021

I don’t follow this super closely, but didn’t the Fed cancel M3 reporting for the same reason?

These guys…”

 

I remember that.   The goldbugs went nuts and the MSM explained that it was totally right to discontinue it because it was no longer meaningful, the world having changed.    Or something…

M2 will be the same.   An authority will eventually be trotted out to “correct” internet disinformation about the central banks trying to cover their tracks.  I just hope the speaker makes studied references to Economic “Science”.   Wouldn’t be the same without that touch

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