PM Daily Market Commentary – 06/23/2020

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  • Wed, Jun 24, 2020 - 01:52am

    #1

    davefairtex

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    PM Daily Market Commentary – 06/23/2020

Gold rallied +18.94 [+1.07%] to 1791.06 on moderate volume, and silver rallied +0.31 [+1.73%] to 18.25 on heavy volume. The buck fell again [-0.39%] as did crude [-1.36%], SPX moved higher [+0.43%], and bonds were mostly unchanged [the 10-Year yield rose +1.0 bp].

Market-moving news of the day: after market close yesterday, Peter Navarro, in an interview on Fox, said that the US-China trade deal was over.

Interviewer: “He obviously really wanted to hang onto this trade deal as much as possible. He wanted them to make good on their promises, because there had been progress made on that trade deal. But given everything that’s happened, and all the things you just listed, is that over?”

Navarro: “It’s over. Yes.”

https://www.marketplace.org/2020/06/23/trump-china-us-trade-deal-peter-navarro/

SPX futures promptly dropped about 60 points (2%) over the next 30 minutes. Trump then tweeted: “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!” Market mostly recovered. Navarro later said his comments were taken wildly out of context.

My guess is, Navarro was probably just repeating in public things that were routinely said inside the White House, most likely by Trump himself.

As evidence, last month, Trump said: “I feel very differently now about that deal than I did three months ago. We’ll see what happens. It just seems to mean less to me. It was very exciting, one of the biggest deals ever made. But once the virus came in, I said, ‘how did they let that happen?’”

https://www.foxnews.com/politics/trump-china-trade-deal-i-feel-differently

Trade deal: over. Navarro said so – and we even got an Official Denial from Trump to confirm it!

Gold chopped sideways in Asia, and then rallied sharply during the London session, breaking out to a new high at the US open, and then finally ending the day at the highs. The long white candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Gold is in an uptrend in all three timeframes.

Gold/euros climbed +8.19 [+0.52%] to 1582.29 on moderate volume. The long white candle was a bearish continuation, forecaster climbed, moving higher into its uptrend. Gold/euros is in an uptrend in all three timeframes.

COMEX GC open interest rose +9.3K contracts. That was 3 days of global annual production in new paper added to the market. Current open interest for GC: 49% of global annual production, up +0.86% today.

This is a new 8-year high for gold, and also a new 8-year closing high as well. Now the focus is on the 2012 high of 1799. RSI7 for gold is 75; it is still not overbought. Gold’s uptrend is reasonably strong. Certainly some of gold’s move higher is a currrency effect; some, but not all. Gold/Euros is now back above the 50 MA. Gold was unaffected by the trade deal story.

Silver tracked gold, rallying mostly during the London session, then managing to close near the highs by end of day. The long white candle was a bearish continuation, forecaster climbed, moving higher into its uptrend. Silver is in an uptrend in all three timeframes.

COMEX SI open interest rose +1.4K contracts. Current open interest for SI: 105% of global annual production, up +0.81% today.

The gold/silver ratio dropped -0.64 to 98.14. That’s bullish.

Unlike gold, silver has yet to break out to new multi-year highs. It continues to lag. Although today it did reasonably well, the GSR at 98 tells you everything you need to know about what silver has been doing in recent months. I think it will eventually catch up to gold. When? Perhaps when the ordinary man’s confidence in government collapses. Currently, silver’s uptrend is looking reasonably strong. It is probably your second-cheapest option if you want to board the PM train right now.

Miners gapped up at the open, rallied in the first hour of trading, then moved lower for the rest of the day. GDX rallied +1.43% on moderate volume, and GDXJ moved up +2.13% on moderate volume. XAU climbed +1.66%, the bearish doji star candle was a bullish continuation, forecaster dropped, but remains in an uptrend. XAU is in an uptrend in all three timeframes.

The GDX:gold ratio climbed +0.36%, and the GDXJ:GDX ratio climbed +0.68%. That’s bullish.

Doji star patterns aren’t usually all that meaningful; this one was no exception. The miner uptrend remains intact, although of the 3 components, the miners look weakest. They appear to be dragged more or less reluctantly higher by steadily ascending gold. Buy-side interest for the miners just isn’t that enthusiastic right now. Perhaps – all the money is pouring into AMZN and AAPL – both stocks made new all time highs just today.

AAPL: Addiction by Design.
AMZN: The Company Store.

Just one man’s view.

Platinum rose +6.64 [+0.78%], and palladium rose +0.65 [+0.03%]. Platinum continues to struggle; it remains below the 200 MA, and while it is in a mild uptrend, the chart still looks pretty weak. Palladium looks worse – nobody seems to care about palladium, it is just slowly moving lower. Platinum is the cheapest PM option right now; with the gold/platinum ratio at 2.20, it remains reasonably close to the all time high of 2.49 set back in March.

Copper was unchanged at 2.65 on moderately heavy volume. The high wave candle was a low-percentage bearish reversal (29%), forecaster dropped, but remains in an uptrend. Copper remains in an uptrend in all three timeframes.

Copper’s uptrend remains reasonably strong. Copper didn’t like the thought that the trade deal was over; while it mostly recovered after the Official Denial, it might have been weakened by Navarro’s initial statement. Its a hint of risk off. If this high holds, this would be a “lower high” for copper. We really need confirmation tomorrow though.

The buck dropped -0.38 [-0.39%] to 96.60 on moderate volume. The swing high candle was a probable bearish reversal (52%), forecaster dropped, moving deeper into its downtrend. The buck is in a downtrend in all three timeframes.

Major currency moves included: EUR [+0.54%], GBP [+0.52%], JPY [+0.45%], AUD [+0.35%].

The currency moves weren’t about the trade deal; EUR’s rally mostly took place during the London trading session. The buck is now below the 9 MA.

Crude fell -0.55 [-1.36%] to 40.04 on moderately light volume. The long black candle was a possible bearish reversal (38%), forecaster dropped, but remains in an uptrend. Crude is in an uptrend in all three timeframes.

That’s a reasonably bearish rating for a long black candle. Crude didn’t like Navarro’s comment much; it rallied back after the Denial, rallied some more during the London session, then sold off for the rest of the day. Net-net, today was a failed rally for crude. A confirmation tomorrow could result in a very bearish pattern. Hmmm. Crude remains in a strong uptrend.

SPX climbed +13.43 [+0.43%] to 3131.29 on moderate volume. The swing low candle was a likely bullish reversal (68%), forecaster climbed, moving higher into its uptrend. SPX is in an uptrend in all three timeframes.

Discretionary [+0.78%] led, along with tech [+0.72%], while utilities [-1.02%] and REITs [-0.37%] did worst. This was a very bullish sector map.

The VIX fell -0.40 to 31.37.

This was a strong swing low pattern. That said, NYSE advance ratio was a bit weak (58% advancing issues), the MA5 of the ratio is still pointing lower (44%) which is bearish, and unlike NDX, SPX has yet to break above its recent trading range. Also, there was a whole lot of selling in the afternoon, and SPX ended the day at the lows. All of the gains came in the futures markets overnight. All of this, taken together with the behavior in crude and copper, seems bearish to me.

The NASDAQ 100 made another new all time high today. The divergence between SPX and the Nasdaq is striking.

TLT felll -0.68%. The swing high candle was neutral, and forecaster climbed, moving higher into its uptrend. TLT is in an uptrend in the daily and weekly timeframes. The 30-Year yield rose +3.0 bp to +1.49%.

TY was unchanged. The high wave candle was a reasonably strong bullish reversal (49%), forecaster dropped, but remains in an uptrend. TY is in a downtrend in both the weekly and monthly timeframes. The 10-Year yield rose +1.0 bp to +0.72%.

Trends for bonds remain weak. I don’t imagine they will go anywhere, since the Fed has destroyed the government bond market. $20-$30 billion per week will do that.

JNK moved up +0.17%. The short black/NR7 candle was a bullish continuation, forecaster climbed, rising into an uptrend. JNK is in an uptrend in the daily and weekly timeframes.

Trends in crappy debt are very weak. Hints of risk off here too.

Physical Supply

ETF Discount to NAV:
* CEF -0.80%
* PHYS -0.50%
* PSLV -0.96%
Bullion Vault Premiums:
* gold: +0.28
* silver: +0.02
Gold dealer big bar premiums:
* gold [1kg]: +0.87%
* silver [100 oz]: +12.85%

Kilo bars have returned. Premiums on silver are moving higher. BV is now in a slight premium, while physical ETFs remain in discount.

Economic Reports

Yield Curve Inversion: the 1-10 spread rose +0 bp to +54 bp today. 1Y: 0.18% (+1 bp), 10Y: 0.72% (+1 bp).

Median new home sales price: headline 318K, +15K (+4.69% m/m) (prior -9.50% m/m) SF new home sales: 676K, +96K (+14.20% m/m) (prior -5.52% m/m) monthly home supply: 5.60, -1.10. Things have improved vs last month if you are a seller: sales up, supply down, prices up. Is this part of the “fleeing the expensive cities” pandemic-induced trend? Hard to say.

Summary

While Peter Navarro’s statement was almost immediately Officially Denied by Trump, the essential truth spoken by Navarro appears as though it might have had a longer-lasting effect. Crude and copper both may have topped out today; if so, equities almost certainly will reverse along with them.

Don’t blame Navarro though. The NYSE advance ratio has been moving downhill now for a week; advances in just a few companies seem to be propping up the averages. That’s what we call a “bearish divergence”, and that’s also why I watch this indicator. Sometimes the market is just ready to fall; we put the finger on a particular act, but – truth be told, “it was just time.”

This feels like it could be a lower high. For equities, that is. Not financial advice, of course.

  • Wed, Jun 24, 2020 - 08:38am

    #2

    JAG

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    Houston, we have a problem… Air Conditioning.

Air conditioning is the super-spreader.

All the states that require air conditioning in the summer months are the states where Rona is rising dramatically: Florida, Texas, Arizona, and the south in general. More evidence for this latest theory is meatpacking plants and the problems they have with spreading the Rona.

Yesterday, my next door neighbor told me over-the-fence that his son (22yo) and his friends all have it now…. geez that’s a little too close for comfort.

The grocery stores have been cleaned out again and many local restaurants have closed in the past 2 weeks. I love the smell of panic (napalm) in the morning.

I live in a house that is raised on pilings because of the hurricane/flooding threat here. The last week I have been building an open-air living space under the house because I think that it might be my only refuge from catching this virus.

I’m installing lots of ceiling fans and wing walls to direct and intensify breezes because its so hot and humid here. When humidity is so high the only thing that helps is air flow (or air conditioning).

I’m kind of enjoying this new space, but it does really suck to have to isolate myself from my family.

I’ve got two solar powered 12-volt coolers, an induction plate, and various other crap on the way from The Company Store (lol) to build a kitchenette with this week.

August is going to suck, I mean really suck.

That’s the news from Lake Wobegon, hope you guys are doing well.

  • Wed, Jun 24, 2020 - 09:28am

    #3

    davefairtex

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    PM Daily Market Commentary – 06/23/2020

JAG-

I agree with you about aircon being a likely super spreader.

Here’s a thought.  You could get a room purifier.  I have one.  Get one with the HEPA filter that can also zap virus particles with ozone.  I mean – can’t hurt, right?

You could always wear a mask indoors too.  That’s tedious, but it also helps.  (There’s a study…).  And if you do get infected, you’ll get less of it.

And lastly, if you do catch something, you can run off to that Dr. Lozano.  She’ll set you up with the Jim H protocol.  Can’t fail, if treated early.  So they say.  🙂

As Kaiser told me, “It helps to believe in the efficacy of your cure.”

Oh.  Do you have blood type O?  If so, you can relax, at least a little bit.

  • Wed, Jun 24, 2020 - 12:00pm

    #4

    davefairtex

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    sickcare racket loses court case – must post prices

The sickcare industry just lost its lawsuit wherein they tried to avoid posting their prices for “shoppable services” – a health care service that consumers can schedule in advance, at times that are convenient for them.

According to the sickcare weasels: posting prices: a terrible idea!   Posted prices will confuse patients, hurt competition, and worst of all, it violates free speech!  Sadly for them, the judge in the case wasn’t buying their argument.  So, post prices, they must.

https://www.healthaffairs.org/do/10.1377/hblog20200304.157067/full/

The new price transparency rule is receiving tremendous pushback from the hospital industry, which views it as an overreach by CMS. In a lawsuit filed to block the rule, the American Heart Association, the Association of American Medical Colleges, the Federation of American Hospitals, and other hospital organizations argue that the rule violates the First Amendment and causes disclosure of confidential information to third-party payers. The groups allege that the Department of Health and Human Services does not have authority to promulgate the rule, which they believe would negatively impact hospitals’ negotiations with private payers while providing minimal benefit to consumers.

Given the “pushback” to this from the sickcare industry, this requirement might actually have a material effect.  I remember when I went with Mom to her cancer treatment, I asked, “so how much will this cost?”  Simple, basic, question.  (Mom: very frugal.  She totally wanted to know too, but didn’t have the energy to ask.)  They couldn’t answer the question.  From what I could tell, they’d never been asked.  What was I gonna do?  Say “sorry Mom, no prices, no treatment.”  They have you over a freaking barrel.  The word “scumbags” is way, way too polite.

Right.  I digress.

Hopefully, the industry will now be forced to behave less sociopathically.  I know, I’m an optimist.  But who can say?  It’s not like things could actually get worse.

Trump’s tweet:

BIG VICTORY for patients – Federal court UPHOLDS hospital price transparency. Patients deserve to know the price of care BEFORE they enter the hospital. Because of my action, they will. This may very well be bigger than healthcare itself. Congratulations America!

  • Wed, Jun 24, 2020 - 06:17pm

    #5
    Chris Martenson

    Chris Martenson

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    Re: sickcare racket loses court case – must post prices

This is superb news!

When I first heard about it (from a Trump tweet, of all places) I let out an audible whoop.

Here’s what I think of the sickcare racketeers;  efamol.

How they’ve managed to get away with their awful, deplorable practices this long is a true mystery, but not really once you understand the role of money in politics.

  • Wed, Jun 24, 2020 - 07:00pm

    #6
    kunga

    kunga

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    PM Daily Market Commentary – 06/23/2020

Sick care racket

YAY!!!

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