PM Daily Market Commentary – 09/24/2020

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  • Fri, Sep 25, 2020 - 03:05am

    #1

    davefairtex

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    PM Daily Market Commentary – 09/24/2020

Gold climbed +5.56 [+0.30%] to 1875.96 on moderately heavy volume, and silver rallied +0.35 [+1.53%] to 23.28 on heavy volume. The buck inched lower [-0.05%], SPX climbed [+0.30%], crude moved higher [+1.51%], as did bonds [the 10-Year yield fell -2.0 bp].

Gold chopped sideways until late morning in the US, when it staged its modest rally, closing near the highs. The long white candle was a reasonably strong bullish reversal (41%), forecaster climbed, but remains in a downtrend. Gold is in a downtrend in both the daily and weekly timeframes.

Gold/euros climbed +4.47 [+0.28%] to 1605.83 on moderately heavy volume. The bullish harami candle was a bearish continuation, forecaster climbed, but remains in a downtrend. Gold/euros is in a downtrend in both the daily and monthly timeframes.

COMEX GC open interest fell -17K contracts. That was -5 days of global annual production in paper removed from the market. Current open interest for GC: 52% of global annual production, down -1.59% today. 180 GC contracts stood for delivery at COMEX today.

Finally, we see a modest amount of short-covering, after a long move down. End of month is coming. There could be a fair amount of demand. That said, the candle print wasn’t all that strong, and the bounce in the forecaster wasn’t all that strong either.

Silver fell in Asia, making a new low to 21.81 at around 1am, then proceeded to move slowly higher for the remainder of the day. The long white candle was a possible bullish reversal (37%), forecaster climbed, but remains in a downtrend. Silver is in a downtrend in both the daily and weekly timeframes.

COMEX SI open interest fell -2.1K contracts. That was -4 days of global annual production in paper removed from the market. Current open interest for SI: 89% of global annual production, down -1.19% today. 13 SI contracts stood for delivery at COMEX today.

The gold/silver ratio dropped -0.99 to 80.58. That’s bullish.

The silver candle print was actually stronger (ratings-wise) than gold. There was some short-covering, finally, and forecaster liked today’s move too. I really liked the long lower shadow on today’s candle print. No bullish reversal yet, however.

Miners gapped down at the open, then rallied for most of the day, eventually closing near the highs. GDX shot up +2.82% on heavy volume, and GDXJ shot up +3.24% on heavy volume. XAU rallied +3.78%, the bullish belt hold candle was a reasonably strong bullish reversal (46%), forecaster climbed, but remains in a downtrend. XAU is in a downtrend in both the daily and weekly timeframes.

The GDX:gold ratio climbed +2.45%, and the GDXJ:GDX ratio climbed +0.41%. That’s bullish.

The miners wiped out most of yesterday’s losses with today’s rally. Forecaster was positive also, but it was not quite enough for a bullish reversal.

Platinum rose +9.09 [+1.07%], while palladium fell -4.82 [-0.22%]. Platinum’s rally was good news for PM, but it was not quite enough for a bullish reversal. Getting closer though.

Copper was unchanged at 2.95 on heavy volume. The doji candle was a possible bullish reversal (36%), forecaster climbed, but remains in a downtrend. Copper is in a downtrend in both the daily and weekly timeframes.

This was a highly rated doji candle – dojis are normally pretty useless, but this one looked strong. Copper is righ
t at its 50 MA. It was not quite enough for a bullish reversal for copper, however.

The buck dropped -0.05 [-0.05%] to 94.38 on moderate volume. The long black candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. The buck is in an uptrend in the daily and weekly timeframes.

Major currency moves included: AUD [-0.39%].

From all I can see, today was not a bearish reversal for the buck. If the buck resumes its uptrend, will PM resume its correction? That’s the question.

Crude shot up +0.60 [+1.51%] to 40.24 on moderately light volume. The long white candle was a bearish continuation, forecaster climbed, moving higher into its uptrend. Crude is in an uptrend in the daily and weekly timeframes.

Crude is now back in a modest near-term uptrend – back above the 9 MA. Crude is definitely not giving any risk-off signals right now. Daily and weekly are both moderately positive.

SPX climbed +9.67 [+0.30%] to 3246.59 on moderate volume. The thrusting candle was a reasonably strong bullish reversal (45%), forecaster climbed, but remains in a downtrend. SPX is in a downtrend in both the daily and weekly timeframes.

Utilities [+1.11%] led, along with staples [+0.73%], while sickcare [-0.50%] and discretionary [-0.04%] did worst. This was a bearish sector map.

The VIX fell -0.07 to 28.51.

SPX printed a strong candle pair today, and forecaster also looked pretty happy with today’s action, however sector map was quite weak – money moved into safe havens of utilities and consumer staples. NYSE advance ratio was at 49%; it was not a broad-based rally today. Probably no bullish reversal for equities.

TLT climbed +0.38%. The spinning top candle was a bullish continuation, forecaster climbed, rising into an uptrend. TLT is in an uptrend in the daily and weekly timeframes. The 30-Year yield fell -1.0 bp to +1.41%.

TY inched down -0.08%. The short white candle was a bearish continuation, forecaster dropped, but remains in an uptrend. TY is in an uptrend in the daily and weekly timeframes. The 10-Year yield fell -2.0 bp to +0.66%.

Bonds continue to chop mostly sideways. Weekly price tag: $45 billion. Thanks for destroying our bond market, Mr. Powell.

JNK inched down -0.08%. The spinning top candle was a bearish continuation, forecaster climbed, but remains in a downtrend. JNK is in a downtrend in both the daily and weekly timeframes.

It was a new low for crappy debt, but there did seem to be some buying here. No bullish reversal though; downtrend remains in place.

Physical Supply

The GLD ETF tonnage on hand was unchanged at +0.00 tons, with 1267 tons remaining in inventory.

ETF Discount to NAV:
* CEF -3.48%
* PHYS -0.27%
* PSLV -2.25%
Gold dealer big bar premiums:
* gold [1kg]: +1.10%
* silver [100 oz]: +6.78%

Physical ETFs have moved back into discount, and premiums on the bars have declined as well. That looks a bit bearish to me.

Economic Reports

Fed Balance Sheet: 7093.2B, +28.7B, Liquidity Swaps: 31.9B, -20.3B, Reverse Repos: 200.3B, +118M, Treasury Securities: 4431.5B, +24.5B, MBS: 2024.9B, +19.8B. Liquidity swaps are almost gone; another $45 billion in Treasury and MBS buying.

Median new home sales price: headline 313K, -15K (-4.80% m/m), SF ne

Summary

Finally there was some positive news for gold, silver, and the miners, with the miners doing best. The short-covering was moderate but positive. Silver’s candle print showed some reasonably strong dip-buying (that long lower shadow tells us that), and strong bullish candle for the miners looks even more positive.

Still no bullish reversal yet – this will require a confirmation tomorrow.

The buck seems to have paused at least momentarily; what will happen to PM if it starts to rise again? That’s the key question in my mind.

Risk assets were mixed; while the declines in SPX, crappy debt, and copper have stopped for the moment, the only bullish-looking item is crude.

Here’s an update to the “selected state unemployment rates”, grouped by Blue & Red administrations. Unemployed peop
le don’t pay income tax, neither do the businesses they are working in, which aren’t running. The difference is dra
matic. Good news is, Blue states have finally started to allow people to start working again.

Median new home sales price: headline 313K, -15K (-4.80% m/m), SF new home sales: 1.0M, +46K (+4.55% m/m), monthly home supply: 3.30, -0.30. A very odd thing is happening – new home prices dropped 5%, while the supply of new homes has fallen to the lowest level in the history of the series dating back to 1963. Normally, a shortage of homes results in skyrocketing prices. But the opposite is happening.

Summary

Finally there was some positive news for gold, silver, and the miners, with the miners doing best. The short-covering was moderate but positive. Silver’s candle print showed some reasonably strong dip-buying (that long lower shadow tells us this), and the strong bullish candle for the miners looks even more positive.

Still no bullish reversal yet – this will require a confirmation tomorrow. I remain somewhat concerned about the relatively low premiums for physical PM.

The buck seems to have paused at least momentarily; what will happen to PM if it starts to rise again? That’s another key question in my mind.

Risk assets were mixed; while the declines in SPX, crappy debt, and copper have stopped for the moment, the only bullish-looking item is crude.

Here’s an update to the “selected state unemployment rates”, grouped by Blue & Red administrations. The difference is dramatic. Turns out, policy really does matter. Good news is, Blue states have finally started to allow people to start working again.

Will the unemployment rates in Red states be “close to normal” by the end of September? The plunge this month in the unemployment rate this month was dramatic. Did this also have to do with the expiration of the unemployment insurance? The plunge might be an unintended consequence of Pelosi refusing to provide cash to Americans for not working – which ended up spurring a lot more Americans to get back to work. Oops.

But for us here in the cheap seats, without more stimulus, it might be difficult for PM to stage a longer-term rally. Perhaps the next PM rally will be a gold-led “safe haven” move, as the planned chaos increases as we move towards November 3rd.

That stealth crude oil move also has my attention right now. At some point, energy equities will be a buy, regardless of Gov Newsome prohibiting IC auto sales in California years after he is out of office. It reminds me of China’s Xi promising that his nation – the largest carbon emitter on the planet, increasing every year – will definitely have “net neutral carbon emissions” by 2060; Xi will be 107 years old when that goal will allegedly be reached.

“I’ll gladly pay you Tuesday, for a Hamburger I can eat Today.”

  • Fri, Sep 25, 2020 - 04:43am

    #2

    sand_puppy

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    PM Daily Market Commentary – 09/24/2020

Market opening looking grim right out of the gates (9/25).  Everything down.

  • Fri, Sep 25, 2020 - 09:26am

    #4

    davefairtex

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    armstrong ECM

So I’ve equipped the GC monthly model with Armstrong’s ECM.   I’m still experimenting with the best mechanism for doing this – Armstrong is not specific about how to take his theory and implement it.

Notice the recent rally.  The blue forecaster line dives down in some periodic way.  ECM says that a full cycle is every 8.6 time units.

It is more complicated than this – since the GC model incorporates ECM values for a number of different related items also, since their cycles seem to influence the price of gold too.  And I also use ECM values from both quarterly and yearly cycles.

Anyhow.  I think there might be a pony in here somewhere.  Still experimenting.

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