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PM Daily Market Commentary – 1/14/2019

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  • Tue, Jan 15, 2019 - 06:33am

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    davefairtex

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    PM Daily Market Commentary – 1/14/2019

Gold rose +4.29 [+0.33%] to 1296.90 on heavy volume, while silver rose +0.04 [+0.29%] to 15.69 on moderate volume. The buck edged lower [-0.08%], while risk assets generally fell [SPX:-0.53%, crude -1.78%, junky debt -0.29%].

There were two important news items today: First China posted some very weak trade data (exports fell -4.4% vs Dec 2017, and imports dropped -7.6%, the largest y/y monthly decline since July 2016). Annual auto sales in China were down -5.8% vs 2017, which is the first annual decline since 1990. Does this align with a GDP figure of 6.5%?  Not so well.

Second, tomorrow is supposedly the big day for the BRExit vote in the UK Parliament.  Currently, the debate is not if she will lose, its all just about the size of the defeat.

Will BRExit be put off “for later”? Will it end up being a hard BRExit? Will the UK Parliament eventually go for May’s Unconditional Surrender? Its a lot of uncertainty.

Gold tried to rally making a new high to 1296, but the rally ultimately failed; the spinning top was neutral, but forecaster jumped back into an uptrend. Gold has been unsure about trend now for the past 8 days, at least on the daily chart, flopping back and forth between buy and sell, while slowly moving downhill. That said, the weekly and monthly forecasters both remain in strong uptrends.

COMEX GC open interest rose +19,122 contracts. This was a large move higher in OI: 9 days of global production in new paper, or as I like to think of it, 38% of a BRExit. (The jump in OI on BRExit vote day was 50k).

Futures are showing a split in March (5% increase, 2% decrease), and another split in December (15% increase, 14% decrease).

Silver mostly just chopped sideways in a narrow trading range with a slight upward bias. The short white candle was mildly bullish, and the forecaster moved higher into an uptrend. Today’s move was enough to cause the weekly forecaster to issue a sell signal, if we close here at end of week. That means silver is in a downtrend in both the daily and weekly timeframes – although the downtrends are not particularly strong.

COMEX SI open interest rose +1,466 contracts.

The gold/silver ratio rose +0.01 to 82.45. That’s neutral.

Miners edged lower, with GDX off -0.71% on light volume, while GDXJ dropped -0.13% on light volume also. XAU fell -0.78% off today; the long black candle was neutral, but forecaster plunged, issuing a sell signal for XAU. XAU also closed below the 9 AM for the first time in a month, which is a negative sign. XAU is now in a downtrend in all 3 timeframes.  The miners aren’t looking so great.

The GDX:$GOLD ratio fell -1.04%, and the GDXJ:GDX ratio rose +0.59%. That’s somewhat bearish.

Platinum fell -1.08%, palladium rose +0.35%, while copper dropped -1.05%. Copper is now in a downtrend in all 3 timeframes, as is platinum.

The buck basically went nowhere, falling -0.08 [-0.08%] to 95.02. The NR7 candle was unrated, while forecaster edged a bit lower, remaining in a downtrend. The buck remains in a downtrend in all 3 timeframes.

Crude fell -0.93 [-1.78%] to 51.2. Candle print was a swing high, which was a follow-through off Friday’s sell signal. Even with the move today, crude remains in an uptrend in the weekly and monthly timeframes, and the uptrends are both fairly strong. It appears that the weak economic news from China has traders worried.

SPX fell -13.65 [-0.53%] to 2582.61. The futures were down more than 25 points overnight after China’s news hit, but managed to bounce back during the trading day – although the close definitely looked weak. The doji candle was unrated, while forecaster fell but remains in an uptrend. SPX remains in an uptrend in both the daily and weekly timeframes.

Financials led today (XLF:+0.69%) along with industrials (XLI:-0.01%) while utilities (XLU:-2.25%) and sickcare (-1.10%) did worst. This was a slightly bearish sector map.

VIX rose +0.88 to 19.07.

TLT fell -0.37%, making another new low. TLT remains in a short-term downtrend. TY fell just -0.01%, rallying relatively strongly during the day but losing it by the close. Still, the move was enough for forecaster to issue a buy signal, putting TY in an uptrend in the daily and monthly timeframes. The 10-year yield fell -2.4 bp to 2.69%.

JNK fell, moving down -0.29%. That’s not enough for a sell signal yet, but JNK may be ready to roll over. Of course, it might just be taking a rest also. So far risk assets remain relatively strong.

CRB fell -0.16%, with 3 of 5 sectors dropping, led by energy (-1.19%).

Both Germany and China have now turned in some pretty poor economic numbers – these are the manfacturing giants of the world, and this strongly suggests a global economic slowdown.  No doubt China is motivated to settle the tariff issue prior to things moving lower more seriously.  A 25% tariff hit would really cause problems.  Since the US is an importing nation, it would not hit us nearly as hard – the tariffs would just cause manufacturing to move elsewhere – Vietnam, Thailand, Taiwan, etc.

Gold and silver continue to hang in there.  The miners look as though they are ready to start heading south.  I think gold’s OI increase of almost 20k was noteworthy – gold didn’t seem to suffer all that badly given the 59 tons of new paper gold.

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