PM Daily Market Commentary – 10/29/2020

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  • Fri, Oct 30, 2020 - 03:06am

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    davefairtex

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    PM Daily Market Commentary – 10/29/2020

Gold fell -9.52 [-0.51%] to 1873.46 on moderately heavy volume, and silver fell -0.12 [-0.51%] to 23.41 on heavy volume. The buck jumped higher [+0.60%], SPX rallied also [+1.19%], crude plunged [-3.36%], and bonds fell too [the 10-Year yield rose +4.0 bp].

Gold started to fall around 7 am, making the day low (to 1859) at around 9, attempting to bounce, but then moving lower for the remainder of the day. The long black candle was a possible bullish reversal (35%), forecaster climbed, but remains in a downtrend. Gold is in a downtrend in all three timeframes.

Gold/euros climbed +4.41 [+0.28%] to 1607.08 on moderately heavy volume. The long black candle was unrated, 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 -3.5K contracts. Current open interest for GC: 51% of global annual production, down -0.33% today. 1258 GC contracts stood for delivery at COMEX today.

The dollar staged a strong rally today; today’s drop in gold was just a currency effect. It was perhaps surprising that gold didn’t end up moving even lower. End of month is almost upon us; deliveries are starting to pick up again. There was a small amount of short-covering today. Was this all enough for a bullish reversal? I think not quite yet.

Silver started falling late in Asia trading, making its day low (22.62) around 8:30 am, then bouncing back, erasing most of its losses by end of day. The high wave candle was a reasonably strong bullish reversal (42%), forecaster climbed, but remains in a downtrend. Silver is in a downtrend in all three timeframes.

COMEX SI open interest fell -1.1K contracts. Current open interest for SI: 90% of global annual production, down -0.62% today. 255 SI contracts stood for delivery at COMEX today.

The gold/silver ratio was unchanged at 80.03.

Today’s candle print was very highly rated; while this isn’t a reversal yet, it was definitely a positive sign. Silver looked substantially stronger than gold today.

Just as an aside; the candle code for each type assigns a “rating” to each print, from 0-100, and then it looks at history to see how candles with that rating have performed over time. Today’s “high wave” print was rated at 99, which puts it in the top 2% of “high wave” prints. High wave candles with that rating have, historically, marked the 8-day low 42.6% of the time.

The miners gapped down at the open, rallied strongly in the first 90 minutes, and then slowly faded for the rest of the day. GDX rallied +1.18% on moderately heavy volume, and GDXJ moved up +1.15% on moderate volume. XAU climbed +1.67%, the thrusting candle was a reasonably strong bullish reversal (45%), forecaster climbed, but remains in a downtrend. XAU is in an uptrend in the monthly timeframe.

The GDX:gold ratio climbed +1.66%, and the GDXJ:GDX ratio dropped -0.02%. That’s bullish.

It was a highly rated candle print today; does it mark the low? Maybe. Daily isn’t quite convinced yet, but weekly is flat, and the monthly is positive.

Platinum fell -21.46 [-2.52%], and palladium fell -44.98 [-2.04%]. Both metals moved strongly lower today; no bullish candles in this group.

Copper dropped -0.01 [-0.33%] to 3.05 on moderate volume. The long black candle was unrated, forecaster dropped, moving deeper into its downtrend. Copper is in a downtrend in both the daily and weekly timeframes.

While copper is still in a downtrend, it does appear to have found support at the 50 MA.

The buck climbed +0.56 [+0.60%] to 93.95 on moderately heavy volume. The long white candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. The buck is in an uptrend in all three timeframes.

Major currency moves included: CAD [-0.31%], EUR [-0.78%], GBP [-0.63%], JPY [-0.36%], AUD [-0.60%].

The buck made a new 4-week high today, and is now convincingly above both the 9 and 50.

I believe the recent dollar move is driven mostly by Lockdown Europe. I think the market is signaling that it expects a lot of economic damage from the lockdowns that have been declared, and money is fleeing Europe as a direct result. Partly that’s the ECB saying it will ease – somehow. With rates at zero. For sure something will be done. We just aren’t sure what it will be.

The US media’s Hide In The Basement narrative that suggests “Lockdowns Make The Virus Go Away” and if you aren’t for lockdowns, you want Grandma to die, has been totally blown apart by Europe’s large recent increase in positive tests. The evidence is clear: lockdowns just push infections off into the future. So why is Europe locking down AGAIN, piling massive economic and psychosocial damage (which targets the poor!) on top of virus effects?

That’s an interesting question.

Here are the positive tests, adjusted for population. I’ve circled the US and Sweden.

Crude plunged -1.26 [-3.36%] to 36.24 on very heavy volume. The long black candle was a possible bullish reversal (36%), forecaster climbed, but remains in a downtrend. Crude is in a downtrend in all three timeframes.

Crude made a new 5-month low today; while it did bounce back signficantly by end of day, the candle print was just moderate, and forecasters all look pretty bearish at this point. The new low looks unpleasant.  I don’t think this marks a low.

I think the move in oil is yet another effect from Lockdown Europe. Europe will be using a whole lot less oil over the next month. I get the sense someone out there sees a silver lining in this particular cloud.

SPX rallied +39.08 [+1.19%] to 3310.11 on moderately heavy volume. The long white candle was a possible bullish reversal (36%), forecaster climbed, but remains in a downtrend. SPX is in a downtrend in both the daily and weekly timeframes.

Energy [+2.98%] led, along with communication services [+2.46%], while sickcare [-0.83%] and staples [-0.03%] did worst. This was a somewhat bullish sector map.

The VIX plunged -2.69 to 37.59.

The candle print was not very highly rated, and forecaster continues to point lower. NYSE advance ratio was 66%; call it reasonably bullish. This doesn’t feel like a bullish reversal for SPX.

TLT dropped -0.97%. The opening black marubozu candle was a possible bullish reversal (37%), forecaster dropped, but remains in an uptrend. TLT is in an uptrend in the daily timeframe. The 30-Year yield rose +5.0 bp to +1.61%.

TY dropped -0.29%. The confirmed bearish high wave candle was a reasonably strong bearish reversal (44%), forecaster dropped, but remains in an uptrend. TY is in a downtrend in both the weekly and monthly timeframes. The 10-Year yield rose +4.0 bp to +0.83%.

Bonds did not do well today. They continue to look weak.

JNK climbed +0.26%. The bullish engulfing candle was a likely bullish reversal (60%), forecaster dropped, moving deeper into its downtrend. JNK is in a downtrend in both the daily and weekly timeframes.

It was a very strong candle print, but forecaster was not convinced.

Physical Supply

The GLD ETF tonnage on hand was unchanged at +0.00 tons, with 1258 tons remaining in inventory.

ETF Discount to NAV:
* CEF -2.52%
* PHYS +0.02%
* PSLV -2.49%
Gold dealer big bar premiums:
* gold [1kg]: +1.28%
* silver [100 oz]: +6.18%

The gold physical ETF has now moved into premium, while the discounts on the silver funds have moved lower. Premiums on the physical bars declined. It appears as though the goldbugs are buying PHYS on this dip.

Economic Reports

Fed Balance Sheet: 7146.3B, -31.0B, Liquidity Swaps: -843M, Reverse Repos: +5.6B, Treasury Securities: +17.4B, MBS: -46.9B. The Fed lightened up on purchases this week; perhaps that’s why bonds looked so feeble recently.

Summary

The sharp rise in the buck helped cause gold and silver to sell off, but both of them mostly recovered the losses, silver doing better than gold. The miners actually moved higher – it looks like dip-buyers appeared for the mining shares. Perhaps they were assisted by the equity market rally.

Money did seem to be moving into PHYS – it is now trading at a premium for the first time in a while.

Risk assets were mixed; equities and crappy debt both rebounded after yesterday’s large decline, copper basically went nowhere, while crude plunged to a new 5-month low. Apparently, the market thinks that people locked in their rooms over in Europe won’t be using much in the way of liquid fuels.

Bonds looked really weak; while money flooded into the buck, it sure didn’t end up in the 10-year treasury. The Fed appears to be buying fewer bonds. Even with no stimulus on the horizon, which should have been positive, bonds do not look good at all. To me, that feels like a “run, don’t walk” situation.

The Q3 GDP print came in at +8.4% Q/Q, vs a Q/Q decline of -9.5% for Q2. It doesn’t quite make up for the decline in Q2, and it cost the country more than $2 trillion dollars. Did it avoid permanent economic damage? I suspect in many areas, it did – mainly in the places where the local officials “re-opened safely.” I’m less convinced about the airlines. I’m not sure how they survive.

Most of the stimulus money didn’t go into that GDP print. Where did it go? Mostly: savings & checking.

Going into the last few days before election day, the message in the US election stems from the Presidential debate:
* Biden: “We’re about to go into a dark winter. A dark winter!”
* Trump: “It’s going to be a great winter! It’s going to be a great spring!”

If only the NIH had provided guidelines to the nation based on the treatments that the science tells us works: vitamin-D, HCQ+AZI+zinc, ivermectin, melatonin. There would be no talk of a “dark winter”, and hundreds of thousands of lives would have been saved.

But for some reason, that didn’t happen.

In an election year, everything that happens is about the election.

  • Fri, Oct 30, 2020 - 04:52am

    #2
    phusg

    phusg

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    PM Daily Market Commentary – 10/29/2020

> So why is Europe locking down AGAIN, piling massive economic and psychosocial damage (which targets the poor!) on top of virus effects?

To try to avoid the hospital systems being overwhelmed with covid patients, pushing out other patients and treatments. I think this is entirely rational and I’m with our politicians and the mainstream media on this one, or at the least the version that I’m hearing, “Lockdowns don’t make the virus go away but they slow the spread so that our hospitals don’t get overwhelmed”.

Yes, it’s only pushing the infections into the future, but I’m hearing reports of vaccine deliveries starting by Christmas. And considering the massive costs of lockdowns as you point out I’m sure some safety corners will be cut to get the vaccine out quicker than normal.

Another answer is that Europe has a older population who are more vulnerable to Covid and so more willing to lock down, although there is also plenty of dissent and pointing to Sweden happening here too. But with the research published last week that natural immunity diminishes within months I would’ve thought the herd immunity strategy would’ve been universally shelved by now.

  • Fri, Oct 30, 2020 - 06:06am

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    davefairtex

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    the ugly truth

phusg-

You are not up to speed on the treatments that are available out there.  I have read dozens and dozens of papers on these treatments.  They work.  Your people – and ours – are not using any of them.  They pretend they don’t exist.

And so instead of using these treatments, they “lock down to prevent hospital overload.”  Which we don’t even know if that’s really happening.

Chris’s latest video, which he calls: “The Ugly Truth”, details this situation.

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

I saw his latest after I made my daily post.  Sometimes I think Chris and I have an invisible connection of some sort.

I mean – I think a lot of this crap in the US is driven by the election.  And vaccine sales.  But that doesn’t explain Europe at all.  It just seems darker.

I mean, they cannot all be this systematically stupid.  Any political team who found and promoted a dramatic reduction in deaths to their own people would be treated as a hero and savior of the nation – they’d get re-elected for years.

So.  Why aren’t they “going there”?

Our story – the overall civilization story that we live in – is not what we have been told.  This isn’t just ordinary corruption.

Here’s one of “your guys” talking about the NHS handing out Vitamin-D to all the vulnerable people.  Gee, wouldn’t that be an awesome idea?

And yet…

http://www.rationaloptimist.com/blog/britains-vitamin-d-deficiency

  • Fri, Oct 30, 2020 - 06:25am

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    davefairtex

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    Sweden update

Did you notice that Sweden’s “case spike” is a small fraction of the one you guys have in the UK?  And – still – nobody is dying in Sweden.

Given they aren’t all hiding in the basement and wearing masks, something else must be helping them out.  DaveDD says it could be an usually strong level of vitamin-D.  I think its probably also some level of herd immunity.

Have you heard about hospitals filling up in Sweden?  I  haven’t.  I looked.

 

 

  • Fri, Oct 30, 2020 - 06:54am

    #5

    JAG

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    The Energy Sector vs Marijuana

The drawdown in the energy sector relative to the S&P has reached 60+%. That is the worst of any sector, ever.

I just dipped my toe into this market, and my call option is up 10%, but I’m not so sure that this is a great contrarian play. The people making money in this economy are not likely to invest in the ‘politically incorrect’ stocks in this sector.

Maybe marijuana is the play. If the dems make it legal on the Federal level that should open up credit for those businesses domestically. Where credit goes, bubbles follow.

What do y’all think?

 

  • Fri, Oct 30, 2020 - 07:07am

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    davefairtex

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    energy

JAG-

I totally believe in the play – and I’ve lost a fair amount – being too early.

My concern with timing right at the moment is the situation in Lockdown Europe.  Pandemic Math says they aren’t going to stop the panic there for another 4-6 weeks.

I think a Biden win would be positive for the sector overall  – he’d ban fracking, and that would reduce US supply on the global market – a positive for crude.  But it would be a negative for the domestic oil drillers and services.

How to slice that is tough.

Trump win would be the reverse; bad for crude overall, but good for the domestic drillers.

My gut says we’re a little bit early.  At the same time – check out the weekly XLE:SPY.  This is probably what you’re seeing.

At some point, this will turn into a money machine.  I just can’t say when.

  • Fri, Oct 30, 2020 - 07:38am

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    Quercus bicolor

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    You tube hiding video

Thanks for that link to Chris’ video from yesterday.

You tube still hasn’t put it on my peak prosperity channel page as of 10:30 AM EDT on Friday.  I checked and I’m still subscribed.  What could it be other than actively suppressing the video and the channel and hoping I get distracted/forget about it?

Update: I last checked at around 11:30 AM EDT and still no video, but now, at 5:50 PM EDT, it has shown up.

  • Fri, Oct 30, 2020 - 08:59am

    #8

    sand_puppy

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    PM Daily Market Commentary – 10/29/2020

Some of the new breakthroughs Chris mentioned in his PeakProsperity 2020 lecture:

Vitamin D3 especially.  Preventative.  Can be given to hospitalized COVID patients to reduce the need for ICU admission and death.

HCQ/zinc/Azith or Doxy–long understood here to offer benefit.

Ivermectin-Can be used As PEP, early treatment and late treatment.  Pretty damn impressive actually.  Newly discovered to be a broad spectrum anti viral medicine.  50+ clinical studies in progress with ivermectin for COVID at this time.  This has emerged as a favorite treatment of Chris’ (and me).  Very non toxic and cheap.  (Available from veterinary sources as your doctor will not prescribe it for COVID.)

High dose Melatonin–20-50 mg / day anti-inflammatory effect. Very helpful in hospitalized patients.

Selenium–less infection risk and less death if Selenium nutritional status if good.

Broad vitamin supplementation–B complex, thiamine, Vita C.

I use a multivitamin MultiThera as it has Selenium, minerals, K2.  Then add zinc picolinate, Vitamin D3 10,000 iu daily.  And I throw in a little NAC and Vita C often times.

HCQ and zinc when traveling and will take continuously while working in medicine.

Ivermectin on hand for big exposure, or actual illness.  (Will take a full dose of 0.2 mg/Kg (18 mg for me) on day 1 and 2 if sick.)

50 to 100 references support this approach.  Many compiled here.

  • Fri, Oct 30, 2020 - 11:49am

    #9
    phusg

    phusg

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    PM Daily Market Commentary – 10/29/2020

You are not up to speed on the treatments that are available out there. I have read dozens and dozens of papers on these treatments. They work. Your people – and ours – are not using any of them. They pretend they don’t exist.

True I’m not up on all the treatments and I’ll definitely give Chris latest a watch. But more importantly it looks like the medical profession is up to speed, as they’ve dropped the case to fatality ratio significantly since the first wave.

And so instead of using these treatments, they “lock down to prevent hospital overload.” Which we don’t even know if that’s really happening.

So AFAIK some or all of these treatments are being used. And from the admittedly n=3 I’m hearing first hand that hospitals busyness this year is primarily correlated to the number of covid cases.

So partial lockdown still seems sensible to me with a vaccine on the quarterly horizon. As far as the new wave of European lockdowns, I think the politicians may well also be counting on central bank bailouts to manage the extra debt. As you pointed out money seems to be flowing from the euro to the dollar and anticipated ECB action could be the cause. Even the monthly of the DXY is now up, so I’m holding my PM shorts for the moment.

Then again, if it’s all about the US election who knows where next week takes us? How long before markets know what the result is?

  • Fri, Oct 30, 2020 - 02:32pm

    #10

    JAG

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    HUGE move in PAAS

DF, just so you know, in the last hour of trading, my Pan American Silver call options took off like I’ve never seen before. I think we might be close to resuming the bull market in PMs (silver especially).

Have a good weekend.

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