PM Daily Market Commentary – 10/31/2017
Gold fell -5.50 [-0.43%] to 1271.80 on moderate volume, while silver dropped -0.14 [-0.83%] to 16.71 on moderately light volume. The buck hardly moved at all – it was not a factor in today’s PM move.
Today’s drop in gold resulted in a weak-looking bearish engulfing candle pattern, which the candle code thinks is actually a bullish continuation. Forecaster fell -0.15 to -0.07. That’s a sell signal. Gold appears to be chopping sideways at this point – during such times, the forecaster ends up issuing a series of whipsaw recommendations which, if you trade them, will leave you unhappy with the results. Now is probably the time to watch from the sidelines.
COMEX GC open interest rose by 4,324 contracts. That’s 13 tons of new paper gold.
Rate rise chances (Dec 2017) moved up to 98%.
Silver also printed a bearish engulfing, which the code felt was neutral. Since silver hasn’t executed a reversal candle pattern, we can call that a bearish continuation. Forecaster dropped -0.20 to -0.15. Like gold, silver appears to be chopping sideways. Time to watch until a trend develops.
COMEX SI open interest rose by 2,321 contracts. That’s 360 tons of new paper silver.
The gold/silver ratio rose +0.31 to 76.09. That’s bearish.
Miners fell, with GDX down -1.23% on moderate volume, while GDXJ dropped -1.48% on moderate volume also. Prints for both miner ETFs were opening black marubozus, which the code felt were neutral. While both ETFs ended up unwinding all of yesterday’s rally, the candle code does not feel price will necessarily continue moving lower. Forecasters: GDX +0.17 to +0.08 (buy), GDXJ -0.09 to +0.01. Not sure what’s up with that GDX buy signal; the swing low is still valid, at least for now, but today’s move down wasn’t so bullish. Today I’m going to give you a HUI chart again, because I think its more representative: HUI forecaster had a sell signal today.
Today, the GDXJ:GDX ratio fell, as did the GDX:$GOLD. That’s bearish.
Platinum fell -0.03%, palladium rose +1.84%, copper rose +0.08%. Platinum is now mostly moving sideways, palladium broke out of its pennant formation and moved into an uptrend, while copper remains in its short term downtrend after making a lower low back on Friday.
The buck fell -0.03 [-0.03%] to 94.34, printing a spinning top/NR7; no new low means no rating from the candle code. Forecaster fell -0.19 to -0.06, which is a sell signal for the buck. Buck may correct here for a time. Spain doesn’t look as though its going to dissolve into civil war this week, which probably helps the EUR/USD.
Crude rose +0.52 [+0.96%] to 54.64, which is a new multi-year closing high. Crude is engaged in a slow breakout through the 54 resistance zone. API report after market close showed a decent-sized crude draw (-5.1m), a large gasoline draw (-7.7m), and a distillates draw (-3.1m). The report was good for a 30 cent move in oil, and a momentary spike to a new high of 54.85. OPEC reported that total production fell by 80kbpd this month – problems with the Kurds in Iraq, Venezuela output dropped due to their chaotic financial situation, and Saudi Arabia continues to maintain its output cuts. So far, all the surprises are positive in oil. Crude’s RSI7 is at 79, which is overbought. Still, if crude breaks through the 54 resistance area with any sort of force, the short-covering might be quite dramatic. Here’s CL monthly, which gives you the long term perspective. “Right at the edge of something big.” EIA report tomorrow. If it confirms the API report…things could get exciting.
SPX rose +2.43 to 2575.26. While SPX remains above all 3 moving averages, it is now moving sideways. Upside momentum has died out. Today’s sector map shows consumer staples (XLP:+0.84%) leading, with industrials bringing up the rear (XLI:-0.40%). That’s a bearish configuration.
VIX fell -0.32 to 10.18.
TLT rose +0.03%, more or less taking a rest after yesterday’s big rally. The short black candle might be a reversal (32%) and the forecaster dropped -0.39 to +0.29; its still an uptrend, at least for now.
JNK rose +0.05%, moving back up to its 9 MA. JNK’s forecaster rose +0.50 to +0.35, which is a buy signal for JNK. I’m going to rate JNK as neutral right now.
CRB rose +0.01%, which is basically no change. 3 of 5 sectors rose, led by livestock once more (+2.44%). There is something up with livestock – up 16% over the past 2 months. Livestock is starting to go vertical. “Pork bellies!”
Today’s moves unwound yesterday’s PM reversal signals almost completely. Except for GDX, the metals now appear to be – best case – chopping sideways, but they probably have resumed their downtrends.
FOMC is meeting today and tomorrow, and I’m sure they’ll have something exciting for all of us to read at 2pm.on Wednesday. They are not expected to act this meeting, and since the balance sheet normalization is now baked into the cake (its like watching paint dry – lets see what happens when the number jumps in 2018 and the ECB starts to taper) I’m not sure what they might say that’s of interest. No press conference this time.
Catalonia hasn’t exploded into civil war, and that’s probably helping the Euro to some extent. Whoever organized the “Spain unity” march did a good job – it seemed to help calm things down.
The release of the details of tax reform has been pushed back; it was due to be released tomorrow, but now that’s not going to happen. Apparently tax reform is hard. That’s dollar negative.
The name of the new Fed chair will be announced sometime this week. If Trump is like every other politician, it will be a dove. Stock market rallies don’t like hawks.
Nonfarm payrolls is on Friday.
There are lots of balls in the air right now.
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Wonder what the magnitude of it will be? Silver is up $0.50 or roughly 3%, which is surprising. The equity markets have virtually filled the gaps from earlier, so they are free to take off, probably around 2:45.
I was wrong about the action today, apparently. PMs hung in there, and equities rebounded some, but ended off the highs. Miners, however, SMH. I guess nobody likes them anymore. They just go all up and then leak out the rest of the day. That happens a lot.
So Dave any new BTC charts?
Yeah the miners were not happy today. Silver on the other hand was hot. Tough to know which one to believe. I prefer it when all my indicators are pointing in the same direction.