PM Daily Market Commentary – 10/6/2016
Gold fell -12.80 to 1256.20 on moderately heavy volume, while silver fell -0.44 to 17.34 on moderately heavy volume also. Gold led PM lower, starting down at around 07:45 eastern. Silver followed, and the selling didn’t stop until the afternoon in New York. A strong (+0.58) dollar rally didn’t help, but wasn’t the proximate cause of PM’s drop.
Gold continued lower today, making a new low at 1251.80, bouncing back about five dollars at end of day. The decline stopped at or around the 200 MA/1250 support. Candle print was a “long black” candle, which is not a reversal bar. Gold is now distinctly oversold, with RSI(7) at 13. While the downside velocity does not seem to be slowing down much, such a low RSI tells us that a reversal could happen any day.
If gold breaks below the 1250 level, the next strong support we can expect is in the 1200-1210 area. If that happens, I’d expect the RSI to drop into the mid-single digits.
December rate-rise projection is at 55%, up 3% from yesterday.
Gold open interest at COMEX fell -11,497 contracts.
Silver dropped further than gold, but also managed to bounce back a bit more, with buyers appearing at the 200 MA/17.10 support level. Silver isn’t quite as oversold (RSI(7) at 15), and at this point gold appears to be leading silver lower. If the 17.10 support level fails, the next strong support is down around 16.
Both miner ETFs gapped down at the open and made new lows, with GDX dropping -3.10% on moderately heavy volume, and GDXJ fell -4.32% on heavy volume. After opening lower, miners just traded sideways in a narrow range, printing a “southern doji” on the day. Today GDX closed below its 200 MA, which is another signpost for how far the correction has come: GDX has not been below its 200 MA since early February 2016. What’s more, this is a signal to longer term traders of a larger trend change. It will be harder for the miners to attract buyers because of this.
Platinum fell -1.29%, palladium dropped -1.40%, and copper moved down -0.58%.
The buck staged an impressive rally today, up +0.58 to 96.69, breaking out to a new high to levels not seen since July. The dollar’s breakout has carried it conclusively above all three moving averages, and the buck is now in a definite medium term uptrend. As long as this lasts, it will cause trouble for PM.
The GBP broke support several days ago, and is dropping fairly heavily; down -1.02% just today, and down more than 3% over the past week. The thought is, there will be a “hard BRExit”.and that’s causing the pound a whole lot of grief. Interestingly, the FTSE (UK stock index) has scampered higher since BRExit – it is up about 17%, which is about the same percentage that the pound has lost. Equities have been a safe haven from currency losses. That’s something to remember if the USD ever starts to have problems.
Crude rallied once again today, up seven days in a row, rising +0.61 to 50.44, closing above round number 50 for the first time since June. Pretty clearly the market believes that the OPEC deal has at least some substance to it, along with the four inventory draws that the EIA has reported over the past four weeks. If oil can break above the previous high at 51.67, we could see a short-covering breakout that could be fairly substantial. If traders are convinced “this is it”, oil could really take off. Alternatively, the shale producers could decide to start hedging more dramatically now that prices are above $50/bbl which would act as resistance. My sense is, as long as we keep seeing those inventory draws each Wednesday, crude will probably keep moving higher.
SPX inched up +1.04 to 2160.77, with basic materials (XLB:+0.82%) in the lead, and sickcare (XLV:-0.44) bringing up the rear. Mostly nothing happened. SPX continues to look weak, with the 50 MA acting as resistance. VIX fell -0.15 to 12.84.
TLT fell once more, down -0.56%, marking 5 straight declines for the 20 year treasury. The 30 year is doing even worse.
JNK closed the day unchanged, right at its all time high. That’s gotta be good, right?
CRB fell -0.13%, but remains above all 3 moving averages. CRB is trying to move back into a longer term uptrend, but is not quite there just yet.
Tomorrow we have Nonfarm Payrolls at 08:30 Eastern, which is always good for some excitement. With the rate increase drum starting to beat more loudly in the background, any disappointing result from payrolls would probably cause PM to rally. Of course a positive payrolls result would have the opposite effect.
The climate is set right now for a reversal off the payrolls report. Gold is deeply oversold, and if we get any sort of disappointing payrolls report, the bounce for PM could be substantial. But although the setup is for a near term reversal, the market may not cooperate. I believe a low to be in the offing; hopefully the market cooperates with my belief.
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Pound has crashed 6% in Hong Kong market. Is this the start of DB conflagration?
And there go PMs giving it up. You knew that was going to happen.
Catherine Austin-Fitts decided to vote for Trump, in spite of his obvious negatives. She explains her rationale in the following piece (last section in the link below). She also suggests elsewhere that "slow burn" is much less likely going forward, and instead we're moving into "controlled demolition." (She has been consistently describing "slow burn" as the outcome as everyone else has predicted market crashes; this is the first time I've heard her talk about a major market correction ahead)
Right now gold does not look great. If gold can't bounce off a weak NFP report with RSI in single digits, it means we probably have more downside left. Buck is one tell – it has rallied back after the decline post-NFP. When it bottomed out around 9:30, that's when gold started to tumble.
The one sole positive note are the miners, which seem to be retaining some support in spite of gold's sell-off.
SPX also looks quite weak. Market looks like its about to start sinking for real. Oil may also have topped out here – dark cloud cover is generally unpleasant – if we close here today, of course.
She did a lengthy interview with Greg Hunter this week. Here's the link, if you'd like to hear it:
Interesting interview. I found her analysis mostly compelling however based on her comments regarding our new "energy independence from SA due to fracking 'revolution' and the 'structural changes' implicit in the low and lowering price of oil she appears to be ignorant of the bigger picture around energy EROEI, depletion trajectories etc.
My initial sense was that she has the classical economist bias, seeing energy as an inexhaustible good, whose role in the economy varies simply as a function of price / supply and demand.
However with a bit of digging I found CAF's response from an old Peak Prosperity straight talk forum question where she acknowledges the finite nature of oil, but betrays a lack of understanding of the unique role of oil and an appeal to 'technology fixes everything'. Feels a bit like the big bad oil companies are suppressing carburetors that can run on water to maintain their profits meme.
[quote= Catherine Austin Fitts]
9. What are your thoughts on Peak Oil?
I believe our dependency on fossil fuels reflects a political choice rather than a material necessity. I also believe that much is being done covertly to keep the price of oil much higher than a market price. That said, we have a growing population and finite resources, so I am a subscriber to the “peak everything” theory.
I suspect one reason why new energy technologies have not been introduced is the fear that it would support even faster population growth that would be unsustainable for the environment.
Again, I find much of her analysis compelling and don't disagree with many of her conclusions. However, It is useful to understand world views of the analysts.
My sense is that she tends to over weight the organizational nature the of elite criminality that she is correctly cataloging, crediting a disparate group of special interests as monolithic master planners with a homogenous agenda where OCCAM's razor would argue that it is people in power breaking and exploiting our systems to benefit their own interests much of which overlap.
Net effect is the same though.
So today turned out much better than I had thought. Silver managed to recover relatively well; it is leading gold and the miners. That's always positive. Silver led gold down, and when we have our bounce, it should lead back up again. Silver looks to be printing a bullish harami, which has a better chance of a low than the doji from two days ago.
Silver found support on the 200 MA.
Gold had a long-legged doji on some strong volume. While dojis aren't my favorite candle, if you add in some high volume and a low RSI, that generally turns out better. (I won't know until I update my database tonight what that means in terms of percentages).
Juniors did better than seniors, and silver outperformed gold.
We might – might – have a low.
Dig a bit deeper. Her worldview is a bit more non-mainstream than you think. Specifically, there's a black budget that funds a secret space program (that's run by an alternative energy source) – that's why she's not so worried about peak oil. Whatever the alt.energy running the spacecraft is, it can certainly fix the liquid fuels issue. Perhaps half of the "flying saucers" that are zipping around the earth are built locally; raytheon, boeing, skunk works, nobody is sure.
The gang in charge of this secret space program (a trans-national deep state) have pilfered money from the national budget (that's why US debt outstanding rises even during times of "budget surplus") to run their operations. Armed with higher-than-mainstream tech, they can kill with impunity, and influence emotions using "entrainment technology", among many other abilities.
So yeah. She's not so worried about peak oil. There are bigger fish to fry. And she likes to track them via money flows, because that's her background.
EDIT: this is her worldview, not mine – but since she's been right about the market outcomes, when she says stuff, I listen. I'm agnostic on the secret space program, but I believe there is something going on with those UFOs; its a lot like my feelings about WTC-7. I don't have an explanation, but there is an answer, and the answer isn't the one the mainstream is providing.
is right twice a day
If that is an accurate description of CAF's worldview, than she sounds like she has a pretty big screw loose. She did not come off like that in the one interview I watched.
the notion that there is a transnational deep state that kills with impunity and uses entrainment technology to influence emotions (TV propaganda) sadly rings true even if they are not using Buck Roger's tech to do so