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PM Daily Market Commentary – 10/8/2018

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  • Mon, Oct 08, 2018 - 10:06pm



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    PM Daily Market Commentary – 10/8/2018

Gold plunged -15.34 [-1.27%] on heavy volume, while silver dropped -0.29 [-1.94%] to 14.39 on very heavy volume. The buck rose +0.13%, but it was not the proximate cause of today’s heavy selling in PM. The metals came under selling pressure just after 8 am; there was no economic report, related-item price movement, or other “reasonable” explanation for the pounding the metals took at 8 am. That suggests it was either some sort of official intervention, or – perhaps – Turkey’s banks are back selling gold; 8 am EST = 3 pm in Instanbul. Regardless, we will only know the truth long after the fact, if at all.

Gold started falling early in Asia, dropping $7 a few hours after the open, but the big move happened right at 8 am, where gold dropped $10 over the course of an hour. The opening black marubozu was neutral, while the gold forecaster plunged -0.40 to -0.28, which is a sell signal for gold. The move took gold back below both the 9 and 50 MA lines, which is a bearish sign. Gold is in a downtrend in all 3 timeframes. However, while today’s move did cause trouble with GC.EUR daily, it was not enough to trigger a sell signal; GC.EUR remains in an uptrend in all 3 timeframes. The candle print for GC.EUR was a bearish engulfing, but it only had a 33% chance of marking the top.

COMEX GC open interest rose 3,625 contracts. If there was official intervention, it appears to have been mostly offset by short-covering.

Rate rise chances (December 2018) rose to 81%.

Silver took a first leg down in Asia, and a second plunge at 8 am right along with gold, bottoming out at 14.28 before rebounding. Silver’s opening black marubozu was neutral, while silver forecaster plunged -0.44 to -0.40, which is a sell signal for silver. Today’s move took silver below both the 9 and 50 MA lines. Silver is now in a downtrend in all 3 timeframes.

COMEX SI open interest rose +1,264 contracts.

The gold/silver ratio rose +0.53 to 82.75. That’s bearish, and the current level for the ratio suggests PM could be at or near a long term low.

Miners did surprisingly well, with GDX up +0.32% on heavy volume, while GDXJ climbed +0.91% on moderately light volume. After gapping down in the morning, and falling for maybe an hour, the buyers appeared, bidding the miner prices all the way back up to even. The rally was quite strong; traders were very clearly buying the dip. XAU moved up +0.67%, and the piercing candle print had a 51% chance of being a bullish reversal. Today’s move pulled XAU back above the 9 MA, and caused the forecaster to jump +0.43 to +0.11, which is a buy signal for the miners. Miners are in an uptrend in both the daily and monthly timeframes. Today’s move in the miners was both surprising, and as I interpret it, bullish for the metals.

The GDX:$GOLD ratio rose +1.61%, and the GDXJ:GDX ratio rose +0.58%. That’s quite bullish.

Platinum fell -0.34%%, palladium climbed +0.48%, while copper moved up +0.16%. Platinum fell along with gold, but the subsequent rebound wiped out most of the loss.

The buck moved slowly higher in Asia and London, topping out at around 9 am, after which it fell into the close. Today’s candle looked a bit like a failed rally; the spinning top was neutral, and forecaster dipped -0.09 to +0.35. That’s still an uptrend. The buck remains in an uptrend in botht eh daily and monthly timeframes. The Euro continues to be under pressure, losing -0.32% and making a new low. CNY also fell, losing -0.90%.

Crude dropped -0.12 [-0.16%] to 74.04. Crude actually sold off fairly briskly, down more than a buck, but came back strongly, printing a neutral-looking takuri line candle. Forecaster jumped +0.08 to -0.03; we are moving quite close to a bullish reversal for crude on the daily. Crude remains in an uptrend in both weekly and monthly timeframes.

SPX fell -1.14 [-0.04%] to 2884.43. SPX experienced a strong sell-off in late-morning, making a new low to 2866, but then came back strongly in the afternoon moving back to almost-flat by the close. The hammer candle had a 48% chance of being a bullish reversal. Forecaster remains in a moderately strong downtrend on the daily, the weekly will issue a sell signal if we close here at end of week, while the monthly remains in an uptrend. SPX is growing progressively weaker. Sector map shows staples leading (XLP:+1.38%) along with REITs (+1.29%), while tech led lower (XLK:-1.13%). This was a bearish-looking sector map.

VIX rose +0.87 to 15.69.

TLT fell -0.34%, falling once more today; TLT has fallen 6 out of 7 days. TY was unchanged, printing a doji candle, which was neutral. Forecaster jumped +0.26 to -0.55; that’s still a steep downtrend, but TY might be starting to put in a near-term low at these levels. TY remains in a downtrend in all 3 timeframes. The 10-year yield rose +0.8 bp to 3.23%.

JNK fell -0.23%, making yet another new low. The drop today was less-worse than on Friday, but the long black candle was a bearish continuation, and forecaster remains in a deep downtrend.

CRB rose +0.36%, with just 1 sector moving higher – agriculture (+0.16%). It sure looks like the closing times for CRB and the commodity sectors are different, because this outcome makes no sense.]

So the metals got pounded.  But viewed on an intraday basis, once the metals bottomed out, the miners put in a low, and then started to rally, staging a 2.7% trough-to-peak rally which pulled them back into positive territory by end of day.  Just look at the 3 charts; the metals candles look fairly bearish, while the miner candle looks like a strong rally.  Does that make sense?  Not if the metals are headed lower, it doesn’t.

And based on that, I don’t think the metals are headed lower.  Gold/Euros remains in an uptrend in all 3 timeframes, and I’m going with that.

It also appears as though the bond sell-off may be approaching a near-term reversal.  At some point, traders will want to ring the cash register on their profitable short trades, and that will put in a low for bonds, at least for now.  Its hard to know for sure, but we might be nearing that point.

The SPX sell-off – mild  as it has been – may also be at an end.  We’ll have to see if today’s hammer is confirmed by a rally tomorrow.  SPX seemed to find support on its 50 MA.  Once again, the US equity market did quite well compared to the rest of the world.

The only fly in the ointment is JNK.  There still seems to be a fair amount of selling pressure there.  That’s something to watch.

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