PM Daily Market Commentary – 11/14/2017
Gold rose +1.90 [+0.15%] to 1280.40 on very heavy volume, while silver fell -0.04 [-0.21%] to 17.02 on moderate volume. There was a lot of movement intraday, as well as some large currency moves; the Euro rallied a big +1.11%, which tells you that gold and silver actually dropped fairly hard when viewed in Euros.
Intraday, gold saw one hard move down, followed later in the day by a hard move back up again. In Asia, just after 3am Eastern, gold was pounded down about $6 in 10 minutes; 20k contracts changed hands during that period. Gold chopped sideways until just after 10 am, when it jumped higher, rising $9 in about 10 minutes, this time with 35k contracts being traded. First the longs were stopped out, then the it was the turn of the shorts. Both moves were not spikes per se – both moves happened over several minutes rather than one massive, high volume one-minute spike. The move at 10 am coincided with a plunge in SPX, but the move at 3am wasn’t connected to anything that I could see.
Candle print for gold today was a high wave, which was neutral. Forecaster rose +0.37 to -0.08, which moves gold back to almost neutral again. Gold ended the day back above its 9 MA. While gold is showing a gentle uptrend on our normal daily chart, the Gold in Euros chart shows gold in a clear downtrend, making new lows. That’s never good to see.
COMEX GC open interest rose by 1,825 contracts.
Rate rise chances (Dec 2017) remains at 97%.
Silver dropped alongside gold just after 3am, losing about 10 cents in 4 minutes. Silver also followed gold higher at 10 am – the move was good for about 20 cents. However unlike gold, silver couldn’t hang onto that gain through end of day. Part of the problem was copper, which fell all day long. Candle print for silver was a high wave, which the code felt was neutral. Forecaster for silver moved up +0.09 to +0.05, which is a buy signal for silver. On the chart, we see silver chopping sideways in a narrowing trading range. Which way will it break? I have no idea.
COMEX SI open interest fell by -543 contracts.
The gold/silver ratio rose +0.27 to 75.23. That’s bearish.
Miners sold off at the open, but spiked higher along with gold and silver at 10 am. GDX ended the day up +0.13%, while GDXJ fell -0.69%, both on moderate volume. GDX’s long white candle print was a bearish continuation, and GDXJ’s southern doji provides only a 25% chance at a reversal. Forecasters: GDX +0.11 to -0.39, GDXJ +0.07 to -0.44. Both miner ETFs remain in downtrends. On the HUI chart, we see it making a new low, and the forecaster also fell to a reading of -0.42.
Today, the GDXJ:GDX ratio fell, while the GDX:$GOLD ratio was flat. That’s somewhat bearish.
Platinum fell -0.69%, palladium dropped -0.36%, copper plunged -2.29%. The big drop in copper completely erased yesterday’s rally and then some, pulling copper back below its 9 MA, making a new low, and throwing it right back into a downtrend. Another (new) technical indicator I’m using rates the sell signal in copper as quite strong. All 3 other metals are in downtrends now.
The buck fell -0.66 [-0.70%] to 93.55, which is a large move. Today, the buck was driven primarily by the Euro, which started moving higher in Asia (just after 1 am Eastern) and didn’t stop until mid-day in New York. The Euro rally was good for a +1.11% gain. Forecaster gets a victory lap; it had a sell signal two days ago after the plunge through the 9 MA, and it thought yesterday’s tepid rally was bearish. It was right. The opening black marubozu was a bearish continuation, and forecaster dropped deeper into downtrend, losing -0.46 to -0.85.
Crude plunged -1.75 [-3.08%] to 55.11. Today’s bearish news included an IEA report (https://www.iea.org/oilmarketreport/omrpublic/) where the IEA demand forecast dropped at the same time they increased their supply projections. In their forecasts, they assume demand will drop 400k bpd for each 10% rise in price, and prices are up 20% over the past few months. Mixed together with a bunch of other factors, the 2017 forecast dropped 50k barrels, and the 2018 demand forecast fell 190k barrels. At the same time, EIA is projecting a 1.4m barrel increase in supply for 2018. The market did not take this well. And then, after market close, the API report surprised the market – but in a bad way: crude inventory rose +6.5m, gasoline +2.4m, while distillates fell -2.5m. That release was good for another 40 cent drop.
On the chart, this resulted in an opening black marubozu candle print (bearish continuation), a close below the 9 MA, and a drop in the forecaster of -0.47 to -0.64. Another forecaster victory lap here; it generated a sell signal yesterday. Next support level is right around 54, and below that, 52/52.50. EIA report comes out tomorrow at 10:30 am.
SPX fell -5.97 to 2578.87. Once again, SPX sold off in the futures markets overnight, and dropped fairly hard after market open. Dip buyers soon appeared and erased the opening plunge, but they were not numerous enough to pull prices back into the green. The takuri line candle print was a bearish continuation rather than a reversal, and SPX forecaster fell -0.32 to -0.33: that’s a downtrend. Utilities did best (XLU:+1.25%) while energy plunged most (XLE:-1.62%). Most sectors fell. The sector map looks bearish.
Mish had an article about GE (https://www.themaven.net/mishtalk/economics/ge-bloodbath-continues-following-largest-dividend-cut-outside-of-financial-crisis-NaGjKKuqlUmGbn7euBDX3Q) cutting its dividend by 50% – a monster cut – while also announcing it would sell $20 billion in assets over the next 2 years. The article included the following tweet, which caught my attention:
A well-diversified global business slashes its dividend with markets at all-time highs, 3% global GDP growth, and record low US unemployment. Just let that sink in.
Indeed. Its a cautionary tale. Usually this stuff happens at market lows, not at the peaks.
VIX rose +0.09 to 11.59.
TLT rallied hard, rising +0.68%, printing a confirmed bullish NR7 candle (45% chance of marking a low) and the forecaster jumped +0.53 to +0.04, which is a buy signal for TLT. The 10 year Treasury has yet to confirm the buy signal, although it too had a decent day. That’s risk off.
JNK fell -0.38%, falling back to the lows set last week. If JNK falls through the current price level, that might trigger another wave of selling. JNK is signaling risk off. Forecaster remains bearish at -0.47, although it is up quite a bit off the lows. Seems like JNK could go either way here.
CRB fell -1.25%, plunging through its 9 MA for the first time in 5 weeks. 4 of 5 sectors fell, with livestock (-2.01%), industrial metals (-2.01%) and energy (-1.82%) being hit relatively hard.
We have a fair number of things signaling risk off right now. It does seem as though SPX cannot follow through on any bearish news, but the same thing is definitely not true about individual equities. GE plunged almost 6% – and it is down almost 50% from its 2016 peak.
Meanwhile, the plunge of gold in Euros has me somewhat concerned. That, plus the ongoing mining share downtrend underscores the sense that “nobody cares” about gold right now.
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So that 4-hour bitcoin forecaster has been pretty good. The current uptrend looks to be slowing somewhat, but it remains in an uptrend at least for now. Now I just need to hook it up to an automated trading bot and watch the money roll in. And pray there aren't any bugs. 🙂
The daily bitcoin chart, while it continues to work just fine, did not signal buy until bitcoin 6600.