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PM Daily Market Commentary – 11/14/2018

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  • Thu, Nov 15, 2018 - 12:50am

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    davefairtex

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    PM Daily Market Commentary – 11/14/2018

Gold rose +8.74 [+0.72%] to 1216.67 on very heavy volume, while silver moved up +0.14 [+1.04%] to 14.11 on very heavy volume also. The buck plunged -0.51%, a strong drop.

Gold moved sideways for most of the day, then suddenly took off at around 12:45, ending the day with much of its gains intact. Today’s print was a swing low (53% bullish reversal), and forecaster jumped +0.48 to +0.11, which is a buy signal for gold. Gold/Euros also issued a daily buy signal too. Gold remains below all 3 moving averages, and in a downtrend in both the daily and weekly timeframes.

COMEX GC open interest fell -621 contracts. A huge increase for the past two days, and nothing today. Maybe that’s why we saw a rally. Its hard to say.

Rate rise chances (December 2018) fell to 72%.

[GC chart]

Silver fell to a new low of 14.86, but then moved higher roughly in line with the Euro.  Silver’s long white candle could be a reversal (42% – a high rating for a normally boring long/white), and silver forecaster jumped +0.33 to +0.01, which is a tentative buy signal for silver. Silver is back to an uptrend in both the daily and monthly timeframes.

COMEX SI open interest rose +771 contracts. Like gold, silver managed a rally when there was no big increase in OI.

The gold/silver ratio fell -0.29 to 85.62. That’s somewhat bullish. The gold/silver ratio is at multi-decade highs – that usually happens around a low for PM.

[SI chart]

Miners did fairly well, with GDX up +2.23% on heavy volume, while GDXJ climbed +1.80% on very heavy volume. XAU did better than either ETF, climbing +2.73%. The swing low candle print could be a reversal (52%), but forecaster wasn’t convinced, rising +0.52 to -0.30; that’s not a daily buy signal just yet; XAU remains in a downtrend in the daily and weekly timeframes.

The GDX:$GOLD ratio climbed +1.49%, while the GDXJ:GDX ratio dropped -0.42%. That’s bullish, more or less.

[XAU chart]

Platinum fell -0.42%, palladium rose +1.31%, while copper rallied +1.06%. Palladium is back in an uptrend, perhaps getting ready to break out to new highs, while both copper and platinum are trying to rebound.

The buck fell -0.49 [-0.51%] to 96.30; this took forecaster down -0.46 to +0.10; that’s not a sell signal yet, but another drop tomorrow and we will see a sell, probably. The buck came to rest on the 9 MA today; in spite of the drop, the buck remains in an uptrend in all 3 timeframes.

Crude rallied +0.82 [+1.48%] to 56.33, a relatively feeble performance given yesterday’s giant move down. Crude did rally more strongly during the day, but was not able to retain its gains. The bullish harami candle print was actually just a bearish continuation, but forecaster jumped +0.47 to -0.55. Crude remains in a downtrend in all 3 timeframes. The bank holiday on Monday caused the API report to be delayed until today; it looked bearish: crude: +8.8m, gasoline: 188k, distillates: -1.6m. In addition, EIA’s weekly USFP report showed US crude production had risen 400 kbpd to a new all time high of 11.6 mbpd. Also – world oil production is up 2.6 mbpd vs 12 months ago, according to the IEA. OPEC really needs to trim production to put a floor under price.  For now, at least, shale is making the US the #1 oil producer in the world.  https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wcrfpus2&f=w

SPX fell -20.60 [-0.76%] to 2701.58. An attempt at a 3pm rally failed, with SPX closing relatively near the lows of the day.  The long black candle was a bearish continuation, and forecaster moved down -0.02 to -0.60. Today’s plunge pulled SPX out of its interim monthly buy signal; it is now back in a downtrend in all 3 timeframes. SPX appears to be heading for a re-test of the October lows.

Sector map had financials leading lower (XLF:-1.35%) along with tech (XLK:-1.20%). That’s bearish.

VIX rose +1.23 to 21.25.

TLT rose +0.06, a fairly pathetic move given the drop in equities. Long bonds aren’t much of a safe haven right now. TY looked slightly better, up +0.14%. TY remains in an uptrend in both daily and weekly timeframes. The 10-year yield dropped -2.5 bp to 3.12%.

JNK fell -0.23%, making a new low. The fall in JNK is looking fairly steady – new lows every day, fairly sizeable drops – JNK is supporting the risk off theme.

CRB rose +1.91%, erasing yesterday’s drop. All 5 sectors moved higher, led by energy (+2.29%). While oil did bounce back a little, natgas has literally gone crazy. It is up 30% this week, and 17% today alone. That feels like a short squeeze. Is it all about an early winter in New York? I only track it occasionally, so I don’t really know.

The PM performance today was both welcome, and a bit surprising. Why didn’t gold and silver continue to plunge through 1200 and 14 respectively? Perhaps the underlying bid remains too strong for the shorts to overcome. I’d like to think that. Certainly, the fact that both gold and silver managed to avoid dropping yesterday even after a large increase in open interest, might have been a sign that the shorts ran into a brick wall of bidding at or around round number 1200.   It also could have been about the falling dollar.  I’m reluctant to read too much into one day’s action.

The US-China trade talks seem to be back on.  China has to the US a written proposal, but it was apparently just a rehash of previous announcements made by the Chinese leadership – it did not address the core demands of the US, which include technology transfers and IP theft.

There wasn’t any dramatic new news out of the Eurozone about Italy’s refusal to change its budget. The deadline came and went without action by the EC. An interesting factoid: Italy pays more into the EU budget than it receives in payments from the EU, so if the EC did levy a fine, Italy might just refuse to pay anything at all. If that happens, what are they going to do – kick Italy out of the EU?  Salvini: “Don’t throw me into that briar patch, Br’er EC…”

The voters in Italy more or less voted for this budget. They want to stay in the Eurozone, for now, but they also want to retain sovereignty. If asked to choose between sovereignty and Eurozone membership, which would they pick?  Does the EC dare to ask?

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