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PM Daily Market Commentary – 11/15/2016

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  • Wed, Nov 16, 2016 - 01:50am

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    davefairtex

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    PM Daily Market Commentary – 11/15/2016

Gold rose +7.40 to 1228.40 on moderate volume, and silver rose +0.15 to 17.06 on moderately heavy volume. Buyers showed up for both gold and silver today; even a modest dollar rally was not enough to suppress the move higher in PM.

Gold rallied early in Asia, and then traded sideways for the remainder of the day in a relatively narrow range. It looked as though there was a steady bid under the metal; the big drop in open interest might have been the commercials steadily covering, which could have acted to put a floor under price today. On the charts, we see gold printing a “short white” candle, which (surprisingly) the new candle code thinks is bullish. No swing low just yet, although it would not take much for one to form. Volume is just moderate.

I’d say gold did reasonably well given the buck’s rally, and the recent downside momentum.

Rate rise chances have risen 5% to 91%.

Gold open interest at COMEX fell a huge -16,158 contracts. I’m guessing the commercials are continuing to cover.

Silver moved fairly similarly to gold today, rallying early and then more or less trading in a relatively narrow range into the close. Silver’s candle print is a “bullish harami”, which the new candle code actually finds fairly bullish – a 53% chance of a low here. That seems high to me, but what do I know?

The miners staged a strong rally today, with GDX up +4.26% on moderately heavy volume while GDXJ climbed +5.43% on heavy volume. GDX printed a two candle swing low, which new candle code says is an 82% chance of a low. I’m getting the sense new candle code is a bit more enthusiastic than the old version. Still, the pattern looks pretty strong; it appears that the buyers for the miners have resurfaced even though the buck hasn’t stopped moving higher. That’s a good sign.

Platinum rose by +0.73%, palladium rose +1.18%, and copper fell by -0.44%. Copper had another large trading range but ended up not moving very far; it is still trying to figure out if it wants to put in a top or not.

USD climbed +0.13 to 100.19. The buck actually sold off fairly briskly in Asia, but managed to rebound, eventually closing at the highs for the day and setting a new high for this particular uptrend. As I have said, the previous high for the buck is at 100.72, which is not so far away. The Yen continues to sink, down -0.70%. The weaker Yen is probably making the folks at the BOJ happy – although I suspect they are not as pleased with the underlying reason.

Crude rallied sharply, up +2.07 [+4.73%] to 45.87, moving higher (probably) because of rumors about OPEC pre-meeting meetings and an increased sense that they might really mean business this time. The market shrugged off the somewhat bearish API report, which showed an inventory build of 3.3 million barrels. OPEC beats inventories, I guess. Crude printed a swing low today, which new candle code assigns as a 92% chance of marking the low – its most enthusiastic rating. We can also see a bullish divergence in the RSI, as well as a move back above the 200 MA and the 9 EMA. Oil equities rallied too, with XLE:+2.82% on the day, which is a very strong move. Technically, oil looks quite strong. That said – if OPEC doesn’t come through, all of these gains will evaporate instantly, and oil probably moves down into the 30s in a really big hurry.

SPX had a good day, up +16.19 to 2180.39. Mostly that was due to energy (XLE:+2.82%), although utilities (XLU:+1.61%) also managed to finally put in a low – XLU actually printed a bullish-looking swing low. Perhaps the sell-off in yield-equities has run its course for now.   DJIA made a new all time high, as did the small cap index RUT.  VIX fell -1.11 to 13.37.

TLT managed to rally today, up +0.46%, which was not enough to print a swing low.  I don’t get the sense buyers are appearing in bonds – probably it is some shorts ringing the cash register after the recent sharp drop.  Contrast this with the swing low in utilities, which looked much more like a genuine reversal pattern.

JNK staged a big rally, up +1.33% and vaulting back above its 9 EMA. In contrast to TLT, JNK is surging back quite strongly. I think JNK likes the oil rally.

CRB rallied +1.57% and printed a swing low, driven almost entirely by the move higher in energy.

Good news for PM today; even with the dollar rally, it looks as though the selling pressure has abated in PM. That could be because the commercials are ringing the cash register on their short positions, which is helping to support the price. The past two days has seen more than 30,000 contracts vanish, which is a very large move. The miners look quite strong also, which is a positive sign.

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