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PM Daily Market Commentary – 11/21/2018

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  • Fri, Nov 23, 2018 - 08:53am

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    davefairtex

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    PM Daily Market Commentary – 11/21/2018

Gold rose +4.65 [+0.38%] to 1232.21 on heavy volume, while silver climbed +0.20 [+1.36%] to 14.49 on very heavy volume. The buck dropped -0.13%; it wasn’t much of a factor today.

Gold made a new high; the long white candle was a bullish continuation, while forecaster dropped -0.20 down to +0.06, which is just barely an uptrend. Today’s move pulled both the weekly and monthly forecasters into an uptrend, which means that gold is now in an uptrend in all 3 timeframes.

COMEX GC open interest fell -4,145 contracts.

Rate rise chances (December 2018) rose to 76%.

Silver rallied much harder than gold, making a new high and erasing Tuesday’s loss; the long white candle was neutral, and forecaster ticked up +0.01 to -0.02. Silver also managed to close (just barely) above its 50 MA. Silver is in an uptrend in the monthly timeframe, and is right on the edge of a buy in both the daily and weekly timeframes.

COMEX SI open interest plunged -6,906 contracts; that’s a pretty big move – about 15 days of global silver production.

The gold/silver ratio plunged -0.85 to 84.40. That’s strongly bullish. The gold/silver ratio remains at multi-decade highs – that usually happens around a low for PM.

Miners moved sharply higher, with GDX up +2.64% on heavy volume, while GDXJ climbed +2.74% on extremely heavy volume. XAU jumped +3.11%, making a new high; the confirmed spinning top was quite bullish, and forecaster jumped +0.85 to +0.81, which is a buy signal for XAU. Today’s move was enough to pull XAU back above its 50 MA, and XAU is now in an uptrend in all 3 timeframes.

The GDX:$GOLD ratio jumped +2.26%, and the GDXJ:GDX ratio rose +0.10%. That’s bullish.

Platinum rose +0.49%, palladium climbed +0.56%, while copper moved up +1.02%. While all 3 other metals rallied, none of the moves today made up for the declines from the day before.

The buck moved down -0.13 [-0.13%] to 96.21, a small pullback after yesterday’s strong rally. The short black candle was unrated, while forecaster moved up +0.13 to -0.13. The buck remains in a downtrend in both the daily and monthly timeframes. Really, not much happened in currencies today.

Crude managed a decent rally today, moving up +1.31 [+2.45%] to 54.78. This doesn’t make up for Tuesday’s cratering, but the bullish harami pattern (39% reversal) was actually quite strong for its type; most harami patterns are useless. Forecaster rose +0.25 to -0.43, which is an improvement, but not a reversal. Crude remains in a downtrend in all 3 timeframes. The EIA report was negative (crude: , gasoline: , distillates: ) which ended up being fairly neutral. Once again, if market fails to sell off on bad news, that’s a positive sign. That said, oil probably drops into the 40s if OPEC’s upcoming meeting doesn’t come away with some strong action. Trump appears to be walking a fine line with MBS; “let the Senate do the heavy lifting”, seems to be his position. In response, Saudi Arabia does seem to be a bit more lethargic than normal about jawboning prices higher. It just feels to me that Trump is using his leverage over MBS via restraining a US contribution to the murder investigation to keep oil prices low.

SPX rose +8.04 [+0.30%] to 2649.93. All of the gains came in the futures markets overnight, with the intraday action looking a whole lot like a failed rally. The spinning top candle was bearish, and forecaster ticked down -0.02 to -0.61. SPX remains in a downtrend in all 3 timeframes.

Energy did best (XLE:+1.57%) along with comm services (XLC:+1.19%), while utilities trailed (XLU:-1.48%). The sector map was actually bullish.

VIX fell -1.68 to 20.80.

TLT fell -0.03%, more or less unchanged. TLT sold off during the day probably due to the equity rally, but bounced back as the rally failed. The hammer candle was unrated, however, and forecaster dropped -0.21 to +0.41; TLT remains in an uptrend. TY was also little changed, up +0.01%, printing a neutral doji candle. Forecaster fell -0.09 to +0.33; TY is in an uptrend in both daily and weekly timeframes, but the monthly buy signal is now gone. The 10-year yield rose +1.3 to 3.06%.

JNK rallied +0.44%, rallying strongly for the first time in 8 days; while JNK did print a swing low (54% bullish), it also printed a shooting star candle (43% bearish), so its hard to know where things go next.

CRB moved up +0.66%, with all 5 sectors moving higher, led by energy (+1.18%). Livestock is the best looking short-term chart for the group, followed by PM. Energy looks worst.

Silver staged a surprisingly strong rally, outperforming the rest of the group. The large drop in OI might have had something to do with that; 15 days of “paper” global production vanished from the market. Miners also did quite well. Is this portending yet another end-of-year rally for PM? It might be. Certainly, the tech darlings have been hit hard; we could be at Peak Iphone, we are well past Peak Facebook (“it makes you depressed” is not good PR for any firm, no matter how well it converts dopamine-addicted users into ad views), and money is probably looking for the new sector to rotate into.

SPX is hovering about 40 points above the 2601 low. Will it collapse further, or will it recover? We are a bit too soon for the Santa Claus rally (which is, itself, just a front-running of the annual-pension-contribution-driven January Effect). It might all depend on the oil market. Along with tech, energy equities have had the crap kicked out of them recently (17% in 6 weeks for the big guys, and 40% for oil services), and if oil can be coaxed into putting in a low by the OPEC meeting, big money is probably ready to rotate back into energy. Certainly XLE is doing a lot better than $WTIC.

I’m not sure which scenario plays out – but they do feel a bit mutually exclusive.

G-20 meeting coming up next week.

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