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PM Daily Market Commentary – 11/26/2018

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  • Tue, Nov 27, 2018 - 11:20am



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    PM Daily Market Commentary – 11/26/2018

Gold fell -0.65 [-0.05%] to 1228.74 on extremely heavy volume, while silver dropped -0.07 [-0.49%] to 14.19 on extremely heavy volume also. SPX rallied strongly (+1.55%) along with crude (+2.46%). The buck rose +0.15%. Currency movements had a reasonably strong effect on gold and silver intraday; the failed rally in the Euro paralleled the failed rallies in both gold and silver, although the size of the actual moves was minor.

Gold tried to rally today – alongside the Euro – but the rally failed. The trading range was narrow; the short black/NR7 candle was unrated, while forecaster edged up +0.04 to +0.12. Gold remains in an uptrend in the daily and weekly timeframes; gold in Euros is in an uptrend in all 3 timeframes.

COMEX GC open interest fell -43,535 contracts. That’s a BRExit-sized move. 135 tons of paper gold, 19 days of global production, just gone. Is it a data artifact? Or does it signify something – like a low? First Notice day for GCZ18 (Dec gold) is Nov 30th.

COT report (one day delayed) showed that commercial net fell -21k, with all of that being new shorts. Managed money net rose by +27k, with 4.8k new longs, and 23k covered shorts. It is hard to see any sort of pattern in the recent COT moves.

Rate rise chances (December 2018) rose to 79%.

Silver didn’t look as good; it too tried to rally, failed, and closed near the lows. The spinning top candle was unrated, while forecaster edged up +0.03 to -0.18. Silver is in a downtrend on the daily, but an uptrend on the weekly and monthly timeframes. In spite of the longer-term uptrends, silver is below both the 9 and 50 MA lines, and appears to be heading for a retest of the recent low at 13.86. It really needs a rescue from the upcoming G-20 meeting.

COMEX SI open interest plunged -7,655 contracts; that’s another large move – about 16 days of global silver production taken off the board.

The gold/silver ratio rose +0.19 to 85.81. That’s slightly bearish. The gold/silver ratio remains at multi-decade highs – that usually happens around a low for PM.

The silver COT report shows the commercial net fell -1.9k, which was 1.7k new longs, but 3.6k new shorts. Managed money net rose +8.1k; that’s 9k shorts covered, and 881 longs sold.

Miners fell again today, with GDX off -0.52% on very light volume, while GDXJ dropped -1.03% on moderately light volume. XAU lost -0.83%, which took XAU below its 9 MA. Forecaster dropped -0.26 to -0.03, which is a tentative sell signal for the miners. That drops XAU into a downtrend in both the daily and weekly timeframes. The miners look better than silver, but not as good as gold; while the miners are below both the 9 and 50 MA lines, the most recent low (set 2 weeks ago) wasn’t a new low, which makes the chart look stronger overall.

The GDX:$GOLD ratio fell -0.46%, and the GDXJ:GDX ratio dropped -0.51%. That’s bearish.

Platinum rose +0.42%, palladium jumped +2.13%, while copper fell -0.27%. Platinum and palladium are trying to reverse, while copper is moving deeper into downtrend.  Copper’s drop probably didn’t help silver.

The buck rose +0.14 [+0.15%] to 96.57. After selling off early, it rallied back, ending the day near the highs. The spinning top was a bullish continuation, and forecaster rose +0.11 to +0.27, which shows a slowly strengthening uptrend for the buck. The buck remains in an uptrend in all 3 timeframes.

Crude moved up +1.24 [+2.46%] to 51.74, a small fraction of last Friday’s -4.24 plunge. The bullish harami was actually a bearish continuation, but forecaster jumped +0.33 to -0.62. That’s still a strong downtrend. So far, no technical signs of a reversal for crude. It remains in a downtrend in all 3 timeframes.

SPX rallied +40.89 [+1.55%] to 2673.45, with almost half of the gains coming in the futures markets overnight. The rally continued during the trading day, and price closed at the highs. The swing low candle print was strong (62% bullish reversal), and forecaster jumped +0.52 to -0.21. Still, the move looked fairly minor on the longer term charts; SPX remains below all 3 moving averages, and in a downtrend in all 3 timeframes.

Sector map shows communications (XLC:+2.28%) and tech (XLK:+2.26%) led, while consumer staples did worst (XLP:+0.13%). This was a bullish sector map.

VIX fell -2.62 to 18.90.

TLT fell -0.23%, printing a swing high (49% reversal). TY fell too, but not that much, losing -0.07%. TY’s bearish harami was neutral, but forecaster dropped -0.23 to -0.01, which is a tentative sell signal for TY. While TY remains above both the 9 and 50 MA lines, it is now in a downtrend in both the daily and monthly timeframes. While just a hint on the daily chart (TY remains above both the 9 and 50 MA lines), if this is the end of our modest rally in bonds, it could support money flows back into equities, and a continued move higher in SPX. The 10-year yield rose +1.8bp to 3.07%.

JNK rallied +0.44%, resulting in a reasonably strong swing low (55% reversal), and forecaster jumped +0.60 to -0.05, which is almost a buy signal for JNK. This lines up with the rally in equities, and the hints at a near-term top in bonds.

CRB moved up +0.39%; only 1 sector moved higher, but it was energy (+2.01%). However, after last Friday’s cratering, today’s move wasn’t all that exciting.

So while gold continues to hang in there, both silver and now the miners have started downhill. Today’s SPX rally was more about a possible low for tech than anything else; the lack of a concerted move in commodities tells us that today’s rally wasn’t about hope for a tariff settlement at the G-20 (or, as its now being called, the G-2). The large drops in gold and silver OI are curious; First Notice Day (Nov 30) is approaching for the Dec 2018 gold contract; perhaps its about that. I don’t pretend to know the inner workings of COMEX, so I’m not sure how typical this is.

Italy is starting to show hints of caving on its budget – Salvini himself is starting to temporize. This helped the Euro, although only briefly. BRExit … I wonder. Is May just pretending incompetence and faking unconditional surrender in order to set the stage for a hard BRExit – all as a negotiating gambit in order to get the EU to actually compromise in the last few months leading up to the deadline, with Parliament playing the part of Accidental Bad Cop?  From a distance, it is impossible to know – much as when viewing that metaphorical duck gliding across the lake: is he riding effortlessly along an unseen current, or paddling furiously beneath the surface?

One bit of evidence for strategy in favor of incompetence: the angry BRExiteer-Tories were unable to muster enough votes to get a no-confidence procedure started.  Perhaps May picked off just enough of them by explaining her strategy to them privately.

Right now, if the current BRExit agreement were put before Parliament, it would be “a crushing defeat for the PM”, as one source puts it. Vote is scheduled for Dec 11th.

Crude’s bounce today has a bit of the dead cat odor to it. At least my candle code wasn’t impressed by the bullish harami print. Still, the more the price falls, the more enthusiasm OPEC will have for reducing production at their upcoming meeting on Dec 6th.

These days: never a dull moment.

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