PM Daily Market Commentary – 11/27/2018
Gold fell -7.94 [-0.65%] to 1220.80 on extremely heavy volume, while silver dropped -0.08 [-0.56%] to 14.24 on extremely heavy volume also. The buck jumped +0.31%, which definitely affected metals prices today; the Euro moved lower, and that seemed to drag prices of most of the metals group down.
Gold fell fairly hard today; the long black candle was a bearish continuation, and gold forecaster dropped -0.34 to -0.22, which is a sell signal for gold. Gold/weekly will also issue a sell signal if we close here by end of week. Gold also fell below the 9 MA, coming to rest right at the 50 MA. Gold in Euros still looks reasonable (it is still above all 3 moving averages), but gold in USD is now in a downtrend in all 3 timeframes.
COMEX GC open interest fell -8,245 contracts. All of the large changes in open interest may be related to the upcoming first notice date of the Dec 2018 gold contract.
Rate rise chances (December 2018) remains at 79%.
While silver had a volume-weighted contract roll (adding 15c to price at market close) intraday silver had a bad day, dropping -0.14. With calendar weighting, we can call the move -0.08. The long black candle was a bearish continuation, and silver’s calendar-weighted forecaster fell -0.08 to -0.30. Silve remains in a downtrend on the daily, but an uptrend on the weekly and monthly timeframes. The contract roll will confuse the charts for a few days.
COMEX SI open interest plunged -906 contracts.
The gold/silver ratio fell -0.08 to 85.73. That’s slightly bullish. The gold/silver ratio remains at multi-decade highs – that usually happens around a low for PM.
Miners fell, with GDX dropping -2.02% on heavy volume, while GDXJ fell -1.93% on moderate volume. XAU lost -1.83%; the opening black marubozu was a bearish continuation, and forecaster plunged -0.67 to -0.67. XAU is in a downtrend in both daily and weekly timeframes, and appears to be headed for a retest of its recent lows.
The GDX:$GOLD ratio fell -1.39%, and the GDXJ:GDX ratio rose +0.10%. That’s bearish.
Platinum fell -1.22%, palladium rose +0.28%, while copper fell -0.82%. Platinum appears to have decided on downtrend for its direction right along with copper, while palladium is hanging on quite close to its recent all time high.
The buck rose +0.30 [+0.31%] to 96.87. The long white candle was a bullish continuation, and DX forecaster rose +0.64 to +0.85. That’s a very strong uptrend; the buck appears to be headed for a retest of the recent high at 97.18. The buck remains in an uptrend in all 3 timeframes.
The move in the buck was all about the Euro (-0.47%) and the Pound (-0.64%). Hours after Salvini hinted that flexibility in the budget was possible, the Italian government walked that bank – they have returned to the “no changes” position. The May BRExit follies continue; May is off to Scotland to try and sell it, while at least one former official suggests the plan is “doomed.” A key thorny issue: Northern Ireland doesn’t want a hard border with Ireland, but that’s very difficult to arrange if Northern Ireland remains within the UK, and Ireland remains within the EU, and BRExit occurs.
Crude rose +0.57 [+1.10%] to 52.31. This marks the second positive day for oil – only mildly positive, to be sure. The spinning top candle was neutral, while CL forecaster jumped +0.61 to -0.02. That’s almost enough for a reversal. Still, oil has teased us this way, with forecaster reversing four different times during this downtrend. Armstrong calls these relatively feeble 2-3 day rallies “reaction rallies” which often occur during sustained downtrends – meaning, we have to see more than 3 days of a move before we can be more certain it is a legitimate reversal. After market close, API report was mildly bearish (crude: +3.6m, gasoline: -2.6m, distillates: +1.2m), which was good for a 30 cent rally at end of day. Perhaps it wasn’t as bad as traders had feared. EIA report tomorrow. Crude remains in a downtrend in all 3 timeframes.
SPX rose +8.75 [+0.33%] to 2682.20. Given the much larger moves last week, this was a pretty feeble rally. The long white candle was neutral, while forecaster moved up +0.05 to -0.16. SPX remains below all 3 moving averages, and in a downtrend in all 3 timeframes.
Sector map has staples (XLP:+0.89%) and utilities (XLU:+0.75%) leading, with materials (XLB:-1.22%) doing worst. This was a somewhat bearish sector map.
VIX rose +0.12 to 19.02.
TLT rose +0.11%; TY actually fell, dropping -0.04%, however TY forecaster actually moved up +0.15 to +0.14, which is a buy signal for TY. TY remains above both the 9 and 50 MA lines, and is now in an uptrend on both the daily and weekly timeframes. It feels as though bonds are searching for shorter-term direction, although longer term, the direction remains down. The 10-year yield fell -1.7 bp to 3.05%.
JNK was unchanged today; it isn’t giving us any clues as to direction right now. JNK has not broken conclusively higher, but it is above its lows to some degree.
CRB fell -0.21%; all 5 sectors dropped, led by industrial metals (-1.23%). Overall, commodities are providing a fairly bearish economic message right now. I have a recession predictor based partially on commodity prices, and it is showing an uptick in recession chances. We really need that G-20 rescue from Trump and Xi.
Gold tipped over and sank today, joining silver and the miners in the downhill move. The contract roll will rescue price to some degree over the next several days. First Notice Day for the big Dec contract is almost upon us, and I think this is causing some of the trouble. In order to dissuade longs from standing for delivery, the shorts sometimes pound prices immediately prior to First Notice Day in order to encourage the longs to bail out, in order to limit the amount of metal that the shorts might need to provide. Once the need for these delivery-reduction shenanigans are past, my guess is that gold will recover its losses. That’s just a guess though.
SPX had no follow-through from yesterday’s big rally. That’s not a great sign if you are betting on the rebound. The strong dollar move was mostly about falling Euro & Pound: driven by resurgent Italian budget worries, and the (my guess) growing likelihood of rejection of May’s EU-friendly BRExit deal by the UK Parliament.
Crude’s possibly-dead-cat bounce has extended to a second day. OPEC meeting isn’t until Dec 6th, however, so there might be time for one more dip – into the 40s – prior to the meeting where, presumably, OPEC will cut production in an attempt to prevent a replay of 2014. Or maybe this is the low. Its hard to say.
Coming up: FOMC minutes from the most recent meeting at 2pm.
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