PM Daily Market Commentary – 11/7/2016
Gold fell -23.20 to 1282 on heavy volume, while silver dropped -0.22 to 18.15 on moderately heavy volume. Both gold and silver gapped down at the open; gold continued selling off for the rest of the day, while silver first dropped, and then rallied back strongly.
The drop in PM appeared to be driven by FBI Director Comey’s re-clearing of Clinton with respect to the alleged mishandling of classified information. As a result, money poured back into US risk assets across the board.
Gold was sold hard today, gapping down below the 50 at the open, and then knifing through the 9 EMA, finally discovering buyers around the 200 MA. Candle print today was a “bear tasuki line”, which the candle code gives as a 34-47% chance of marking the high. We have to hope the 200 MA holds; if Clinton wins the election, however, we might end up making new lows. It will be important to watch how prices respond to the results tomorrow.
The December rate-rise projection rose to 76.30%.
Gold open interest at COMEX rose by +8,377 contracts.
Compared with gold, silver actually did fairly well today; it too sold off fairly strong, but managed to climb back above its 9 EMA, printing a “spinning top” candle on the day which looks suspiciously like a hammer. In spite of the loss, the rebound was reasonably impressive, and on an intraday basis, all the decline happened at the open. Silver more or less traded sideways for the rest of the day, which along with the relatively bullish-looking candle print says to me there are buyers for silver at these price levels.
The miners had a bad day, with GDX dropping -3.95% on moderately heavy volume, while GDXJ lost -4.26% on heavy volume. On the chart, we see that GDX dropped through both its 9 EMA and the 200 MA, finding support on the uptrend line. GDX printed a hammer candle, but not a very bullish one; it was only a 14-22% chance of a low here.
From a multi-month view, GDX is now at a high risk for another leg lower; the attempt to rise above the 50 MA failed, and price has fallen back below the 200. If the uptrend line fails and GDX closes below it in a convincing way, I would expect several days of heavy selling. Since this coincides with the timing of the vote tomorrow, my guess is that the miners will be pounded hard if Clinton wins, probably making another (10-15%?) leg lower.
Platinum rose +0.11%, palladium jumped +5.06%, and copper shot up +2.42%, breaking to a new high of 2.31, last reached back in March, 2016. Most of copper’s gains came during the Asia trading session. Volume was immense, and copper is now officially very overbought (RSI-7 = 92). This is 11 straight days up for copper.
USD staged a very strong rally today, rising +0.77 to 97.79, printing a swing low. The buck gapped up at the open and rose all day long, a result of money pouring back into the US, almost certainly as a result of Trump’s diminished chances of winning the Presidency. Buck printed a two-candle swing low, a 38-48% chance of a low.
Crude finally managed to rally today, rising +0.82 [+1.86%] to 44.89, printing a two candle swing low. Traders appear to view crude as a risk asset, and so we could say that the recent drop in prices was due to the “risk off” posture tied to the US election. The two candle swing low is a 36-61% chance of a low, according to the candle code. We may well have a low for oil.
SPX staged a massive rally, rising +46.34 [+2.22%] to 2131.52, moving convincingly back above its 9 EMA as well as 2120 resistance. Sickcare led (XLV:+2.56%) along with financials (XLF:+2.51%), while materials pulled up the rear (XLB:+1.53%). Equities gapped up at the open, and rallied steadily right into the close, printing a white marubozu/bullish strong line as well as a two-candle swing low; that all boils down to a 55-78% chance of marking a low. VIX cratered, dropping -3.80 [-16.88%] to 18.71.
TLT fell -0.88%, dropping back below the 9 EMA. Bonds continue to be weak, and remain in their downtrend. Money flowing back into the US is ignoring the US treasury.
JNK rocketed higher, up +1.31% and jumping back above both the 9 EMA and the 50 MA. JNK wiped out 5 days of decline in one fell swoop, printing a bullish white marubozu as well as a swing low. That’s a strong risk on move today for JNK.
CRB climbed +0.54%, managing to print a swing low but not by very much. 4 of 5 commodity groups rose, led by industrial metals which did quite well.
The polls-plus forecast at 538 now gives Trump a 28% chance of winning, down 7% from Friday. Paddy power has Trump a 1:4 underdog. Momentum has now swung back to Clinton, and so all the “risk off” trades are being unwound.
At the same time, the polls and the market got BRExit wrong. There will be a huge move in risk assets if Trump ends up winning; SPX will probably crater, along with the dollar, and gold will probably go nuts. What position to take going into Tuesday? I don’t really have an answer. Who will end up counting the votes? I guess it all boils down to that.
Once again, TA isn’t so useful in predicting a news-driven market.
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SPX is currently off -74 [-3.50%], buck off -1.05, – ignore the polls and watch the prices! Gold is up +38 to 1312.
My guess: exit polling is showing that Clinton only got 51% of women in Florida, and between 52-55 percent of women in other states. Reading between the lines, women were expected to break much more heavily for Clinton than they have been doing.
It will be interesting to see if the vote-counting lines up with the exit polls. Where "interesting" is an understatement.
Power of the people…
Am watching the minute-by-minute results. So far, no *called* states have broken from 538.com's predicted map, which this morning had an overall Clinton win at 71.4%:
BUT, it looks like Florida, North Carolina and possibly Virginia could be called soon for Trump, which would all be big upsets.
Trump is also ahead in Michigan right now, which would be another upset and would add materially to his momentum.
Turned out to be an interesting night…
The CNN talking heads just noted, as Dave did earlier, that stock market futures are plummeting and gold futures are rising.
Interesting how our favorite yellow metal is once again proving how it's one of the best real-time indicators of sentiment.
If North Carolina and Virginia go for Trump, Clinton is toast. Michigan = double-toast. These were all states that Silver had as Blue – with Trump needing to win only one of them. I am assuming that if these Blue states go for Trump, the "lighter blue" states will follow right along.
Assuming the votes are counted properly, of course.
SPX is confirming, now down -86 [-3.97%].
CNN just projected Virginia will go to to Clinton after an 11th hour surge. So Nate Silver's map is still unchanged as of now (i.e., no upsets yet).
Trump is still leading in FL, NC, MI, and WI — all of which 538 predicted for Clinton. If he holds those, it's quite likely he'll win.
Dow futures now down -700 points (down 4%), and gold futures up up over 1320/oz
CNN just called North Carolina for Trump.
This is the first state of the night called in contrast with Nate Silver's/538.com's projections.
WI & MI are still leaning well towards Trump, which would be major upsets as well.
Trump also has a 100,000+ vote lead in FL with 95% of the votes counted. That would be his most valuable upset of the night (he can't win without it)
In the pant suit ain't sang yet?
(not sure that metaphor will go over well)
It's too early for either side to put on their victory dance shoes.
As I'm typing this, the margin of Trump's lead in MI just plummeted over 60%.
The night is still young…