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PM Daily Market Commentary – 12/19/2016

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  • Tue, Dec 20, 2016 - 04:48am



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    PM Daily Market Commentary – 12/19/2016

Gold rose +2.90 to 1139.70 on light volume, while silver fell -0.12 to 16.02 on moderate volume. Gold tried rallying today, but the rally was capped by renewed strength in the buck, which made a new “closing” high today to 103.09 – the Euro also made a new closing low of 103.99.

Gold actually did fairly well, given the strength in the buck; gold priced in Euros managed to close back above its 9 EMA, which is a positive sign. Gold in dollars wasn’t so fortunate; it remains below the 9 EMA, and has yet to print a swing low. Gold’s candle print today was a spinning top candle, which provides no help as to direction. That said, I think the rally today is probably a positive sign, given the strength in the dollar.

Rate rise chances (May 2017) fell to 30%.

Gold open interest at COMEX fell -377 contracts.

Silver was weaker than gold today; it had brief rally at the start of trading in Asia, but then sold off for the remainder of the day. Silver also printed a “spinning top” candle, which isn’t helpful about direction. The gold/silver ratio rose +0.71 to 71.14; the ratio is back into an uptrend, which looks bearish. Silver remains well below its 9 EMA.

The senior more or less chopped sideways, with GDX up +0.29% on moderately light volume, while GDXJ rose +0.27% on heavy volume.  Well, actually GDXJ plunged -4.79%, but it also issued a massive dividend of about 5%, so – depending on which chart you view, juniors either were hammered or they were mostly unchanged.  GDX printed a spinning top, which the candle code cannot determine if it is positive or negative.  I guess this is why stockcharts has the policy it does on dividends.

Platinum fell -1.80%, palladium dropped -2.66%, and copper plunged -2.53%. Both palladium and copper are now having trouble; palladium has now retraced half its “Trump rally.”

USD climbed +0.17 to 103.09, which is a new multi-decade closing high.  This dragged the Euro to new closing lows of 103.99.  It wasn’t just the Euro that dropped; CAD fell -0.47%, and AUD was down -0.82%.  That was probably because of copper’s big plunge.  If the buck breaks out again and the Euro continues to head towards parity, gold probably takes another leg down.

Crude rallied +0.23 to 52.47, mostly going nowhere. Candle print was a “bearish doji star” which is not all that bearish – sub 10% of marking the top. The “actual” price of the front-month contract is 53.06, but my code averages between the two front-month contracts and so near “contract-roll” time my price and the actual market price can diverge. From what I can see, traders continue to buy-the-dip in oil; it remains above its 9 EMA and at least at the moment, appears to be headed towards new highs.

SPX rallied +4.46 to 2262.53. Tech led (XLK:+0.72%) while energy trailed (XLE:-0.46%). Not much happened today in the equity market; candle print was one of those useless spinning tops. VIX fell -0.49 to 11.71.

TLT rallied +1.08%, managing to pop above its 9 EMA after chopping mostly sideways for a week. TA has been suggesting that bonds might be ready to rally for at least a week – downside momentum has really slowed, and all it would take is a couple of reasonably good days to mark a reversal. We might be there right now. This should help gold, at least to some extent.

JNK rallied +0.36%, moving back above its 9 EMA. JNK appears to be slowly heading higher, recovering slowly from the sell-off after last Wednesday’s FOMC announcement.

CRB fell -0.11%, moving largely sideways. CRB remains in a reasonably strong longer-term uptrend.

From the perspective of PM, it wasn’t a very eventful day. TLT might have made a low, while palladium and copper sold off hard. Most everything else just marked time.  Silver weakened a bit today (with the gold/silver ratio shooting higher) but that’s about it.  The buck continues to move higher; if it breaks out further, that will not be helpful for PM.

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  • Wed, Dec 21, 2016 - 02:28am


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    Thank you

Just wanted to say thank you for these updates.  Grateful for your efforts and time putting this out there



  • Wed, Dec 21, 2016 - 03:42am



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What do you think the odds of DB getting a sweet deal on this settlement are? I've read reports that the deal is expected as early as Wednesday. Seems to me if things continue on as they have then DB will pay much less the DOJ chargers were (something like $14 billion…) Just curious what your thoughts are on the topic?

  • Wed, Dec 21, 2016 - 06:56am



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    DB settlement

Well, looking at the DB chart, the market seems optimistic but not excessively so.  I'm sure it won't be 14 billion.  Who knows, maybe $5-7 billion?

We'll only know after the fact if that was a positive surprise or not.

Article below sounds like someone is talking up their book.  I'd probably sell the news.

Deutsche Bank, which used to be a major player in the U.S. mortgage market, is set to pay far less than the $14 billion penalty the U.S. authorities had initially asked for, the source indicated. Deutsche Bank declined to comment.

Deutsche Bank was one of the most high profile European banks involved. It had a 6.4 percent share of the retail mortgage backed securities market, according to rating agency Moody's.

That was slightly less than Goldman Sachs, which reached a settlement earlier this year of roughly $5 billion.

I think the more important thing is the taxpayer-funded bailout of the Italian banking system.  I'm just guessing, but it feels like DB has a lot of exposure to Italy and once again public money in other countries will end up bailing out DB's bad bets.

  • Thu, Dec 22, 2016 - 02:11pm



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    Take the Under on DB:

Three of the top lawyers past and present were revolving door SEC fellas having worked at both…Also enjoying decades long friendships with Mary Jo White (SEC)….  

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