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PM Daily Market Commentary – 12/21/2017

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  • Fri, Dec 22, 2017 - 02:01am

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    davefairtex

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    PM Daily Market Commentary – 12/21/2017

Gold rose +0.80 [+0.06%] to 1269.90 on moderate volume, while silver moved down -0.06 [-0.40%] to 16.18 on light volume. The buck hardly moved at all, losing -0.03%, so it was not a factor.

Gold made a new high today to 1272.50, but couldn’t hold the very modest gain, printing a spinning top that was a bullish continuation. Forecaster moved up +0.04 to +0.33; it is still an uptrend. It was another sleeper of a day for gold.  Gold may have run into resistance here at 1270.  Its a logical place for the shorts to re-enter after being squeezed out on the way up.

COMEX GC open interest rose by +3,533 contracts today.

Rate rise chances (March 2018) remains at 56%.

Silver chopped sideways with a lower bias, ending the day relatively near its low. Print was just a neutral-looking spinning top but silver forecaster dropped further into downtrend territory, losing -0.10 to -0.12. Silver continues to underperform, and it appears as though it may be reversing soon. It just doesn’t look as though it is ready to take off yet, in spite of the encouraging COT report.

COMEX SI open interest fell -2,038 contracts today.

The gold/silver ratio rose +0.36 to 78.51. That’s bearish.

The miners continued moving higher, with GDX up +0.58% on moderate volume, while GDXJ climbed +1.07% on moderate volume also. The opening white marubozu candles were both bullish continuations. XAU forecaster fell -0.05 to +0.39, which is still a strong uptrend. XAU’s RSI-7 is currently 81, which is fairly heavily overbought. It is now right up against the 200 MA.

Today, the GDXJ:GDX ratio rose, as did the GDX:$GOLD ratio. That’s bullish.

Platinum fell -0.22%, palladium rallied +1.03%, and copper climbed +0.64%. Copper appears ready to retest its multi-year highs in the near future, palladium is also near its high, while platinum may be about to reverse; its forecaster dropped –0.13 to +0.03, which is just barely an uptrend. If platinum starts dropping again, that won’t be good news for the rest of PM either.  Hmm, first silver, then platinum. 

The buck fell -0.03 [-0.03%] to 92.86, trying to rally today but failing. The short black/NR7 candle was neutral, and the forecaster dropped -0.02 to dead even. Its hard to know where the buck goes next.  Monthly remains bullish, while weekly is bearish.

Crude rose +0.20 [+0.34%] to 58.23, edging higher into that 58 resistance zone. Oil is creeping up on the previous high of 59.05, set back on November 24th. The spinning top candle was a bullish continuation, and the forecaster edged down -0.01 to +0.19, which is a relatively slow uptrend.

Here is an oil article talking about oil discoveries for 2016, which we know all about here: lowest number of barrels discovered since the 1940s. 550M barrels discovered every month – and that’s BOE, not barrels of oil. Reserve replacement rate: 11%. They didn’t utter the words “Peak Oil” in the article, but it was definitely the elephant in the room – and the writer talked all around it. https://oilprice.com/Energy/Energy-General/Oil-Discoveries-At-Lowest-Point-Since-The-1940s.html

SPX rose +5.32 [+0.20%] to 2684.57; it actually was up perhaps 16 points at one point, but the larger rally topped out in the early afternoon and then sold off into the close, resulting in a shooting star candle with a 39% chance of marking a top. That SPX forecaster still looks quite unhappy, off -0.09 to -0.50. The energy sector (XLE:+2.12%) continued screaming higher breaking out to levels not seen since early 2017, while utilities (XLU:-1.19%) plunged again. These are really big moves for both sectors. In 4 days, XLU has dropped almost 5%. Money seems to be flowing from XLU to XLE. That’s nice if you happen to be one of those long-suffering XLE owners.

VIX fell -0.10 to 9.62.

TLT recovered today, rising +0.37%, with the spinning top candle having a 48% chance of being a bullish reversal. TLT is so choppy right now its hard to sort out direction – so we look at TY, which rose +0.04%, trying to rally but failing, resulting in a spinning top/bullish harami which had just a 23% chance of being a bullish reversal. TY forecaster remains in a horribly steep downtrend, falling -0.07 to -0.88. This probably isn’t the low for TY.  Weekly and monthly are both pointing downhill for TY.

JNK rose +0.03%; the spinning top candle print was neutral. Forecaster dipped -0.04 to -0.74, which is a strong downtrend. That aligns with the BAA weekly chart, which has staged a sharp recovery this week; the bounce in BAA is bullish for yield, bearish for price. You don’t want BAA to rise if you own junk debt, and that’s what it is doing right now.

CRB rose +0.35%, with all the sectors rising, led by industrial metals once more (+0.69%). Copper just continues to move higher. Previous high at 3.26, with copper just one percent away at 3.22.

There seems to be a very strong sector rotation out of utilities and into energy. Services are doing particularly well (OIH:+3.12%). It looks as though traders are betting that the oil glut is coming to a close sooner rather than later. Perhaps that news from Total a few days back was the bullish trigger. Once one company starts, the rest won’t want to be left out, because renting equipment right now is a lot cheaper than it used to be. Locking in that long term rig contract at today’s prices could be a very smart move – assuming your timing is right. I think traders are front-running that move.

With all the fun being had in energy, PM seems to be a bit of an afterthought. The miners are still strong, but the move in the metals (silver and platinum especially) may be starting to peter out.

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