PM Daily market Commentary – 12/7/2016
Gold rose +4.10 to 1175.50 on light volume, while silver climbed +0.40 [+2.41%] to 17.18 on moderate volume. Both gold and silver just took off at about 08:45 for no reason I could determine; silver did a lot better than gold.
While the initial rally at 08:45 looked strong, gold appeared to run into resistance at the 9 EMA. Once gold topped out, it could not hang onto its gains – the rally steadily faded away into the close. The candle print was a spinning top – one of the useless ones, I’m afraid. Gold remains in a downtrend in spite of today’s rally.
Rate rise chances are at 95%.
Gold open interest at COMEX fell -1,329 contracts.
Silver broke sharply higher at the same time gold did, but silver’s rally was much larger and traders seemed happy to take silver home overnight. The “long white” candle print looked bullish and probably does not mark a top. I still am somewhat concerned that silver may be repeating its previous pattern – a spike higher, lots of resistance at the 50 MA, followed by a much stronger sell-off. How silver behaves at the 50 will be important. The gold/silver ratio fell a big -1.41 to 68.40. The falling ratio continues to be a bullish sign.
Miners moved slowly higher, with GDX up +1.13% on moderate volume, while GDXJ climbed +1.44% on moderate volume also. GDX is now back above its 9 EMA, and is moving slowly towards the top of its consolidation zone. The miners appear to be following gold at this point – not silver.
Platinum rose +0.76%, palladium fell -0.24% and copper dropped -0.92%. Copper’s momentum has slowed greatly – there is a large bearish divergence in the RSI, the MACD has rolled over, and all it will take is a break below the 9 EMA and copper will correct. Or so I think anyway.
Crude had a bad day, falling -1.07 [-2.10%] to 49.84; I’m not sure what the drop was about – the petroleum status report showed a bullish crude inventory draw of -2.4 million barrels; perhaps the issue was the build in gasoline inventory of 3.4 million barrels. In spite of the drop, crude remains above its 9 EMA, and remains in an uptrend. My guess – and its just a guess – is that the OPEC deal will keep a bid underneath oil, especially as long as we keep getting inventory draws.
SPX broke out sharply to new highs today, rising +29.12 [+1.32%] to 2241.35. Leaders were cyclicals (XLY:+1.94%) and tech (XLK:+1.90%), with sickcare (XLV:-0.86%) trailing. Sickcare’s underperformance is actually fairly striking; I think it has to do with a Trump comment: “I’m going to bring down drug prices.” VIX rose +0.43 to 12.22.
TLT climbed +0.85%, popping above its 9 EMA at long last. MACD has rolled up, RSI has a bullish divergence – its likely we have a low in bonds at this point, although I’m not sure how durable the low will be.
JNK rallied, up +0.63%, and is just a few pennies below its all-time high.
CRB fell -0.87%, following through off yesterday’s swing high. 3 of 5 groups fell, led by energy.
Silver had a very nice pop; gold and the miners were much less enthusiastic. Can silver rise on its own? It sure seems to be doing so, at least for now. SPX is in total risk-on mode, breaking out to new all time highs. And its a real rally – led by industrials and tech. Hope none of you are short.
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