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PM Daily Market Commentary – 2/11/2019

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  • Tue, Feb 12, 2019 - 05:10am

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    davefairtex

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    PM Daily Market Commentary – 2/11/2019

Gold fell -6.22 [-0.47%] to 1313.10 on moderate volume, while silver droped -0.13 [-0.82%] to 15.70 on very heavy volume. The buck rose +0.42%, a fairly large move, while the rest of the metals group plunged, and SPX was basically unchanged. Yet bonds fell too, with TLT off -0.39%.

There was no major news item I saw driving prices today.

Gold plunged in Asia and London, making its low just after the US market opened, then bouncing back somewhat by end of day. The candle print was a bearish engulfing (43% reversal), but forecaster remains in a slight uptrend, at least for now. Gold remains in an uptrend in all 3 timeframes.

COMEX GC open interest fell -2,928 contracts. That’s a mildly positive sign.

Futures are showing a 1% chance of a cut in March, and a split in December (2% increase, 11% cut).

Silver fell for most of the day, finally ending relatively near its lows. The long black candle was unrated, while dipped slightly, and forecaster remains in a downtrend. Today’s drop was enough to trigger a sell signal on the weekly, assuming we close here on Friday. This puts silver in a downtrend in both the daily and weekly timeframes..

COMEX SI open interest rose 2,308 contracts.

The gold/silver ratio rose +0.29 to 83.27. That’s bearish.

Miners fell along with the metals today; they gapped down at the open, tried to rally, but the rally failed. GDX dropped -1.16% on moderately light volume, while GDXJ fell -1.52% on moderate volume. XAU fell -1.24%, the spinning top candle was a bearish continuation, and forecaster dropped relatively hard, resulting in a sell signal for XAU. The drop took XAU through the 9 MA. XAU remains in an uptrend in the weekly and monthly timeframes.

The GDX:$GOLD ratio fell -0.70%, while the GDXJ:GDX ratio dropped -0.36%. That’s bearish.

Platinum plunged -1.78%, palladium dropped -1.23%, while copper fell -0.91%. The other metals looked very weak today, led by platinum which plunged hard through 800, making a new low. Palladium is still quite near its all time high, while copper has started to reverse lower. This all looks like bad news from China to me.

The buck rose +0.42 [+0.44%] to 96.50. The buck broke out to a new high for this cycle, and is nearing the previous high at 97. Today’s long white candle was a bullish continuation, and forecaster jumped higher – the uptrend is now a very strong one. The buck is in an uptrend in both the daily and weekly timeframes, and the monthly is right on the edge of a buy signal.  The buck has moved higher for 7 of the last 8 days.  That’s a strong move.

The big currency moves today were: EUR [-0.64%], GBP [-0.64%], JPY [-0.63%], and AUD [-0.52%]. That’s almost everything in the DX index. European economic activity looks bad, BRExit makes things look worse, and the US-China tariff issues results in capital flight from emerging markets.

Crude fell -0.18 [-0.34%] to 53.00. Crude sold off relatively hard prior to the open in New York, making a new low to 51.23, then rallied back to almost even. The takrui line candle was not a reversal, however, but forecaster did recover somewhat – although it remains in a downtrend. The move was enough to cause the weekly to issue a buy signal, assuming we close here at end of week. This puts crude in an uptrend in both the weekly and monthly timeframes.

SPX rose +1.92 [+0.07%] to 2709.80. Basically SPX went nowhere in a very narrow trading range. The short black candle was unrated, while forecaster inched higher but remained in a downtrend. SPX remains in an uptrend in both the weekly and monthly timeframes.

Sector map has industrials leading (XLI:+0.53%) along with energy (XLE:+0.48%), while communications (XLC:-1.03%) and sickcare (XLV:-0.12%) did worst. It looks like a somewhat bullish sector map.

VIX rose +0.25 15.97

TLT fell -0.39%, printing a swing high (40% reversal), but forecaster remains in an uptrend. TY dropped -0.13%; it also printed a swing high (48% reversal), and forecaster fell on TY, but it remains in an uptrend. TY is in an uptrend in all 3 timeframes.The 10-year yield rose +2.9 bp to 2.66%.

JNK rose +0.03%; it was basically unchanged, just like SPX. JNK remains in a slight uptrend. HYB looks pretty similar, although it is slightly more bullish.

CRB plunged -0.52%, with 4 of 5 sectors falling, led by industrial metals (-0.84%). The metals really looked weak today – and the sell-off in the metals is starting to accelerate. Looking at the chart, it looks as though the market is starting to believe those 25% tariffs might really be imposed at the end of the month.

The buck is the big winner recently – the move if anything is starting to accelerate.  It is up around 2% over the past few weeks, which is a big move for a large currency like the buck. Looking at the cause, weakness in the Euro and the GBP is the main culprit, but the AUD is also selling off hard.

This is making life slightly hard on gold, at least measured in USD. Gold/Euros is still in an uptrend, however; it remains above its 9 MA, and that tells us that gold’s minor correction is just a currency effect.

I’m not seeing anything that runs against the basic buy-gold-buy-bonds story, even with a 2% rally in the dollar.  Normally that would cause gold a fair amount of heartburn…that should tell you something about the current environment.

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