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PM Daily Market Commentary – 2/12/2019

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  • Wed, Feb 13, 2019 - 03:49am

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    davefairtex

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    PM Daily Market Commentary – 2/12/2019

Gold rose +2.72 [+0.21%] to 1315.82 on moderate volume while silver fell -0.01 [-0.03%] to 15.69 on extremely heavy volume. The buck plunged -0.37%, SPX shot up +1.29%, crude rose +1.75%, and junky debt rallied +0.51%. For the most part, it was a risk on day.

Market driving news included a US trade delegation arriving in Beijing, including both Mnuchin and Lighthizer, to try and negotiate the outlines of a trade deal.  After market close, Trump indicated that the March 2 tariff deadline may not be a hard deadline after all: “If we’re close to a deal where we think we can make a real deal, I could see myself letting them slide for a little while.”  Both of those were seen by the markets as a risk-on sign.

Gold moved higher in a fairly narrow range today, rallying perhaps $7 but then losing most of that by the end of the day. For the most part gold moved on its own, it did not appear to be tied to currency moves much at all. The spinning top candle was unrated, but forecaster fell somewhat, resulting in a sell signal for gold. Gold probably should have done better given the drop in the buck. Gold is in an uptrend the weekly and monthly timeframes.  Gold’s recent corrections have been barely worth mentioning – they have been quite shallow.

COMEX GC open interest rose +622 contracts.

Futures are showing a 1% chance of a cut in March, and a split in December (4% increase, 10% cut).

Silver mostly followed gold, but its rally failed entirely, dropping into negative territory by the close. The doji candle was a bearish continuation, while forecaster inched higher but remains in a downtrend. Silver remains in a downtrend in both the daily and weekly timeframes.  You can see that silver’s corrections have been fairly steep compared to gold.

COMEX SI open interest rose +3,908 contracts. Perhaps all that new paper – 8 days of global production – was the cause of silver’s underperformance today.

The gold/silver ratio rose +0.17 to 83.44. That’s mildly bearish..

Miners were mostly flat; GDX fel -0.14% on very light volume, while GDXJ rose +0.41% on very light volume also. XAU fell -0.71%, the long black candle was a bearish continuation, while forecaster inched a bit higher but remains in a downtrend. XAU remains in an uptrend in the weekly and monthly timeframes.  Looking at the chart, the miner correction looks fairly shallow – a lot more benign than the one we saw back in early January.  At least so far anyway.

The GDX:$GOLD ratio fell -0.34%, while the GDXJ:GDX ratio climbed +0.54%. That’s neutral.

Platinum rose +0.61%, palladium climbed +1.28%, while coper dropped -0.52%. The drop in copper was a bit surprising given what the rest of the market did, as was the platinum rally. Maybe platinum is at or near a low?

The buck fell -0.36 [-0.37%] to 96.14. The fairly strong move down almost erased yesterday’s rally. The dark clound cover was mildly bearish (32% reversal), while forecaster ticked lower but remains in a strong uptrend. The buck is in an uptrend in both the weekly and monthly timeframes.

The big currency moves today were in all of the items that fell yesterday: EUR +0.45%, GBP +0.26%, and AUD: +0.46%.

Crude rose +0.93 [+1.75%] to 53.93. The bullish engulfing/swing low candle print looked strong (53% reversal), and forecaster issued a buy signal too. The API report at 4:30 pm was bullish (crude: -1m, gasoline: +0.7m, distillates: -2.5m), which was responsible for about 30 cents of today’s move. Crude is now back in an uptrend in all 3 timeframes.  Today’s move looks like a real reversal.

SPX climbed +34.93 [+1.29%] to 2744.73, breaking out to a new high. More than half of the move came in the futures markets overnight. The opening white marubozu was a bullish continuation, and forecaster jumped, resulting in a buy signal for SPX. The rally stopped right at the 200 MA. SPX is now in an uptrend in all 3 timeframes.

Materials led (XLB:+2.24%) along with industrials (XLI:+1.55%), while REITs (XLRE:-0.69%) and utilities (XLU:+0.23%) did worst. This was a fairly bullish sector map – although it was weighted towards a US-China tariff resolution pattern.

VIX fell -0.54 to 15.43, with forecaster issuing a sell signal. TY lost -0.20%, forecaster issuing a sell signal. TY is in an uptrend in the weekly and monthly timeframes. The 10-year yield rose +2.3 bp to 2.68%.

JNK jumped +0.51%, making a new high – looking somewhat like SPX in that regard. JNK remains in an uptrend, as does its cousin, HYB.

CRB rose +0.62%, with 4 of 5 sectors rising, led by energy (+1.51%). Industrial metals continue to plummet, however. That’s a bit of a confusing picture. Normally a China-positive day would involve a metals rally.

I think Trump realizes that he will blow up the US equity market if he hits China with those 25% tariffs, and it appears that he does not want to do that.  The US is just now getting over the effects of the government shutdown, and I suspect he is getting an advance look at economic data that suggests things are not as strong as he would like.

Even with the large rally today in equities, gold and silver hardly sold off at all. Part of that could have been a currency effect, but I also think the metals now have a reasonably strong bid underneath them at the moment, with gold looking stronger than silver on the downside.  Hopefully the COT report this Friday will shed some light as to who has been buying.

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