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PM Daily Market Commentary – 2/14/2019

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  • Fri, Feb 15, 2019 - 02:50am

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    davefairtex

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    PM Daily Market Commentary – 2/14/2019

Gold rose +6.49 [+0.50%] to 1317.36 on heavy volume, while silver climbed +0.04 [+0.26%] to 15.59 on extremely heavy volume. The buck fell a little [-0.13%], crude moved a bit higher [+0.93%], as did bonds [+0.57%]; it was a relatively quiet day.

There was one interesting report released today: December retail sales were down -1.2%, and excluding autos, sales were down -1.8% m/m. It was a pretty ugly report. Was it about the government shutdown, which hit in December? Or was it something more?  Its hard to know.  The various markets did react to the report release, which provides us some clues as to how traders may respond in the future to bad news.  If we assume a recession is imminent, we should expect to see more such reports in the near future.

Gold fell in London, briefly hitting new low of 1304.70, but then spiked higher ($8) on the retail sales report at 8:30 am. The long white candle was neutral, but forecaster moved higher, and is right on the edge of a buy signal for gold. Today’s move took gold back above its 9 MA. Gold remains in an uptrend in both the weekly and monthly timeframes, and in all 3 timeframes in Euros. Today’s move in gold after the dismal Retail Sales report tells us that bad news = good news for gold.

COMEX GC open interest rose +448 contracts.

Futures are showing a 1% chance of a cut in March, and a split in December (3% increase, 12% cut).

Silver fell along with gold, making a new low to 15.44, but the retail sales-inspired rally was much smaller – and much briefer – for silver than it was for gold. Silver did finally manage to rally, but it lagged significantly behind gold. The high wave candle was a bearish continuation, but forecaster did move a bit higher, reducing the intensity of the current downtrend. Silver remains in a downtrend in both the daily and weekly timeframes.

COMEX SI open interest fell -1,843 contracts. That’s mildly positive.

The gold/silver ratio rose +0.20 to 84.12. That’s somewhat bearish.

Miners opened down making a new low, but then rallied for most of the day, closing near the highs. GDX climbed +0.51% on moderately light volume, while GDXJ rose +0.37% on moderate volume. XAU moved up +0.62%, the bullish engulfing candle looked positive (41% reversal), but forecaster sank hard, moving deeper into a downtrend. Which one is right? XAU remains in an uptrend in the weekly and monthly timeframes.

The GDX:$GOLD ratio rose +0.51%, and the GDXJ:GDX ratio climbed +0.37%. That’s bullish.

Platinum rose +0.14%, palladium jumped +1.41%, while copper dropped -0.29%. That’s a new all time high for palladium, platinum may have put in a low, and copper continues to search for direction.

The buck fell -0.13 [-0.13%] to 96.44. The buck made a new high but then reversed, ending the day near its lows. The closing black marubozu might be a reversal (36%), and forecaster dropped substantially, but not enough for a sell signal. The buck remains in an uptrend in both the daily and weekly timeframes, but the daily uptrend is slowing somewhat.  Not a reversal, but … the buck’s recent headlong rush higher appears to be slowing down.

There were no major currency moves today.

Crude climbed +0.51 [+0.93%] to 55.13, moving slowly higher towards the previous recent high of 56.10. The spinning top candle was a bullish continuation, and forecaster moved higher into an uptrend, which now looks relatively strong. Crude remains in an uptrend in all 3 timeframes. Crude is slowly recovering from last year’s sell-off, and the current momentum suggests that we may well see a breakout in the near future.

SPX fell -7.30 [-0.27%] to 2745.73. SPX had ralled perhaps 10 points in the futures markets overnight, but then sold off hard following the retail sales report, dropping almost 30 points in the hour before market open. Prices rallied back into the green, but then sold off once more in the last 30 minutes of trading; it was not a positive ending to the day. Still, the high wave candle was a bullish continuation, and while forecaster dipped, it didn’t drop very much; SPX remains in an uptrend in all 3 timeframes.

Financials led the market down today (XLF:-1.22%) along with staples (XLP:-1.12%), while REITs (XLRE:+0.38%) and communications (XLC:+0.37%) did best.  It is never good to see financials leading down.  This was a bearish sector map. 

VIX rose +0.57 to 16.22.

TLT rose +0.57%; bonds moved sharply higher after the retail sales report, but then lost some of the gains intraday. While TLT forecaster remains in a downtrend, the TLT chart looks reasonably good to me, moving higher in a choppy sort of uptrend. TY climbed too, up +0.35%, a strong move. The TY daily chart doesn’t look quite as strong, but TY remains in an uptrend in both the weekly and monthly timeframes – and I suspect those will dominate direction. The 10-year treasury fell -5.1 bp to 2.66%. Bonds remain reasonably well bid regardless of the 7-week equity market rally.

JNK rose +0.03%, more or less going nowhere today. It remains in a shallow uptrend. HYB looks substantially better; it jumped +0.60%, and the HYB uptrend looks a lot more well-defined. In spite of the bad retail sales numbers, junky debt isn’t sending out any danger signals just yet.

CRB was unchanged, but 4 of 5 sectors fell, led by agriculture (-1.46%). Energy (as a group) broke out above its recent trading range today; it is looking quite strong.

So what did that Retail Sales report really mean?  First, here is what the report looked like.  First thing you need to know is that the report is seasonally averaged; it is not as if sales actually fell in December.  Here’s what the 3 lines look like: Retail + Food sales, Retail Sales less Food, and Retail Sales less Autos.  All three dropped, with the last one dropping most.  It was a decent-sized drop, all things considered.

So, impending recession, or government shutdown artifact? Sorry to say, I can’t tell. We may not have clarity on that for two more months.

One thing that is clear is the market’s reaction to bad news.  Equities sold off, bonds and gold rallied, silver was flat – that’s no real change, but it is always nice to see that the current trend remains in place.  Gold continues to be a safe haven, even with all that new paper.  The buck is doing its own thing, driven right now more by EU and BRExit.

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