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PM Daily Market Commentary – 2/5/2019

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  • Wed, Feb 06, 2019 - 05:15am

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    davefairtex

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    PM Daily Market Commentary – 2/5/2019

Gold rose +2.91 [+0.22%] to 1320.08 on light volume, while silver fell -0.01 [-0.09%] to 15.86 on moderate volume. The buck rose +0.25%, so did SPX [+0.47%], so did TLT [+0.46%], while crude fell [-1.97%].

Gold chopped higher in a narrow trading range; the short white/NR7 candle was neutral, while forecaster dipped, issuing a tentative sell signal for gold. Gold is now in an uptrend in the weekly and monthly timeframes. Volume continues to decline.  I’m not sure I’d believe today’s sell signal; there doesn’t look to be much selling pressure right now at all.  The fact gold rose on a day when the buck moved higher is a positive sign.

COMEX GC open interest rose +5,998 contracts.

Futures are showing a 1% chance of an increase in March, and a split in December (6% increase, 13% cut).

Silver moved slightly lower, also in a narrow trading range. The short black/NR7 candle was unrated, while forecaster jumped sharply, issuing a buy signal for silver. Forecaster didn’t like yesterday’s long lower shadow, but it liked today’s NR7. Volume for silver is also now declining. Silver is now in an uptrend in all 3 timeframes.

COMEX SI open interest fell -1,786 contracts. That’s a positive sign.

The gold/silver ratio rose +0.29 to 82.92. That’s mildly bearish.

Miners sold off in the morning, but then turned around and rallied in the afternoon, recovering all the losses and then some. GDX rose +0.53% on moderately light volume, while GDXJ climbed +0.95% on light volume. XAU was up +0.65%; the spinning top candle was neutral, and forecaster moved a bit lower but remains in a strong uptrend. XAU is in an uptrend in all 3 timeframes. The miners continue to look good.

The GDX:$GOLD ratio rose +0.31%, while the GDXJ:GDX ratio climbed +0.42%. That’s bullish.

Platinum fell -0.24%, palladium rose +1.35%, while copper climbed +0.63%. Its another new high for copper, which is moving steadily towards the previous high of 2.85. Pallladium looks bullish as well.

The buck climbed +0.24 [+0.25%] to 95.50, following through off yesterday’s swing low. The short white candle was a bullish continuation, while forecaster moved higher into uptrend. The buck remains in an uptrend in the daily and weekly timeframes.

Large currency moves were limited to GBP [-0.77%]. The EUR [-0.21%] moved lower too, but not by nearly as much. BRExit remains the driver for both currencies, at least for the time being. May appears determined to run out the clock, hoping that Uncoditional Surrender will end up being the only “viable” option.

Crude fell -1.09 [-1.97%] to 54.11. Crude rallied briefly in London trading, and then fell for the remainder of the day, closing near the lows. The long black candle was a bearish continuation, and forecaster plunged, issuing a sell signal for crude. Crude is now in an uptrend in just the weekly and monthly timeframes, and the weekly is right on the edge of a sell signal also. Crude looks to be on the verge of a correction; Wednesday’s EIA report could well prove decisive.

SPX rose +12.83 [+0.47%] to 2737.70. That’s another new high for SPX. The short white candle was a bullish continuation, while forecaster dipped slightly but remains in a reasonably strong uptrend. SPX is in an uptrend in all 3 timeframes. SPX ended the day just below its 200 MA. DJIA moved above its 200 MA 3 days ago.  The rally in SPX is slow, but seemingly relentless.

Sector map had communications (XLC:+1.10%) in the lead along with consumer discretionary (XLY:+0.94%), while financials (XLF:-0.27%) and sickcare (XLV:-0.14%) did worst. The sector map is perhaps neutral.

VIX fell -0.16 to 15.57.

TLT rose +0.46%; the long bond is chopping ever so slowly higher. TY rose +0.15%; TY remains in a downtrend in both the daily and weekly timeframes, although it really looks as though TY is just chopping sideways too, unsure of where to go next. The 10-year yield fell -2.2 bp to 2.70%.

JNK rose +0.34%, continuing its slow progress higher; cousin HYB looks a bit more steady, and is in a stronger uptrend. JNK is more or less supporting the risk on move in equities.

CRB fell -0.36%, with 3 of 5 sectors falling, led by energy (-1.01%).

Not much happened today – crude could be correcting, but that EIA report is probably more important than today’s price action. SPX continues its long, slow recovery from the pre-Christmas sell-off. With the VIX down to a 15 handle, it is the least worried the market has been since early October 2018.

Looking at both copper and SPX, it sure seems as though the market is pricing in a US-China trade settlement.  Boy, if we don’t get one, it could be a long way down.  What are the chances?  Non-zero, you just never know with Trump, or the Chinese.  I think we’ll get a settlement in the near future, but the ride might be a bit more bumpy than we currently expect.

While gold and silver are both slowly moving lower, the mining shares – surprisingly – appear to be heading for a breakout. We may not get a correction in the miners after all. This is a bullish signal; the gold/XAU ratio has been heading steadily lower for about 30 months now since the peak in mid-2016, and if it starts to meaningfully recover, the mining shares could do very well.

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