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PM Daily Market Commentary – 3/20/2018

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  • Wed, Mar 21, 2018 - 03:07am

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    davefairtex

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    PM Daily Market Commentary – 3/20/2018

Gold fell -5.80 [-0.44%] to 1310.90 on moderate volume, while silver dropped -0.13 [-0.80%] to 16.18 on moderate volume also. The buck shot higher – up +0.70% – a big rally, unwinding all of yesterday’s drop and then some.  Why the big rally?  No news that I could see.  All I can do – like everyone else – is blame the move on concern about the upcoming FOMC announcement.

Gold roughly followed the Euro lower, making a new low to 1306.60 at around 10:20 am before bouncing back somewhat, although the Euro continued to decline.  Today’s long black candle was a bearish continuation, and gold forecaster dropped -0.06 to -0.15.  Gold remains in a mild downtrend.  However, with gold falling -0.44% and the Euro dropping -0.77%, that means gold in Euros actually rallied today.  That rally was enough for the GC.EUR forecaster to issue a buy signal.  That’s good news, although GC.EUR remains in a downtrend in both the weekly and monthly timeframes.

COMEX GC open interest rose 5,919 contracts today.

Rate rise chances (March 2018) rose to 94%. I think its 100%.

Silver took a similar track as gold but dropped more substantially, making a new low to 16.10 before bouncing back into end of day.  The momentary drop below the previous low is not a positive sign.  Candle print was a long black candle, which was a bearish continuation. Forecaster rose +0.01 to -0.27; silver remains in a downtrend.

COMEX SI open interest rose 4,677 contracts today; that’s 727 tons of paper silver, or more than 10 days of actual silver from mine supply.  That’s a big increase in OI.  Someone is going short; I’m guessing that’s managed money.

The gold/silver ratio rose +0.29 to 81.02. That’s bearish – although in the longer term, it suggests that when the PM trend eventually changes, silver will move much more strongly than gold as the ratio snaps back.

Miners fell today, gapping down at the open, and then more or less trading sideways.  GDX dropped -1.12% on moderately heavy volume, while GDXJ fell -1.10% on moderate volume. XAU moved down only -0.67%, and XAU forecaster fell -0.08 to -0.34. Curiously, the GDX forecaster actually issued a buy signal today; both GDX and GDXJ are looking more bullish than XAU.

Today, the GDXJ:GDX ratio rose slightly, while the GDX:$GOLD ratio fell. That’s slightly negative.

Platinum dropped -0.98%, palladium fell -0.80%, copper plunged -1.28%. The other metals all looked fairly unhappy today; copper made a new low, and all three metals are in downtrends that look substantially worse than gold.

The buck rallied +0.62 [+0.70%] to 89.95, totally erasing yesterday’s drop and making a new high. Forecaster jumped up +0.45 to +0.59, which is a strong uptrend. The buck is now above both the 9 MA and the 50 MA. Not only that, the weekly forecaster issued a buy signal for the buck, assuming current prices hold through Friday. That’s a reasonably big deal, since the buck has been in a weekly downtrend for 10 weeks. Mostly the rally was about the Euro, which lost -0.77% on the day.  On the chart, the buck still needs a conclusive close above 90.29 to really confirm the double bottom.

Crude rallied +1.53 [+2.46%] to 63.74. The API report issued after the close at 4:30 pm looked bullish [crude -2.7m, gasoline -1.1m, distillates -1.7m], and resulted in a $0.30 move. While the API report was bullish, one possible reason for the overall move today was the latest IEA report that projected oil markets are moving into balance mostly because of Venezuela’s production declines. The article I read summarizing the rport is not too long, but has some longer-term relevant detail for PP readers, including a projection of shortage in the 2+ year timeframe because only 4 billion barrels were discovered in 2017, while 36 billion barrels were produced – along with the projection that exploration budgets were going to be similarly constrained this year too.

https://oilprice.com/Energy/Energy-General/The-Single-Largest-Supply-Risk-In-Oil-Markets.html

SPX bounced back slightly, up +4.02 [+0.15%] to 2716.94. Candle print was a bullish harami, which had a 42% chance of being a bullish reversal. Forecaster bounced +0.14 to -0.61, which is still a strong downtrend. It was not much of a bounce considering yesterday’s big plunge, as well as the strong rally in crude. Energy led (+0.85%) while utilities fared worst (XLU:-0.46%).

Facebook (FB) continued moving south today on massive volume, with all the losses happening at the open – it looked as though there was a lot of dip-buying in FB today. The Cambridge Analytica “scandal” (which is really just about weaponized Facebook data used exactly as it was intended to be used) is starting to pick up steam. To me, the “scandal” isn’t about Trump – the question is larger than him.  Do we want our elections decided by AIs that microtarget voters in swing counties? If so, the companies who own and process the data (i.e. Facebook, and whomever Facebook grants access) will end up deciding our elections for us.  I think that’s probably a bad idea.  But I digress.

VIX fell -0.82 to 18.20.

TLT continued moving south, dropping -0.40% on the day. Forecaster dropped -0.72 to -0.35, which is a sell signal for bonds. TY also fell, losing -0.25% and also issuing a sell signal. Bonds are moving to the lower end of their recent trading range. The 10-year yield has moved back up to 2.90%.  Bonds look a bit nervous ahead of FOMC.

JNK rose +0.14%, most likely moving higher because of the big rally in crude. Certainly today wasn’t a risk-on sort of day. JNK remains in a slow-paced downtrend.

CRB rose +0.65%; only 2 of 5 sectors rose, led by energy (+2.03%), which pretty much single-handedly pulled the commodity complex higher.

Today appeared to be mostly about getting positions set prior to the FOMC meeting, with crude the notable exception.  Roughly speaking, that’s bond-bearish, dollar-bullish, and commodity-bearish.  More or less anyway.

FOMC announcement tomorrow at 2:00 pm, with a press conference to follow at 2:30.

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