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PM Daily Market Commentary – 3/20/2019

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  • Thu, Mar 21, 2019 - 06:59am

    #1

    davefairtex

    Status Diamond Member (Offline)

    Joined: Sep 03 2008

    Posts: 3084

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    PM Daily Market Commentary – 3/20/2019

Gold rose +6.48 [+0.49%] to 1318.02 on extremely heavy volume, while silver climbed +0.11 [+0.68%] to 15.48 on moderately heavy volume. The buck was smashed [-0.66%], bonds surged [+1.05%], while equities moved lower [-0.29%]. All the activity occurred following the FOMC meeting announcement and press conference.

So what happened? Well, the Fed left rates unchanged, but it announced that it would end its QT program in September, and it would reduce the program starting in May. This will leave the Fed with a 3.5 trillion dollar balance sheet. I believe it was this announcement that caused all the price movement today.

Gold jumped higher at 2 pm, making a new high today. The long white candle was a bullish continuation, and forecaster moved slightly lower but remains in an uptrend. Gold remains in an uptrend in all 3 timeframes.

COMEX GC open interest rose +3,179 contracts today.

Futures are showing a 4% chance of a rate cut in May, and a 42% chance of a rate-cut by December. That’s a very bearish change from yesterday.

Silver also jumped higher at 2pm; the long white candle was mildly bearish (33% reversal), but forecaster moved higher into a reasonably strong uptrend. Today’s rally caused silver to unwind its monthly sell signal; that puts silver in an uptrend in all 3 timeframes.

COMEX SI open interest rose +1,500 contracts.

The gold/silver ratio fell -0.19 to 84.98. That’s mildly bullish.

Miners shot higher at 2 pm also; GDX jumped +2.26% on heavy volume, while GDXJ climbed +2.67% on very heavy volume. XAU climbed +1.88%; the confirmed bullish NR7 candle print was definitely bullish (45% reversal), and forecaster screamed higher, resulting in a buy signal for the mining shares. The move also unwound the weekly sell signal; this puts XAU in an uptrend in all 3 timeframes.

The GDX:$GOLD ratio rose +1.76%, and the GDXJ:GDX ratio climbed +0.40%. That’s bullish.

Platinum rallied up +1.20%, palladium climbed +0.44%, while copper rose +0.27%. It was another strong day for the other metals; platinum looked especially strong.

The buck plunged -0.63 [-0.66%] to 95.16. As with everything else, the bulk of the move happened at 2 pm. The buck made a dramatic new low today, but the closing black marubozu was actually bullish (41% reversal), and forecaster ticked slightly higher but remains in a strong downtrend. The move took the buck down below its 200 MA, and it also broke below the previous low, which is a long term bearish sign. The buck remains in a downtrend in both the daily and weekly timeframes,

Large currency moves included: EUR [+0.53%], GBP [-0.55%], JPY [+0.63%].

Crude rose +0.68 [+1.14%] to 60.16, closing above round number 60 for the first time since October 2018. While crude did rally a bit at 2 pm along with most everything else, most of today’s gains happened following the EIA report, which was quite bullish (crude: -9.6m gasoline: -4.6m, distillates: -4.1m). The long white candle was a bullish continuation, and crude forecaster moved higher, resulting in a buy signal for crude. That puts crude back into an uptrend in all 3 timeframes.

SPX fell -8.34 [-0.29%] to 2824.23. SPX also rallied at 2pm, but shortly after Powell’s press conference ended, SPX started selling off, and the selling didn’t stop until market close. The long black candle was a bearish continuation, and forecaster dipped, but remained in an uptrend. SPX remains in an uptrend in all 3 timeframes.

Financials led lower (XLF:-2.06%) along with sickcare (XLV:-0.69%), while communications did best (XLC:+0.90%). It was a mostly-bearish sector map.

VIX rose +0.22 to 14.13.

TLT screamed higher, up +1.05%, breaking out to a new high. Forecaster moved higher into its uptrend. TY also did quite well, up +0.55%. It too also broke out to new highs, the opening white marubozu was a bullish continuation, and forecaster jumped higher into its uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield plunged -7.9 bp to 2.54%. The last time we were here was back in January, 2018.

JNK also rallied strongly up +0.34%, breaking out to new highs. Why did JNK rally and not SPX? I don’t know. JNK remains in an uptrend.

CRB rose +0.20%; only 2 of 5 sectors rose, led by livestock (+1.75%).

So now we know.  The great balance sheet unwind is close to being finished.  The buck was trounced; a recession seems in the cards – the market totally ignored the Fed “dot plot” that suggested we might get a rate increase next year, and promptly increased its projection for at least one, if not more than one rate cut by end of 2019.

While gold rallied, it didn’t do as well as it should have.  My feeling anyway.  It didn’t even rally as strongly as the buck fell.  Miners did very well, but gold itself looked a bit sluggish.  Bonds were where the real action was – a breakout to new highs.

While the metals remain in an uptrend, it does not look like the aftermath of this FOMC meeting will be lighting a fire underneath gold and silver.  Interest in gold appears to have faded, for whatever reason.  That’s just what I’m seeing right now.

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  • Fri, Mar 22, 2019 - 05:11am

    #2

    Michael_Rudmin

    Status Gold Member (Offline)

    Joined: Jun 25 2014

    Posts: 828

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    Thanks for the technical analysis, Dave

Here’s the level of my own skill.

I enjoy xkcd.

https://xkcd.com/2101/

  • Fri, Mar 22, 2019 - 06:11am   (Reply to #2)

    #3

    davefairtex

    Status Diamond Member (Offline)

    Joined: Sep 03 2008

    Posts: 3084

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    TA

TA is all about people and emotions.

Support is people wanting to buy the dip – FOMO.  That’s also an uptrend.

Support break is people getting scared that – maybe things are getting worse, and they better sell now.

Its really all about fear & greed patterns.

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