PM Daily Market Commentary – 3/7/2017
Gold plunged -9.60 to 1215.90 on moderate volume, while silver fell -0.29 to 17.52 on moderately light volume. No buyers again today for PM.
Gold moved sideways in Asia, started to decline more heavily in London, finally hitting bottom late in the afternoon in the US. Gold bounced ever so slightly into the close. Candle print was a long black candle, which the code thinks is a bit more bearish than bullish. The volume was relatively light, which continues to suggest that the selling wasn’t all that intense. Upcoming support points include the 50 MA at 1208, round number 1200, and a previous low at 1182. No reversal bar yet.
Open interest at COMEX for GC fell -4,500 contracts.
Rate rise chances (March 2017) fell to 84%.
Silver started falling slowly right at the open in Asia, and fell off a cliff (or perhaps it was pushed) at 08:05 in the US. Silver never recovered, closing at the dead lows of the day, printing a “black marubozu” candle which the code says is bearish. Black marubozu candles very seldom mark lows. Sometimes I think about buying in the last 30 minutes after a decent-sized drop, but if prices are unable to rally into the close, I stay far away. The gold/silver ratio rose +0.59 to 69.42, which is bearish.
Miners gapped down at the open, tried to rally but mostly failed; GDX fell -0.60% on moderate volume, while GDXJ rose +0.87% on moderately heavy volume. Candle print for GDX was a spinning top/NR7, which the candle code found equal parts bullish and bearish. The GDX:Gold ratio improved slightly – but only slightly. No reversal bar yet here either.
Platinum fell -1.83%, palladium dropped -0.08%, and copper lost -1.52%. It was another bad day for the metals. Copper is now below its 50 MA, and appears to be starting to break down. Platinum is also starting to look seriously ill; today’s sell-off was very high volume.
The buck rose +0.16 to 101.69, printing a spinning top candle which the code thinks is somewhat bullish. Its hard to know where the buck is going next, but with the rate-rise already baked into the cake, its not clear just how much upside potential the buck has right now. I’m getting the sense that the Euroskeptic forces in the Netherlands are not likely to actually take control over the government. Even if PVV gets the most votes, the other parties have promised not to form a coalition with them. So maybe – Eurozone electoral disaster in the Netherlands will be avoided, and will therefore await how Le Pen fares in France.
Crude fell -0.36 to 52.94; crude rallied strongly during the London session, topping out at 53.80 just before the New York open. Oil then spent the rest of the day dropping, capping it all off with a plunge at 16:30 due to a very disappointing API report, which showed a massive build of 11.6 million barrels. After the bad news hit, crude dropped by about 35 cents in just a few minutes. Candle was a spinning top, which the candle code felt was somewhat bearish. It really looked like a shooting star though. EIA report tomorrow.
SPX fell once more, dropping -6.92 to 2368.39. SPX traded in a range today, ending the day by dropping off a small cliff in the last 30 minutes. Candle print was a spinning top, which candle code felt was neutral. SPX has now dropped 3 days out of 4, and is now below its 9 EMA. Energy led the market lower (XLE:-0.89%) while tech did best (XLK:+0.0%). Healthcare also did poorly (XLV:-0.70%) due to a series of Trump Tweets which talked about drug prices being too high. It feels to me like momentum may have shifted in equities. VIX rose +0.21 to 11.45.
TLT fell -0.30%, making a new low and falling gently through the bottom of its recent trading range. TLT still has a ways to go before making a new low for the longer cycle, but right now treasury bonds are suffering from a lack of buyers.
JNK plunged -0.60%, dropping JNK below its 50 MA. JNK is now starting to look more seriously ill, and is now sending a very definite risk-off signal.
CRB fell -0.74%, making a new low and printing an ugly-looking closing black marubozu. 4 of 5 groups fell, led by agriculture. CRB’s new low took it below the 200 MA for the first time since November.
As you can see from glancing at the overall picture, lots of things are dropping right now, not just gold and silver. Crude, treasury bonds, platinum, copper, overall commodities, SPX, JNK, and … what else? I think that’s most everything I track. The dollar is rising slowly. Risk-off is starting to become more apparent.
The miners did manage to avoid selling off hard today, but the recent pattern has been an alternating one of one day down hard, and the next day about even, rinse, repeat. Perhaps the juniors are the “tell”; if we can string together two up-days, that might just be the first sign of an approaching low for the metals.
And who knows. Maybe it will happen tomorrow. But its probably unwise to buy in advance.
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Do you use Bullish Sentiment? Whats your take on using it as a indicator?
Sprott is looking to buy CEF gold on the cheap. With CEF currently trading at a 9% discount to NAV, he's proposing a takeover – as far as I understand it. I only noticed this because I saw my CEF jump 3.2% this morning when gold itself was off almost 1%. Go CEF!
Now CEF is up +3.36%. I'd certainly vote for the measure, if I were asked.
The device that keeps the Sprott funds trading at a very low discount to NAV during "bad times for gold" is the ability to take delivery of physical gold. CEF does not have such an option, but when I can get gold at a 9% discount, its hard for me to resist.