PM Daily Market Commentary – 4/16/2019
Gold dropped -11.26 [-0.87%] to 1281.40 on heavy volume, while silver inched up +0.01 [+0.07%] to 14.96 on heavy volume. The buck was little-changed [+0.09%], as was SPX [+0.05%], while crude jumped higher [+1.16%] and bonds fell [10Y +3.9 bp]. Safe havens gave it up today, for the most part.
Gold moved slowly lower until about 8:25 am, when it fell off a small cliff, plunging about $11 in about an hour, breaking through the 1280 previous low, and generally looking quite bearish. The opening black marubozu was a bearish continuation, and forecaster dropped hard, moving into a strong downtrend. Volume was quite heavy. There was no good news today in gold. Gold remains in a downtrend in all 3 timeframes. Support is roughly down around 1240.
COMEX GC open interest rose 1,211 contracts today. That’s not a great sign. Although commercials are probably covering, it wasn’t enough to overcome the strong selling pressure.
Futures are showing a 1% chance of a rate cut in May, a 33% chance of one rate-cut by December and a 8% chance of 2 rate cuts. Rate cut chances continue to decline. That’s not good for gold either.
Silver fell alongside gold, but it did not make a new low, and the snap-back rally was strong enough to wipe out all of the losses by end of day. The high wave candle was unrated, and forecaster moved higher, but not enough for a buy signal. Silver remains in a downtrend in both the daily and weekly timeframes, and the weekly forecaster is on the edge of a bullish reversal. Given silver stayed even while gold was hammered through support – I think that’s a very positive sign for silver. My guess is, there’s a war between managed money and the commercials going on right now, with managed money loading up short right here at the lows, while commercials are covering like mad. We’ll see if my theory is correct in the COT this coming Friday.
COMEX SI open interest rose +1,732 contracts.
The gold/silver ratio plunged -0.81 to 85.31. That’s very bullish.
Miners gapped down hard at the open, and moved slowly lower during the day. GDX dropped -1.85% on moderately heavy volume, while GDXJ fell -2.07% on heavy volume. XAU fell -1.82%, making a new low. The opening black marubozu was a bearish continuation, and forecaster plunged deeper into a downtrend. Miners remain in a downtrend in both the daily and weekly timeframes. XAU has completely broken its uptrend line, and is now on the edge of a more substantial breakdown. With no reversal candle and a very bearish forecaster, its more likely than not this will happen.
The GDX:gold ratio fell -0.98%, while the GDXJ:GDX ratio dropped -0.23%. That’s bearish.
Platinum fell -0.28%, palladium dropped -0.73%, and copper moved down -0.02%. The other metals looked a bit weak today, with platinum leading the way down.
The buck rose +0.08 [+0.09%] to 96.45. The short white candle was a bearish continuation, and forecaster moved higher, but remained in a downtrend. The buck continues to look as though it has found support at its 50 MA, and it remains in an uptrend in the weekly and monthly timeframes.
The largest currency move today: GBP [-0.32%].
Crude rose +0.74 [+1.16%] to 64.50. While crude dipped briefly at the open in the US, it then reversed and blasted higher, rallying strongly for the rest of the day. A bullish-looking API report released at 4:30 pm was good for 20 cents of today’s gain (crude: -3.1m, gasoline: -3.6m, distillates: +2.3m). The closing white marubozu was neutral, but the forecaster jumped higher, issuing a buy signal for crude. Crude is back in an uptrend in all 3 timeframes.
SPX moved up +1.48 [+0.05%] to 2907.06. SPX is slowly inching higher, but it remains more than 30 points from the previous all time high. Today’s spinning top candle was a bullish continuation, and forecaster inched higher, remaining in a moderate uptrend. SPX remains in an uptrend in all 3 timeframes.
Sector map showed financials at the top (XLF:+1.41%) along with energy (XLE:+0.66%), while REITs (XLRE:-2.36%) and sickcare (-2.05%) doing worst. This was a relatively bullish sector map. Sickcare had a terrible day today – the sell-off was primarily in the insurance companies; apparently Medicare for All would “destabilize the nation’s health system”. This is the same system that spends 20% of GDP – the most expensive system in the world – and doesn’t cover everyone. But it did make the insurance companies and Big Pharma a whole lot of money. And that’s now at risk. Apparently.
VIX fell -0.14 to 12.18.
TLT plunged -0.63%, making a new low today. TLT remains in a downtrend. TY fell also, dropping -0.25%, also making a new low. The confirmed bearish NR7 pattern was definitely bearish, and forecaster dropped deeper into a strong downtrend. The drop was enough to cause the weekly forecaster to issue a sell signal. This puts TY in a downtrend in both the daily and weekly timeframes. The 10-year treasury yield jumped +3.9 to 2.59%.
JNK rose +0.03%, basically unchanged on the day. JNK remains in an uptrend.
CRB fell -0.07%, with 3 of 5 sectors dropping, led by Agriculture (-1.29%).
Silver was the surprise winner today – managing to come back to positive territory while cousin gold smashed through two previous lows and bonds dropped as well. Can silver retain its support if gold continues selling off? I’m not so sure. But today’s bounce does hint that the commercials are in a “short covering” mood in silver, madlly ringing the cash register just below 15.
Miners and gold both look ill, with gold looking the weakest. The breakdown through 1280 was bad news, and the selling could actually accelerate as longs bail out. Who needs exposure to gold when SPX is ready to hit all time highs, bond prices fall, and the prospects of a rate cut diminish by the day? The COT report does not show gold anywhere close to a turning point right now.
Note: If you’re reading this and are not yet a member of Peak Prosperity’s Gold & Silver Group, please consider joining it now. It’s where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the “Join Today” button.