Investing in precious metals 101

PM Daily Market Commentary – 4/17/2019

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  • Thu, Apr 18, 2019 - 06:51am

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    davefairtex

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    PM Daily Market Commentary – 4/17/2019

Gold fell -3.14 [-0.25%] to 1278.26 on moderate volume, while silver dropped -0.02 [-0.13%] to 14.94 on very heavy volume. The dollar was unchanged, SPX moved lower [-0.23%] along with crude [-0.95%], while treasury bonds rallied [10Y -2.9 bp]. There were hints of risk off today.

Gold tried a feeble rally in Asia, but it failed, and gold slowly fell into the close. The short black candle was a bearish continuation, and while the forecaster rebounded somewhat, it remained in a downtrend. Gold remains in a downtrend in all 3 timeframes. No sign of a reversal today.

COMEX GC open interest fell -1,241 contracts. That’s a mild positive.

Futures are showing a 1% chance of a rate cut in May, a 35% chance of one rate-cut by December and a 8% chance of 2 rate cuts. Rate cut chances are leveling off.

Silver looked stronger than gold, actually staging several attempts to move higher – but both failed. While the high wave candle was mildly bearish (32% reversal), forecaster moved higher, resulting in a buy signal for silver. This puts silver in an uptrend in both the daily and monthly timeframes, with the weekly quite close to a buy signal too.

COMEX SI open interest fell -4,696 contracts. That’s a big change – 10 days of global production in paper, gone. That’s a positive sign.

The gold/silver ratio fell -0.10 to 85.22. That’s mildly bullish.

Miners sold off briskly for most of the day, but rebounded sharply in the last 30 minutes of trading. GDX fell -0.69% on moderate volume, while GDXJ dropped -0.36% on moderately light volume. XAU fell -0.85%, the long black candle was a bearish continuation, and forecaster fell further, and is now in a strong downtrend. Miners are in a downtrend in both the daily and weekly timeframes. It was another new low, as well as a break down below a previous low; miners appear to be slowly breaking down.  There is no reversal for the miners today.

The GDX:gold ratio fell -0.44%, while the GDXJ:GDX ratio rose +0.33%. That’s neutral.

Platinum rose +0.85%, palladium jumped +3.51%, and copper climbed +0.99%. That’s a great day for the rest of the metals. I’m not sure what caused the jump – it was not any one thing, at least that I could see.

The buck was unchanged at 96.45. The spinning top was a bullish continuation, and forecaster moved higher, but not quite enough for a buy signal. The buck remains in an uptrend in the weekly and monthly timeframes.

There were no large currency moves today.

Crude fell -0.61 [-0.95%] to 63.89. The long black candle was mildly bearish (36% reversal), and forecaster dipped, resulting in a sell signal for crude. The EIA report wasn’t nearly as strong as yesterday’s API report, and that seemed to cause problems (crude: -1.4m, gasoline: -1.2m, distillates: -0.4m). Today’s move took crude below its 9 MA for the first time in a month. Crude is is in an uptrend in the weekly and monthly timeframes.

SPX fell -6.61 [-0.23%] to 2900.45. SPX rallied in the futures markets overnight, but then sold off sharply at the open, and it just moved lower all day long. The long black candle was mildly bearish (30% reversal), and forecaster dipped, but was not enough for a sell signal. Still, the short-term momentum for SPX seems to be declining right now. SPX remains in an uptrend in all 3 timeframes.

Sector map has sickcare falling most (XLV:-2.88%) along with REITs (XLRE:-1.04%), while tech (XLK:+0.56%) and staples (XLP:+0.50%) were in the lead. Basically it looks as though today’s move was driven by a second day of very strong selling in sickcare. Might the US be on a path to fix its horribly rapacious sickcare system? You’ll see the first sign of that in sickcare-company equity prices. I am both skeptical and hopeful at the same time.  Obamacare was written by the cartels, after all.

VIX rose +0.42 to 12.60.

TLT rose +0.04%, basically going nowhere. The spinning top was a bearish continuation, and forecaster rebounded, but it was not enough for a buy signal. TLT remains in a downtrend. TY fell -0.02%, also going nowhere. The doji candle was a bearish continuation, and forecaster bounced, but remains in a strong downtrend. TY remains in a downtrend in both the daily and weekly timeframes. The 10-year treasury yield fell -2.5 bp to 2.57%.

JNK plunged -0.22%; the long black candle (also a multi-candle swing high) was neutral, and forecaster dipped, but remains in an uptrend. Still, there are hints of risk off here. Cousin HYB made a new low, and is in a fairly steep daily-chart downtrend.

CRB fell -0.36%, with 4 of 5 sectors dropping, led by livestock (-0.36%).

Gold and the miners continue to languish – and the miners are now making new lows almost every day, while silver looks as though it might be bottoming out.  SPX would be doing fine, except for the problems in sickcare, however I don’t think this is enough to bring on an SPX correction all by itself.  Bonds aren’t signaling risk off just yet, although JNK may be doing just that.  Its a bit too soon to tell.

While there appears to be ongoing positive news in silver, I’m not sure it will be enough to drag gold and the miners back into an uptrend.  Still, the short-covering today in silver was quite heavy, and that is a positive sign.  Commercials continue to cover, and managed money is not offseting the covering with new shorts.  Managed money might be too far out on a limb this time.  We’ll have to see how it goes.

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