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PM Daily Market Commentary – 4/24/2018

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  • Tue, Apr 24, 2018 - 10:22pm

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    davefairtex

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    PM Daily Market Commentary – 4/24/2018

Gold rose +5.60 [+0.42%] to 1332.20 on moderate volume, and silver rallied +0.11 [+0.57%] on very heavy volume. The buck retreated, losing -0.20%. The real action today was in equities, which sold off fairly hard, with SPX losing -1.34%.

Gold recovered about half of yesterday’s loss, moving slowly higher alongside the Euro. Forecaster climbed +0.37 to -0.16, which is still a downtrend for gold. I’m not sure this is the end of gold’s move lower.

COMEX GC open interest fell 2,175 contracts.

Rate rise chances (June 2018) fell to 91%.

Silver mostly sold off for the first half of the day, making a low at about 8:45 am, after which buyers pulled price back up fairly substantially. The bullish harami print was just neutral, and silver’s forecaster moved up +0.28 to -0.43, which is still a fairly strong downtrend. Given the massive sell-off yesterday, today’s rally was fairly minimal.

COMEX SI open interest fell by 11,918 contracts today. That’s a huge change; 1853 tons of paper silver vanished – thats 7.4% of annual global silver production. It looks as though the commercials are ringing the cash register again today in a big way.

The gold/silver ratio fell -0.12 to 79.77. That’s mildly bullish.

Miners more or less moved sideways; GDX rallied +1.29% on moderate volume, while GDXJ rose +1.16% on moderately light volume. XAU didn’t do as well, moving up only +0.04%, and XAU forecaster continued dropping, losing -0.23 to -0.60. Weekly and monthly XAU forecasters remain in an uptrend. XAU remains below the 9 and 200 MA lines.

The GDXJ:GDX ratio fell, but the GDX:$GOLD ratio rose. That’s neutral.

Platinum rose +1.07%, palladium fell -0.68%, while copper climbed +0.90%. Palladium remains in a downtrend, while platinum is trying to mark a low (although the bullish engulfing is only a 36% reversal chance), and copper forecaster issued a buy signal today. Copper is back in an uptrend in both weekly and monthly timeframes.

Crude plunged -1.20 [-1.74%] to 67.72. There wasn’t any crude-specific news that pulled prices lower, it just seemed to fall along with equities starting after about 10:30 am and finally bottoming out around 2:15 pm. After market close, price fell slightly as the API looked bullish to me [crude:+1.06m, gasoline:-2.7m, distillates:-1.9m], but market edged perhaps 10 cents lower on the news.  Crude printed a bearish engulfing (46% bearish reversal), and crude forecaster plunged -0.40 to -0.20, which is a sell signal for crude.

SPX plunged -35.73 [-1.34%] to 2634.56. While SPX rallied overnight in the futures markets, it topped out around 8 am, and then just sold off for the rest of the day, recovering somewhat by the close. Print today was a strong line, which was a bearish continuation. Forecaster dropped -0.68 to -0.70, a very large drop. Industrials led (XLI:-2.79%), along with materials (XLB:-2.70%), while utilities did best (XLU:+0.68%). That’s a fairly bearish sector map. The driver in the market today appears to have been CAT, which reported record earnings and revenues that beat estimates, but then mentioned this would probably be the high watermark for the year, whereupon price collapsed; CAT ended the day down -6.2%.

VIX rose +1.68 to 18.02.

TLT fell -0.46% – even with the sell-off in equities, TLT just couldn’t seem to rally. Forecaster jumped +0.45 to -0.20; I’m guessing forecaster is expecting TLT to catch a bid based on falling equity prices. I’m not so sure that’s going to happen. TY fell -0.11%, making a new low and confirming the drop in TLT. TY forecaster also rose, up +0.24 to -0.57, but TY remains in a downtrend in all 3 timeframes. The 10-year briefly hit 3%, but ended the day at 2.98%.

JNK fell -0.17%, a relatively mild move given the drop in both crude and equities today. JNK’s downtrend just keeps getting worse, as the forecaster fell -0.24 to -1.42, a strong downtrend. JNK is continuing to say risk off.

CRB fell -0.32%, with 3 of 5 sectors dropping, led by energy (-0.98%). CRB has dropped back down to support at 200.

The equity market is starting to feel more bearish to me.  CAT is used as a forward-looking indicator, and for them to say “we see lower earnings going forward” seemed to cast a chill on prices.  The market also appears ready and willing to sell off.

While the 10-year has yet to close above 3%, it is inching ever closer every day. It closed today at 2.98%, which is a stone’s throw away.  That probably contributes to the equity market bearishness.

What then for the metals?  If the buck avoids breaking out, they will probably recover.  However my concern is that the buck was just taking a break today, and we may well see higher prices soon.  We’ll have to see how it goes.

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