PM Daily Market Commentary – 4/3/2018

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  • Thu, Apr 05, 2018 - 11:51am



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    PM Daily Market Commentary – 4/3/2018

Gold dropped -8.90 [-0.66%] to 1336.50 on moderately heavy volume, and silver fell -0.20 [-1.18%] to 16.39 on very heavy volume. The buck did tick higher [+0.16%] but the move was not large enough to account for the selling pressure in PM.

Gold tried rallying several times in Asia and London, failing for the last time at about 8:20 am, and after that gold dropped fairly briskly into the open in New York. Candle print for gold was a bearish harami (38% bearish reversal), which the forecaster felt was neutral – no change at +0.40 – and so gold remains in an uptrend.

COMEX GC open interest fell -7,274 contracts.

Rate rise chances (June 2018) fell to 79%.

Silver also printed a bearish harami, which only had a 35% chance of being a bearish reversal. Silver’s forecaster dropped -0.07 to +0.21; silver remains in an uptrend. The recent set of high volume down-day bars is bearish, as it suggests the selling pressure is higher than the buying.

COMEX SI open interest rose by 4,653 contracts today. That’s 10 days of mine production in paper silver – and is probably managed money loading up short.

The gold/silver ratio rose +0.42 to 81.52. That’s bearish.

Miners fell, with GDX down -1.44%on moderate volume, while GDXJ dropped -1.48% on moderate volume also. GDX printed a bearish tasuki line (42% reversal), while GDXJ just printed a (neutral) short black candle. XAU forecaster actually rose, up +0.06 to +0.33, which is still an uptrend. Looking at the daily charts, miners seem to be slowly recovering; even after today’s dip, XAU remains above its 9 MA. Pulling back to weekly and monthly timeframes, I notice mild uptrends in both weekly and monthly timeframes – with this month’s forecaster issuing a buy signal – which assumes we close the month out at today’s prices.

Today, the GDXJ:GDX ratio fell slightly, and the GDX:$GOLD ratio fell a bit harder. That’s bearish.

Platinum dropped -1.03%, palladium was off -0.34%, while copper rallied +0.71%. Copper appears to be continuing its recovery, while both palladium and platinum look quite bearish. Gold is doing a lot better than platinum: the gold/platinum ratio is at 1.44, which is a 35-year high, and is only surpassed by a 1-day spike high to 1.46 back in 1982. If platinum continues to plunge like this, we should see a new all time high in the ratio in the next few days. Unless there’s a million-ton platinum asteroid being secretly towed back to earth…I’m not sure why this metal is performing so poorly. Maybe it is that gold is doing (relatively) well.

The buck moved up +0.14 [+0.16%], printing a (neutral) spinning top. Forecaster didn’t like it, dropping -0.34 to +0.04, which is just barely an uptrend. The buck continues to more or less move sideways – there are occasional strong days in both directions, but which way will it finally jump? When we pull back to the weekly & monthly timeframes, we see a mild uptrend on the weekly, and a mild buy signal for April – assuming we close here at end of month. So let’s say the bias is up.

Crude rebounded from yesterday’s big hit, up +0.72 [+1.15%] to 63.56. The bullish harami was just neutral, but the forecaster jumped +0.41 to -0.17. There was a somewhat bullish-looking API report after market close [crude -5.3m, gasoline +1.1m, distillates +2.2m], but it just caused some volatility rather than moving price in a particular direction. The weekly US Field Production/Crude report shows an increase of +150k bpd vs last month, to 10.433 mbpd, a new all time high. Crude’s weekly forecaster remains in a downtrend. News articles I read blame crude’s relative recent weakness on concerns over a trade war. Could be.

SPX climbed +32.57 [+1.26%] to 2614.45. There has been a whole lot of back and forth over the last 7 trading days – large days down, then large days up again. Weekly & monthly both show SPX in a downtrend, so that’s the current bias right now. Sector map shows energy did best (XLE:+2.13%) while utilities trailed (XLU:+0.34%) with tech (XLK:+0.99%) second-lowest. This wasn’t a particularly bullish map today; much of today’s rally was about oil equities. Really, not everything is in a bubble; oil equities (and especially services) are closer to the lows than the highs.

VIX fell -2.52 to 21.10. The VIX has just been chopping sideways for the past few weeks also; it is not sure where things go next.

TLT fell -0.77%, following through off yesterday’s poor performance. TLT printed a swing high (47% bearish reversal) and its forecaster plunged -0.88 to -0.25, which is a sell signal for TLT. TY looked much the same, printing a swing high also (58% bearish reversal) and TY forecaster dropped -0.36 to -0.07, which is a sell signal for TY. TY weekly and monthly are both showing uptrends, but to me, bonds have been doing badly enough in recent days that I’m betting on them to fall further.

JNK rose +0.20%, printing a bullish harami (49% bullish reversal) and sending the forecaster up +0.90 to -0.07. A reversal for JNK? Maybe. HYB, JNK’s cousin, issued a (daily) buy signal a few days ago. Weekly still points downhill.

CRB fell -0.09%, with only 2 of 5 sectors dropping, led by livestock (-1.70%) which has done quite poorly over the past few months, down 15%. CRB is below the 50 and 9 MA lines; the hoped-for “inflation” might be fading, at least from the commodity complex anyway.

While gold seems to be mostly marking time, gold’s cousins – silver and platinum – are doing a whole lot worse. That’s both annoying (if you hold silver or platinum) and a buying opportunity. One assumes reversion to the mean will reward the patient buyer.

Gold in Euros has bounced higher in the past few weeks, almost 35 euros up from the March low, and forecaster has GC.EUR in an uptrend. That’s a good sign.

Equity markets are still really volatile – there is a lot of selling, but also a lot of dip-buying, which makes sense since the dip-buying strategy has worked out well for the past 9 years. Junk debt isn’t signaling any sort of impending collapse. It will take time for the higher rates to have an impact on the economy.

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