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PM Daily Market Commentary – 5/1/2019

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  • Thu, May 02, 2019 - 12:15am

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    davefairtex

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    PM Daily Market Commentary – 5/1/2019

Gold fell -7.01 [-0.54%] to 1281.57 on heavy volume, while silver plunged -0.29 [-1.94%] on very heavy volume. The buck moved higher [+0.22%] along with crude [+0.22%], while SPX fell [-0.75%]. The “other metals” were just crushed – led by copper which dropped a massive -3.92%.

What was all the fuss about? Well, much of it came following the FOMC announcement, at Powell’s press conference. About two minutes in, he said something – I’m not sure what it was – that caused the buck to scream higher, and gold, silver, and the 10-year to tank. All of the damage in gold came during the first 15 minutes of the press conference. My guess: Powell dashed the prospects of a near-term rate cut when he said that the current stance was “appropriate”.

However, the plunge in copper had nothing to do with the Fed. Copper fell off a cliff at 7:25 am, and it just never stopped until the close. I believe that copper’s huge plunge helped pull silver prices lower. What was the drop in copper about? Kitco had an article but mostly it summed to “we don’t really know – so we blame computer trading and options expiration.”

Gold chopped mostly sideways until the FOMC announcement at 2 pm – where it first jumped $3 higher on the 2 pm release, and then dropped hard 2 minutes in to Powell’s press conference, and it just never really recovered. The long black candle was a bearish continuation, and forecaster fell, dropping into a more pronounced downtrend. Gold is now in a downtrend in all 3 timeframes. Gold/Euros flipped into a downtrend in both the daily and weekly timeframes also.

COMEX GC open interest jumped 4,388 contracts.

Futures are showing a 7% chance of a rate cut in June, a 37% chance of one rate-cut by December and an 11% chance of 2 rate cuts. Rate cut odds dropped following the FOMC meeting today.

Silver moved steadily lower for most of the day, dropping on its own early, then pulled lower by copper, and then dragged even lower by Powell’s press conference, breaking down to a new low of 14.62. The opening black marubozu might be a reversal (38% bullish), but forecaster moved lower, and remains in a strong downtrend. Today’s plunge caused the weekly forecaster to drop into a downtrend as well. Silver is only in an uptrend in the monthly timeframe – and that’s Silver remains in an uptrend in both the weekly and monthly timeframes.

COMEX SI open interest jumped +4,997 contracts. That’s 8 days of global production in new paper – looks like managed money really piled in on the breakdown. They’ve certainly been right so far.

The gold/silver ratio jumped +1.22 to 87.24. That’s very bearish. What’s more, this is the highest gold/silver ratio in 20 years. Its wintertime and silver is a “straw hat”, there is blood in the streets – silver is in terrible shape right now.

The miners mostly followed the track of gold, rallying at 2 pm on the FOMC announcement, peaking out at about 2:15, and then dropping more gradually during the press conference. GDX fell -1.77% on very heavy volume, while GDXJ dropped -1.77% on heavy volume. XAU plunged -2.21%, breaking down to a new low. The confirmed bearish NR7 was definitely bearish, and forecaster dropped hard and dropped back into a downtrend. XAU is in a downtrend in both daily and weekly timeframes. Today’s move took XAU below the 200 MA.

The GDX:gold ratio fell -1.23%, while the GDXJ:GDX ratio was unchanged. That’s bearish.

Platinum plunged -2.43%, palladium dropped -2.65%, while copper was crushed, losing -3.92%. The other metals all looked terrible today – but only platinum was materially affected by FOMC. The other metals were dancing to the tune of another piper, but it was a distinctly bearish melody for all of them. Currency played little to no role in today’s other metal moves.  Here is a chart of what happened to copper today: it was really ugly.  And nobody really knows why.

The buck rose +0.21 [+0.22%] to 97.12. The buck fell relatively steadily, dropping lower at 2 pm, but then reversing hard 2 minutes into Powell’s presser. The rally in the buck directly paralleled the plunge in gold that happened at that same time. The hammer candle was relatively bullish (40% reversal), but forecaster edged lower, and remains in a downtrend. The buck remains in a downtrend in both daily and weekly timeframes.

Crude rose +0.15 [+0.24%] to 63.68. Crude was pressured today by a very bearish EIA report (crude: +9.9m, gasoline: +0.9m, distillates: -1.3m) which knocked a buck off the price, but crude bounced back, ending the day in the green. Amazing. Regime change in Venezuela, perhaps? I thought Trump said we weren’t going to do that sort of thing anymore. The high wave candle was a bearish continuation, but forecaster jumped strongly higher, flipping crude back into an uptrend. Crude is now in an uptrend in both the daily and monthly timeframes.

SPX plunged -22.10 [-0.75%] to 2923.73. The bearish belt hold was a possible reversal (36% bearish), and forecaster dropped, but remains in an uptrend. Today’s move took SPX through its 9 MA. Still, SPX remains in an uptrend in all 3 timeframes.

Sector map had energy leading down (XLE:-2.00%) along with materials (XLB:-1.81%), while REITs (XLRE:+0.0%) and sickcare (XLV:-0.18%) did best. This was just a slightly bearish sector map.

VIX jumped +1.68 to 14.80.

TLT rose +0.20% – it jumped higher after a weak ISM manufacturing index report hit at 10 am, but then plunged during Powell’s press conference. The TY intraday pattern looked quite similar, but the plunge during Powell’s press conference was much stronger; TY fell -0.06%. The high wave candle was mildly bearish (32% reversal), and forecaster moved a bit lower but remains in an uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield rose +0.2 bp to 2.51%.

JNK cratered, dropping -0.80%, printing a very bearish-looking swing high (59% reversal), and forecaster plunged too, dropping JNK into a downtrend. Much of JNK’s drop came on a sharp gap down at the open, but the intraday rally was cut short by Powell’s press conference, which caused JNK to sell off hard, accounting for more than half of JNK’s loss today.

CRB fell -0.32%, with 3 of 5 sectors dropping, led by industrial metals (-1.43%). Agriculture, livestock, and industrial metals all look pretty awful right now. PM isn’t great, but energy continues to look strong.

So today’s FOMC meeting was bad for gold, silver, bonds, and SPX. It was however good for the buck. Rate cut chances declined, although really by not very much. It looks as though Trump isn’t going to get either his rate cut, or his QE. I’d say that’s probably a good thing – although not for gold.

Crude continues to look very strong – a terrible EIA report was more or less ignored (at least on the daily chart) after dip-buyers appeared to pull prices right back up after an initial sell-off.

It appears as though silver is now headed for a re-test of the 13.85 lows, dragged down by both gold and copper, and by all of the new managed money shorts piling in on each breakdown. The miners are also looking quite ill, having made repeated new lows. Will the new highs in the gold/silver ratio ever matter – as a buy signal?  Well, presumably at some point it will.

But when?

 

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