PM Daily Market Commentary – 5/15/2019
Gold fell -0.36 [-0.03%] to 1301.70 on heavy volume, while silver [-0.24%] to 1302.06 on moderately heavy volume, while silver was unchanged at 14.80 on moderately light volume. The buck was mostly unchanged [+0.05%], SPX rallied [+0.58%], along with crude [+1.33%]. Strangely enough, bonds rallied too [10Y -4.0 bp].
The retail sales report, released at 8:30 am, was ugly today; it dropped through the lower end of expectations. Headline was -0.2% m/m, and retail sales less autos & gas were also down -0.2%. There was some muttering about calendars and seasonal adjustments – do we believe? This was a recessionary number, but in truth neither the bond market nor the equity market seemed to care.
Gold fell in Asia, rallied in London, and then reversed back to its starting point by end of day. The long legged doji was neutral, while forecaster ticked higher, moving gold back up into an uptrend. Gold is now back in an uptrend in all 3 timeframes – but the daily trend is very slight. Gold/Euros remains in an uptrend in all 3 timeframes, and there the trends are somewhat stronger.
COMEX GC open interest rose 8,229 contracts. The shorts have returned.
Futures are showing a 13% chance of a rate cut in June, a 41% chance of one rate-cut by December and a 30% chance of 2 rate cuts. That’s a bit worse than yesterday.
Silver chopped sideways in a narrow range again today – the doji/NR7 candle was unrated, while forecaster moved lower, entering a modest downtrend. Silver is in an uptrend in the weekly and monthly timeframes, but – like the daily, the trends are very tentative and silver could really go either way.
COMEX SI open interest rose +637 contracts.
The gold/silver ratio fell -0.02 to 87.83, which is neutral.
The miners gapped up at the open, but then sold off during the day; GDX dropped -0.24% on light volume, while GDXJ fell -0.34% on extremely light volume. XAU fell -0.13%, the short black candle was potentially bearish (30%), but forecaster moved higher, just enough for a very slight uptrend. This puts XAU in an uptrend in the daily and monthly timeframes.
The GDX:gold ratio fell -0.21% and the GDXJ:GDX ratio dropped -0.10%. That’s slightly bearish.
Platinum fell -1.04%, palladium moved up +0.34%, and copper rallied +0.88%. That was a new low for platinum, as well as a confirmed shooting star (60% bearish). Copper did rally, but remains in a strong downtrend.
The buck moved up +0.05 [+0.05%] to 97.01. The buck made a new high today. The high wave candle was a bullish continuation, and forecaster edged higher and remains in a modest uptrend. The buck remains in an uptrend in both daily and weekly timeframes.
Large currency moves include: GBP [-0.44%], AUD [-0.33%].
Crude moved up +0.82 [+1.33%] to 62.41. The rally followed the EIA report, which looked bearish (crude: +5.4m, gasoline: -1.1m, distillates: +0.1m) but was actually better than yesterday’s API report. That EIA report accounted for the entire move higher today. The long white candle was a bullish continuation, and forecaster moved higher, and is now in a moderate uptrend. Crude is now back above its 9 MA, which is a positive sign. Crude remains in an uptrend in both daily and monthly timeframes. Things look a bit better today for crude following EIA.
SPX moved up +16.55 [+0.58%] to 2850.96. SPX fell in the futures markets overnight, starting down perhaps 20 points at the open. It then rallied strongly for the first 3 hours, regaining all it lost and then some. The long white candle was neutral, but forecaster shot higher, moving SPX back into an uptrend. This puts SPX in an uptrend in both daily and monthly timeframes – and the weekly could unwind its sell signal fairly easily after another strong day.
Remember the chart I posted at the end of last week? The October-December decline was full of daily-chart reversals on its way downhill. I believe we are – probably – in the middle of a longer term decline, but things don’t go straight downhill until people really get panicked, and it takes a while for that to happen.
Sector map had communications (XLC:+2.24%) leading, along with tech (XLK:+1.09%) while financials (XLF:-0.37%) and materials (XLB:-0.26%) trailed. This was a mostly-bullish sector map.
VIX fell -1.62 to 16.44.
TLT rose +0.61%, leaping to a new high. High wave candle was a bullish continuation, and forecaster remains in a moderate uptrend. TY also did well, moving up +0.26%. The long white candle was also a bullish continuation, and while forecaster moved a bit lower, it remains in a strong uptrend. The 10-year appears to be readying a multi-month breakout to new highs. TY remains in an uptrend in all 3 timeframes. The 10-year treasury yield fell -4.0 to 2.38%. That’s a year low for 10-year rates. Bonds looked very strong today, especially considering the rally in equities and crude.
JNK moved up +0.07%, the long back candle was neutral, and forecaster moved higher but remains in a downtrend. The BAA.AAA differential did not move at all. No fear from the credit markets. Contrast that with Wolf Richter’s report that shows auto loan delinquencies spiked to decade highs: https://wolfstreet.com/2019/05/15/subprime-bites-serious-auto-loan-delinquencies-spike-to-q3-2009-level-despite-strongest-labor-market-in-years/. I wonder which one will end up mattering?
CRB rose +0.37%; 4 of 5 sectors rallied, led by industrial metals (+0.94%).
Well it was an odd day; both equities and bonds rallied, which is fairly unusual. Sometimes that happens when a bunch of money comes in from overseas, but usually the buck will rally, and we didn’t see that today.
If copper can keep rallying I might change my mind; it tipped over well in advance of the trade deal blowing up.
Retail sales is a fairly important report, and it appears to be signaling recession. The market ignored it. We’ll see how long that lasts.
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