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PM Daily Market Commentary – 5/2/2018

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  • Wed, May 02, 2018 - 08:41pm

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    davefairtex

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    PM Daily Market Commentary – 5/2/2018

Gold rose +1.20 [+0.09%] to 1305.80 on heavy volume, while silver climbed +0.23 [+1.39%] to 16.41 on heavy volume also. The big event today was the FOMC announcement, which ended up being mostly a non-event. The Fed mentioned that their favorite inflation metric (the PCE) had risen to the target level of 2%. What does that mean for the pace of rate increases? Nobody knows. The buck first spiked lower on the report, but then recovered fairly quickly, wiping out all the losses, ending up +0.09%.

Bottom line: we have no answers, and no new information – other than the Fed knows that PCE inflation is at 2%.

Gold rallied in Asia, sold off in London, spiked higher following FOMC, and then retreated back to its starting point. Candle is a high wave – it would have been a bearish shooting star under other circumstances. Forecaster ticked up +0.12 to -0.48: unfortunately, FOMC did nothing to halt gold’s downtrend.

COMEX GC open interest fell -4,895 contracts.

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

Silver looked much stronger than gold, rallying steadily for most of the day, spiking higher at 2pm, then retracing the spike but holding the rest of the day’s gains into the close. Silver printed a swing low today – 70% bullish reversal, a very high rating. Forecaster agreed, jumping +0.70 to +0.07, which is a buy signal for silver.

COMEX SI open interest fell by -1,174 contracts today.

The gold/silver ratio fell -1.03 to 79.60. That’s bullish.

Miners more or less followed gold, spiking strongly higher after 2pm, but then retracing all those gains by the close. GDX rose +0.31% on heavy volume, while GDXJ climbed +1.10% on heavy volume also. In spite of the strong signs of a failed rally, both ETFs printed swing lows, which had a 48-54% chance of being a bullish reversal. XAU forecaster agreed with the bullish sentiment, rising +0.30 to -0.11, which is not quite a buy signal but much improved over yesterday.

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

Platinum edged up +0.06%, palladium rallied +1.49%, while copper climbed +0.36%. Platinum is the weakest of the bunch, while palladium and copper appear to be trying to put in lows. I’m not sure what platinum’s problem is right now. I keep imagining a big platinum asteroid being towed back to earth, swamping the market with millions of tons of new ore.

The dollar edged up +0.08 [+0.09%] to 92.15. While the Fed did look a bit more hawkish, it does not appear as though they are signing up to raise rates more quickly at this point. Could this be a temporary top? Technicals are saying not just yet – the high wave candle was a bullish continuation, and DX forecaster edged down just -0.05 to +0.66, which is still a strong uptrend.

Crude rose +0.18 [+0.27%] to 67.68. Mostly crude chopped sideways today; the EIA report was bearish (crude: +6.2m, gasoline: +1.2m, distillates: -3.9m) but the market seemed to shrug the report off. Crude’s rally came at 2pm – initially a strong move, which then faded into the close. Candle print was neutral, while forecaster rose +0.12 to -0.13. Crude remains in a sideways-chop-downtrend – below its 9 MA.

SPX plunged -19.13 [-0.72%] to 2635.67. SPX rallied initially after 2 pm, but then sold off steadily into the close. All the losses came in the last 2 hours of the trading day. Sector map shows that consumer staples led the market lower (XLP:-1.96%) while energy did best (XLE:+0.41%). Energy was the only sector to rise. This was a somewhat bearish-looking sector map.

VIX rose +0.48 to 15.49.

TLT fell -0.11%, a terrible performance given the drop in equities today. Bonds spiked higher at 2pm, but then proceeded to sell off for the rest of the day. TY crept up +0.05%, but the forecaster wasn’t impressed, rising +0.01 to -0.19. TY remains in a downtrend.

JNK was unchanged today; it mostly just chopped sideways. It rallied somewhat at 2pm, but faded quickly thereafter. JNK’s downtrend increased, with the forecaster dropping -0.23 to -0.25.

CRB rose +0.17%, with 3 of 5 sectors rising, led by industrial metals (+1.54%). CRB remains quite near its highs.

So the big question is, did the FOMC announcement mark the low for PM? Looking at the numbers, I have to say, “not yet.” Things improved, especially for silver, but the miners and gold both remain in downtrends. Blame the over-strong dollar, which has continued moving higher for 10 of the last 12 days. Gold did look ready to recover immediately after the announcement, but the strength in the buck put an end to gold’s attempted rally.

Silver appears to be tracking the industrial metals (copper, palladium), and it might well benefit from the concerns about inflation. Could we see falling gold and rising silver? We more or less saw that today.

Nonfarm Payrolls report comes up on Friday.

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