PM Daily Market Commentary – 6/19/2018
Gold fell -3.60 [-0.28%] to 1277.00 on moderate volume, while silver plunged -0.16 [-1.00%] to 16.30 on very heavy volume. It was tariffs and more tariffs today, with the commodity complex overall selling off fairly hard; CRB down -1.20%, with industrial metals off -1.90%. While the buck did rally [+0.29%], today’s PM move down looked more to be about falling commodity prices due to concerns over tariffs. Gold is once again back to dropping more slowly than the other commodities.
Gold fell along with the rest of the metals, bottoming out at 1272.60, at around 8:10 am. It bounced back somewhat, but still looked weak going into the close. The spinning top candle was a bearish continuation, but the forecaster was actually positive, rising +0.13 to -0.33. That’s still a downtrend. Gold remains in a downtrend in all 3 currencies. Gold in Euros has not yet broken down, however; it remains at support just above its 50 MA. Gold’s move today was just a currency effect – although the impetus for its fall today was tied to the other metals. Gold’s RSI-7 is at 22, which is oversold.
COMEX GC open interest rose 1,720 contracts.
Rate rise chances (September 2018) dropped down to 78%.
Silver fell with the rest of the metals, making a new low of 16.24 at 8 am, and it too bounced just slightly off the lows. The long black candle was a bearish continuation, but forecaster rose +0.09 to -0.28. That’s also a downtrend, but perhaps a slowing one. Silver is approaching the lower end of its trading range. A break below 16.10 could lead to a lot of selling, but a buy here at least has a defined stop of 16.10 on it. Buy the low end of the range, and sell the top end – that looks to be what at least some traders have been doing for a while now. Silver is in a downtrend in all 3 timeframes.
COMEX SI open interest fell by -1,153 contracts today.
The gold/silver ratio rose +0.57 [+0.73%] to 78.32. That’s bearish.
Miners fell, with GDX off -0.99% on moderate volume, while GDXJ lost -0.79% on moderately light volume. Candle prints were both bearish continuations. XAU forecaster was unchanged at -0.25, which is downtrend. Weekly forecaster is also in a downtrend, but monthly remains pointing higher. I guess it is telling us to buy the dip. Also – notice how XAU has avoided making a new low, unlike gold which has made 2 new lows in the last 2 months. This seems bullish to me.
The GDXJ:GDX ratio rose slightly, but the GDX:$GOLD fell. That’s slightly bearish.
Platinum plunged -1.78%, palladium dropped -2.06%, and copper fell -2.80%. It was a really bad day for the other metals – you can see they all did much worse than gold. Copper is looking particularly bad; it is down almost 8% over the past 7 trading days. That’s all about the fallout from tariffs, I think.
The buck climbed +0.27 [+0.29%] to 94.73, making a new closing high. Candle print was a bullish continuation, but forecaster edged down -0.05 to +0.42, which is still a strong uptrend. The buck is in an uptrend in all 3 timeframes. If “trade wars” were going to be bad for the US, it is most likely the buck would sell off hard. That is just not happening.
Crude fell -0.79 [-1.20%] to 64.90, falling along with the industrial metals, although the intraday pattern was substantially different – so crude might be operating under a different set of triggers. Today’s API report was mixed: crude: -3.0m, gasoline: +2.1m, distillates: +0.74m; the report release didn’t seem to move prices at all. Forecaster edged up +0.06 to -0.33, which is still a downtrend. Crude remains in a downtrend in all 3 timeframes – below the 50 and the 9 MA lines.
SPX fell -11.16 [-0.40%] to 2762.59. Equities have fallen since the sell signal last Thursday, but the drops have been fairly minor so far, with US-hours dip-buying making up for a whole lot of selling in the futures markets overnight. Forecaster fell -0.28 to -0.35, which is a moderate downtrend. SPX remains in uptrend in both weekly and monthly timeframes. Sector map shows utilities doing best (XLU:+0.99%) while industrials led the market lower (XLI:-2.11%), along with materials (XLB:-1.83%). That seems like a tariffs-impact move to me. Sector map looked somewhat bearish.
Contrast what happened to US equities with the SSEC (Shanghai Stock Exchange Composite), which plunged -3.78%, making a fairly dramatic new low for the year. Chinese equities were hammered. Traders are saying that while US companies might get a sniffle, Chinese companies could require hospitalization. Given this “truth” (at least told to us by the actions of big money), one wonders why the business press is so uniformly anti-tariff. One wonders also why the US has been so continually hosed in trade over the past 20 years too. Someone is making money from the status quo – and its probably not you and me.
VIX rose +1.04 to 13.35
TLT rose +0.58%, another decently strong move higher. This marks a new high, and the forecaster is at +0.52 which is a reasonably strong uptrend. TY moved higher also, but not as enthusiastically, up just +0.14%, and printing a shooting star candle which didn’t look great, but was actually a bullish continuation. Forecaster edged up +0.04 to +0.55, which is still a strong uptrend. TY is in a very slight uptrend in both weekly and monthly timeframes also. The 10-year yield fell -3.3 bp to 2.89%.
JNK fell -0.14%, a gentle move lower, but enough to trigger a sell signal (forecaster -0.38 to -0.13). That’s also a swing high for JNK – but it seems as though it is a very slow motion affair. Changes in JNK are very modest, in both directions.
CRB fell -1.20%, with all 5 sectors moving lower, led by industrial metals (-1.91%). Agriculture also did poorly as well (-1.90%). These moves both seem tariff-related.
While the popular press (and Mish too) are all saying how horrible the Trump tariff regime will be, the market is saying something different. The market appears to agree with Trump – trade wars are winnable. There will be individual winners and losers, but overall, it seems as though the US should come out ok. At least from what we can see today.
Both gold and silver are oversold, but – no reversal just yet. Its probably best to watch.
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