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PM Daily Market Commentary – 6/26/2019

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  • Thu, Jun 27, 2019 - 01:46am

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    davefairtex

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    PM Daily Market Commentary – 6/26/2019

Gold fell -14.08 [-0.98%] to 1417.82 on very heavy volume, while silver dropped -0.03 [-0.20%] to 15.32 on very heavy volume. The buck inched higher [+0.08%] along with crude [+0.77%], SPX fell [-0.12%], and bonds moved sharply lower [10Y yield +5.5 bp].

Gold fell in Asia, and then chopped sideways for the remainder of the day. The swing high candle was bearish (49%), and forecaster dropped hard, but remained in a modest uptrend. Gold remains in an uptrend in all 3 timeframes, but the plunge in the forecaster and the swing high pattern did not look great.  1382 is now support – not saying we will fall that far, just that the overbought pressure needs to be released.  RSI-7 is now 77, down from 94.  That’s a bit healthier.  Where the buyers appear will tell us a lot about how enthusiastic they are to “get on board the gold train.”

COMEX GC open interest rose +3,330 contracts.

Futures are projecting a 24% chance of a rate cut in July, a 100% chance of at least one rate-cut by December, a 92% chance of at least 2 rate cuts, and a 58% chance of at least 3 rate cuts. That’s down from yesterday.

Silver mostly just chopped sideways; , ending up closing near the lows. The opening black marubozu was mildly bullish (!) (32%), and forecaster moved higher, into a slight uptrend. Silver remains in an uptrend in all 3 timeframes.  Silver actually outperformed gold today; perhaps the forecaster noticed this and that’s why it felt today’s move portended a modest move higher.

COMEX SI open interest fell -4,466 contracts, or 9 days of global production. That’s a fairly large decline. It appears that silver outperformed gold today because someone is covering short.

The gold/silver ratio fell -0.31 to 92.55. That’s bullish.

The miners gapped down fairly hard at the open, but then rallied for much of the day. GDX fell -0.43% on heavy volume, while GDXJ dropped -0.14% on moderately heavy volume. XAU ended down just -0.04%, the long white candle was neutral, and forecaster was virtually unchanged, leaving XAU in a moderately strong uptrend. XAU remains in an uptrend in all 3 timeframes. Today’s move in the miners looked quite strong, especially given the drop in gold. Traders were definitely buying the dip – and it wasn’t even a very large dip.

The GDX:gold ratio rose +0.56%, and the GDXJ:GDX ratio climbed +0.29%. That’s somewhat bullish.

Platinum rose +1.35%, palladium dropped -0.48%, while copper fell -0.57%. Palladium seems to have run into selling pressure as it nears the all time high, while platinum is moving slowly higher off its lows.

The buck rose +0.08 [+0.08%] to 95.67. The short white/spinning top was unrated, and forecaster moved higher but remains in a strong downtrend. The buck remains in a downtrend in all 3 timeframes. Is this a dead cat bounce for the buck?

Large currency moves included: AUD [+0.45%], CAD [-0.56%]

Crude rose +0.45 [+0.77%] to 59.24. Crude moved higher into the EIA report, and spiked up 70 cents right after release, but that marked the high for the day, as crude slowly walked back the bullish spike into the close. The report was very strong (crude: -12.8m, gasoline: -1.0m, distillates: -2.4m), but it appears as though the market had already anticipated this from yesterday’s not-quite-as-strong API report. The spinning top candle was a bullish continuation, and forecaster inched lower but remains in a reasonably strong uptrend. Crude managed to end the day just above its 200 MA. Crude remains in an uptrend in both daily and weekly timeframes.

SPX fell -3.60 [-0.12%] to 2913.78. There was a spike higher at 5:05 am – copper jumped at the same time, probably US-China trade news – but after the spike, equities fell for the rest of the day. The closing black marubozu was a bearish continuation, but forecaster moved higher, putting SPX back into a slight uptrend. SPX is now back in an uptrend in all 3 timeframes.

Sector map had energy leading (XLE:+1.54%) along with tech (XLK:+1.08%), while utilities (XLU:-2.18%) and REITs (-1.94%) did worst. This was a bullish sector map.

VIX fell -0.07 to 16.21.

TLT fell -0.64%, printing a collection of bearish candles (59% bearish overall), and forecaster dropped hard, moving TLT into a downtrend. TY also fell, losing -0.41%; it printed a bearish engulfing/swing high (59% bearish), and forecaster inched lower but remains in an uptrend. TY ended the day just below its 9 MA. There is also a “bearish divergence” forming on the RSI, which suggests the upside momentum for bonds may be over. TY remains in an uptrend in all 3 timeframes, but today’s candle prints look pretty ugly. The 10-year yield rose +5.5 bp to 2.05%.

JNK fell -0.08%, and forecaster plunged further – JNK is now in a reasonably strong downtrend. The BAA.AAA differential fell -3 bp yesterday to 1.02%; concern over credit risk is starting to decline now.

CRB rose +0.82%, with 2 of 5 sectors rising, led by energy (+2.43%).

The jump in equities and copper after the close of the Asia trading session was possibly due to a story I read in the SCMP – maybe not this specific story, but the event overall – that Trump had agreed to hold off imposing the 25% tariffs as a condition X imposed for meeting with him at the G-20.  This makes sense to me.

https://www.scmp.com/economy/china-economy/article/3016255/trade-war-us-and-china-agree-tentative-truce-g20-summit

The US and China have tentatively agreed to another truce in their trade war in order to resume talks aimed at resolving the dispute, sources familiar with the situation said.

However, this “Trade War Truce” news didn’t end up leading to a rally in equities that held through end of day, although it did help copper move higher.  This suggests the mood in the equity market is a bit bearish, at least for now anyway.

While gold fell fairly hard today, the miners showed surprising strength, as did silver.  I expect gold’s uptrend to continue, but we might see a correction back down to the breakout point of 1382; that sort of thing happens after breakouts sometimes.  Normal markets act to hose as many people as possible – in this hypothetical case, the market would be rinsing out some of the new longs that bought the breakout.

It might also just be one of those 1-3 day reaction moves that commonly occurs during trends.

We will just have to see.

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