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PM Daily Market Commentary – 7/2/2019

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  • Wed, Jul 03, 2019 - 12:47am

    #1

    davefairtex

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    PM Daily Market Commentary – 7/2/2019

Gold jumped +34.52 [+2.48%] to 1427.93 on very heavy volume, and silver ralled +0.17 [+1.12%] to 15.35 on moderate volume. The buck moved lower [-0.15%], crude was smashed [-4.76%], while bonds rallied [10Y yield -5.8 bp] along with SPX [+0.29%].

So what caused today’s massive gold rally? Really, nobody knows. Was it Trump announcing one of his new candidates for the Fed – Judy Shelton – who has said in the past that she would lower rates to 0 as rapidly as possible, and is a fan of the gold standard? Was it reports that Pence was abruptly called back to Washington for an unspecified emergency (according to a representative from Pence’s office – a characterization that was later walked back – apparently not an emergency at all, it was just a “situation”, with “nothing to see here”)? I don’t honestly know. But gold shot up $34 bucks, a really big move.

You might be curious to know – just how many times in the last 24 months did gold rally more than $34 in one day? Exactly one time – today.

I’ll just provide what my trading screen showed me. The first jump started at 10 am, and the second, a little before 3pm. And things just continued to climb after market close, topping out in Asia at 1441.

Today gold wiped out all of Monday’s losses and then some, printing a swing low (66% bullish).  Forecaster jumped higher, moving gold back into an uptrend. Gold is now back in an uptrend in all 3 timeframes. Gold’s recent correction didn’t quite make it down to the 1382 breakout point – buyers stopped the decline at 1384.50.  Things often retrace to their breakout point, and then continue higher.  That’s my sense of what gold will do next too.

COMEX GC open interest rose +19,345 contracts, or 9 days of global production in new paper. That’s 39% of a BRExit. The shorts continue to pile in.

Futures are projecting a 28% chance of a rate cut in July, a 100% chance of at least one rate-cut by December, a 94% chance of at least 2 rate cuts, and a 63% chance of at least 3 rate cuts. That’s up from yesterday.

Silver chopped sideways in Asia, dropped to a new low of 15.07 at around 8:30 am, then rallied back along with gold through end of day. Silver’s bullish engulfing was definitely bullish (54%), and forecaster moved higher, putting silver back into a slight uptrend. Today’s rally was enough to pull silver back into a very slight uptrend in the weekly timeframe too – silver is back in an uptrend in all 3 timeframes, although daily and weekly trend predictions are only very slightly positive. Silver is now (just barely) back above its 9 MA as well. If you get the sense that silver is struggling to keep head above water – that’s the sense I have too.

COMEX SI open interest rose +2,827 contracts, or about 6 days of global production. Shorts continue to pile in; no rest for the weary silver longs.

The gold/silver ratio jumped +1.23 to 93.02. That’s another 27 year high. Poor silver.

The miners gapped up at the open, then rallied hard all day long, closing at the highs. GDX jumped +3.95% on very heavy volume, while GDXJ rose +5.09% on extremely heavy volume. XAU rose +3.24%, and the swing low candle was not as bullish as I expected (40%, a low rating), but forecaster jumped back into an uptrend. XAU is also back above its 9 MA. XAU is back in an uptrend in all 3 timeframes.

The GDX:gold ratio rose +1.43%, and the GDXJ:GDX ratio climbed +1.10%. That’s quite bullish.

Platinum fell -0.28%, palladium rose +0.95%, while copper dropped -0.80%. Copper is back in a downtrend, and does not appear to be supporting the “happy China” meme at all. Meanwhile palladium is just a few bucks away from breaking out to a new all time high.

The buck fell -0.14 [-0.15%] to 96.18. The spinning top candle was a bullish continuation, and forecaster moved higher, putting the buck in an uptrend. The buck remains in a downtrend in both weekly and monthly timeframes.

Large currency moves today include: AUD [+0.45%], JPY [+0.55%].

Crude was hit hard, dropping -2.82 [-4.76%] to 56.40. Neither the OPEC+ decision to extend output cuts for another 9 months, nor a strong API report (crude: -5m, gasoline: -0.4m, distillates: -1.7m) were enough to move prices higher today. The swing high candle print was quite bearish (62%) and forecaster dropped hard, pulling crude into a strong downtrend. Crude remains in an uptrend in both weekly and monthly timeframes. What was the driver for today’s big sell-off? Perhaps this: Venezuela production rose 26% this month, due to increased sales to China. Or maybe the recent rally was just overdone, its hard to say.

SPX rose +8.68 [+0.29%] to 2973.01, which is another new all time closing high. The spinning top candle was unrated, and forecaster moved higher into what is now a strong uptrend. SPX remains in an uptrend in all 3 timeframes.

Sector map had REITs (XLRE:+1.85%) and utilities (XLU:+1.36%) leading, with energy (XLE:-1.60%) and financials (XLF:-0.25%) trailing. This was a relatively bearish sector map. You never like to see the high-yielding group in the lead.

VIX plunged -1.13 to 12.93. This is a 2-month low for the VIX.

TLT rose +0.77%, which was a new high for TLT. TY rose too, up +0.32%, the white marubozu is a bullish continuation, and forecaster moved higher, and is now in a moderate uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year yield plunged -5.8 bp to 1.98%. This is a new 2-year low for the 10-year yield. I thought we might reverse here at 2%, but the yields just continue to drop.

JNK rose +0.19% – it was in a downtrend for a time but seems to have found some support. The BAA.AAA differential fell -1 bp to 1.05%. BAA.AAA differential remains in a moderate uptrend.

CRB plunged -1.82%, with 3 of 5 sectors falling, led by energy (-3.98%).

Gold’s drop following the restart of the US-China trade talks was very short-lived. Today’s $34 rally was extraordinary – it was the best one-day performance for gold in 24 months. The really odd thing is, we really don’t know why.  Gold prices crept higher in Asia, but then buyers really showed up after about 10:30 am in New York, and not even 60 tons of paper gold were enough to keep gold from closing at the highs of the day.

Retracement post G-20 took gold back down to (roughly) the point of the breakout at 1382.  And it fell no further.

That’s bullish for gold, and the miners.  Silver?  So far – it remains the poor stepchild.

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  • Wed, Jul 03, 2019 - 04:49am

    #2

    Cold Rain

    Status Gold Member (Offline)

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    Slam Commence?

Here comes our slow day slam we’ve been waiting for. 🙂

Impressive move yesterday, though.

  • Wed, Jul 03, 2019 - 08:53pm   (Reply to #2)

    #3

    Penny551

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    re: Slam Commence?

What are you referring to?

  • Thu, Jul 04, 2019 - 12:54am

    #4
    Sparky1

    Sparky1

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    My take on "Slam Commence"

Hi Penny551,

FWIW, my take on Cold Rain’s “Slam Commence” comment was in reference to the manipulated decline in the spot gold prices during after-market hours (typically very early morning) when “someone” or entity dumps massive amounts of gold contracts on the Comex thereby depressing (“slamming”) the spot price of gold.  As the US markets are closed due to the Independence Day holiday, the manipulated decline in the spot price of gold may be slower, dragged down sufficiently to prime a strong stock market start come Friday (7/5) morning.

Notwithstanding any black swan geopolitical event or Presidential tweets, stock market-pumping/spot gold slamming shenanigans may continue on Friday with the (“better-than-expected”) job numbers report and prospects of a pending Fed rate cut; and continue throughout the weekend during after-market hours.

You can monitor the gold spot price changes over time here (may need to refresh chart):

https://www.kitco.com/charts/popup/au24hr3day.html

I’m just a layperson with much to learn, so I’d like to hear from Cold Rain and others re: their take on “Slam Commence” and if my understanding is “off” in any way.  Thanks!

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