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PM Daily Market Commentary – 7/9/2018

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  • Mon, Jul 09, 2018 - 11:12pm



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    PM Daily Market Commentary – 7/9/2018

Gold rose +2.40 [+0.19%] to 1258.30 on heavy volume, while silver climbed +0.07 [+0.47%] to 16.14 on moderate volume. The buck inched up +0.02%; it was not a factor today. Copper managed to rally substantially for the first time in weeks, up +1.83%. Does this mark the low for copper? Candle code says: 56%, but the longer-term reality is, where copper really goes next will depend on tariffs, and Chinese economic performance.

Gold rallied strongly in Asia and London, making a new high to 1266.90 at about 7:30 am, but then sold off for the remainder of the day.  Looking at the large increase in open interest, I’m guessing the decline had some help from a bunch of new shorts.  Candle print today was a shooting star, but candle code felt it was a bullish continuation. Forecaster inched up +0.02 to +0.20; that’s a slow uptrend.  Its hard to know if the recent rebound is just a shorting opportunity or the start of a move higher.

COMEX GC open interest rose 11,632 contracts; that was 6 days of global production.

Rate rise chances (September 2018) jumped to 79%.

Silver tracked gold, topped out a bit earlier, and fell a bit less severely once the US market opened. Candle print was a high wave/bullish continuation; forecaster didn’t agree, falling -0.22 to -0.01, which is a sell signal for silver, although not a very strong one.

COMEX SI open interest rose by 3,131 contracts today. That’s also 6 days of global production.

The gold/silver ratio fell -0.21 to 77.94, which is somewhat bullish.

Miners were mixed today, with GDX down -0.27% on light volume, while GDXJ rose +0.30% on moderate volume. The miners gapped up at the open since gold was up about $10 at that point, but then sold off for most of the day as gold declined. Candle print was a bearish engulfing, which had a 43% chance of marking the top. Volume wasn’t all that heavy, but it definitely was a day of selling for the miners.

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

Platinum rose +0.84%, palladium climbed +0.70%, and copper jumped +1.83%. As mentioned, copper printed a swing low today (56% bullish reversal), and both palladium and platinum moved higher; platinum is back above its 9 MA – the other metals are hinting at recovery. The SSEC (Shanghai Composite) jumped +2.47%, also printing a swing low. My guess: the rhetoric over trade didn’t escalate over the weekend, and so perhaps the thought is that the damage will remain limited to the relatively small number of goods currently being taxed. Result: a relief rally on Monday.

The buck rose +0.02 [+0.02%] to 93.75, making a new low to 93.38 before bouncing back. The high wave candle was mildly bullish (35% bullish reversal), but forecaster wasn’t as impressed, dropping -0.12 to -0.32. The buck seems to have found support right at its 50 MA. Weekly and monthly both remain in uptrends.

Crude edged down -0.06 [-0.08%] to 73.17, after first making a low to 72.15. The spinning top candle print was neutral. I’ve been experimenting with a forecaster that is better at buying the dips and selling the rallies; I’ve got it working for crude, more or less, and it seems to be suggesting we buy the dips right now: today was a buy signal for crude. This forecaster is less of a trend-follower, and more of a short-term predictor of where prices will head in the next few days. It seems to work, but the paint is still drying on the overall approach.

SPX rose +24.35 [+0.88%] to 2784.17. SPX rose in the futures markets overnight, and continued rallying during the day in New York, closing at the highs. Candle print was a bullish continuation, and forecaster jumped +0.21 to +0.71, which is a relatively strong uptrend. SPX may be getting ready to break out to new highs. Sector map shows financials (XLF:+2.29%) in the lead, with industrials (XLI:+1.86%) and energy (XLE:+1.49%) also up strongly. Utilities brought up the rear (XLU:-3.08%) – that’s a massive drop in the normally-boring utility group. While tech was missing from the top group, the map overall looked fairly bullish.

VIX fell -0.68 to 12.69.

TLT fell -0.64%, printing a swing high (40% bearish reversal) and forecaster issued a sell signal. TY confirms, falling -0.20%, also printing a swing high (55% bearish reversal), and also with a forecaster sell signal. This could well be an interim top for bonds. The 10-year treasury yield rose +2.9 bp to 2.86%.

JNK rose +0.17%, continuing to move higher off its swing low from last week. JNK is confirming risk-on in equities.

CRB edged up +0.09%; 3 of 5 groups rose, led by industrial metals (+1.36%). Livestock was hit hard, dropping -2.55%.

It appears as though the market was saying today, “well at least things didn’t get worse over the weekend”, and this was cause enough to rally, especially for heavily oversold copper as well as the Shanghai Composite. The crazy sell-off in copper may be at an end – at least for now – and this seemed to take some of the pressure off the rest of the metals group.

Looking at the increases in OI for gold and silver, it appears that the shorts are piling in right now – they are probably betting that the rally in the metals is just a dead cat bounce, with more lows yet to come. Its hard to know who is right on this – it will probably depend on how the tariff thing comes out.

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