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PM Daily Market Commentary – 8/14/2017

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  • Mon, Aug 14, 2017 - 09:21pm

    #1

    davefairtex

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    PM Daily Market Commentary – 8/14/2017

Gold fell -7.20 [-0.56%] to 1287.80 on moderately heavy volume, while silver dropped -0.04 [-0.20%] to 17.07 on moderate volume. A dollar rally [+0.37%] (and a falling Euro) seemed to pull gold lower, while silver held up substantially better. Is gold topping out? It certainly could be.

Gold’s drop today started in Asia and continued through the London session, after which gold chopped sideways into the close in the US. Candle print was a bearish engulfing, which the code rates as a 48% chance of marking a top. I’ve seen much worse-looking engulfing patterns than this. The gold forecaster plunged a big -0.50 points, but is still bullish with a +0.53 rating. Gold remains above its 9 EMA. It appears as though gold is preparing to change trend, but has not done so just yet.

COMEX GC open interest rose +529 contracts.

Rate rise chances (Dec 2017) rose to 47%. That’s a 10% increase from where we were last Friday.

Silver did substantially better than gold, mostly chopping sideways vs gold’s moderate drop. Silver’s candle print was a spinning top, which the code sees as neutral. Forecaster disagrees, dropping -0.40 to read a still-bullish +0.47. Silver continues to have trouble with the 200 MA, being unable to close above it 3 days in a row.

Open interest in COMEX SI contracts fell -241 contracts.

The gold/silver ratio fell -0.27 to 75.44. That’s bullish.

Miners fell today, with GDX off -1.38% on moderate volume while GDXJ dropped -1.72% on moderately light volume. GDX printed a two-candle swing high, which the code felt was a 50% chance of marking the top. Forecaster dropped a huge -0.55 to read +0.32; still bullish, at least for now. GDX does remain above its 9 EMA, at least for now. GDXJ printed just a long black candle, which was neutral, and its forecaster fell by -0.25 to read +0.36 – GDXJ is still bullish also. No trend change yet for the miners, but things are definitely looking more iffy after today.

The GDXJ:GDX ratio fell, and so did the GDX:$GOLD ratio. That’s bearish.

Platinum was hit hard, dropping -1.55%, printing a two-candle swing high which has a 53% chance of marking a top. Platinum’s forecaster dropped -0.62 and is now showing -0.07, which is slightly bearish. This may mark the end of the platinum rally. Palladium rose +0.31%, but its forecaster dropped too, and now reads -0.01. Palladium is teetering on the edge. Copper fell -0.41%, and ended the day right at its 9 EMA. Copper’s forecaster fell also, and now reads -0.25, which is a modest downtrend. It looks like the “other metals” are reversing.

The buck rose today, climbing +0.34 to 93.19. Forecaster jumped +0.36, but remains slightly bearish at -0.15. The opening white marubozu was not given a rating by the code. While the buck is trying to rally, its not clear yet if it will manage to pull it off.

Crude was hit hard today, dropping -1.25 to 47.59. Crude’s print was a closing black marubozu, which the code feels is a continuation. Forecaster agrees, dropping a massive -0.63 to read -0.62, which is quite bearish. After chopping sideways for a few weeks, crude has finally picked a direction: down. There’s no news that I saw driving prices lower. API report comes out after market close tomorrow.

SPX rebounded sharply from last week’s selloff, rising +24.52 to 2465.84. Today’s rally erases last Thursday’s big drop; SPX is now back above its 50 MA. Tech led (XLK:+1.59%) followed by financials (XLF:+1.37%), with energy doing worst (XLE:-0.30%). Energy stocks continue to grind slowly lower; right now XLE is back down to levels last seen in April 2016.

VIX fell -3.18 to 12.33. 2/3 of last week’s VIX rally is now gone.

TLT fell -0.51%, printing a bearish harami which the code assigned just a 37% chance of marking a top. TLT remains above all 3 moving averages, and is still in an uptrend; the TLT forecaster fell -0.21 but still retains a bullish reading of +0.48.

JNK rallied +0.44%, erasing last Thursday’s losses but managing to print a shooting star candle; candle code said it wasn’t bearish, however, and rates it as a likely continuation. JNK is now back above its 200 MA. We’ll call this a mostly-risk-on day.

CRB fell -1.17%, making a new low. All 5 groups fell, led by energy which dropped -2.08%. Ouch. CRB’s new short-term downtrend continues.

My concerns about the staying power of last week’s “flight to safety” rally were borne out today, to some degree. The buck rallied, equities rallied, JNK rallied, and gold and TLT fell. While actual trend changes in gold and silver have not yet occurred, the overall orchestra appears to be tuning up to play downtrend music.

Equity market rallies are not gold-positive events. If this one continues, and the buck starts to rally in earnest, today’s bearish engulfing for gold may just be the start. COT report shows that managed money shorts have been rinsed out almost entirely, while gold commercial shorts have risen enough perhaps to mark a top.

Last point: after today’s close, early in tomorrow’s Asia session, both gold and silver were hit by spike assaults: gold was hit for $6 on 5200 contracts, and silver for $0.22 on 1748 contracts. Both assaults took the metals through some minor support levels. It appears as though someone is trying to kick off a trend change here. We’ll have to see how the buyers respond – this will give us a sense as to where we go next. If buyers don’t show up, most likely the assaults will continue and the metals will move into a downtrend.

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  • Tue, Aug 15, 2017 - 01:13pm

    #2

    Cold Rain

    Status Gold Member (Offline)

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    Game Over

Game over for this rally.  Maybe in 3 or 4 months we can do it all over again.  Triple top held in gold.  200 dma held in silver.  And back into the abyss we go.

  • Tue, Aug 15, 2017 - 03:16pm

    #3

    KugsCheese

    Status Gold Member (Offline)

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    Re: Game Over

The hit was at 8:00, 8:30, 8:40 yet gold is trending up.

  • Tue, Aug 15, 2017 - 03:32pm

    #4

    Cold Rain

    Status Gold Member (Offline)

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    Still Down Though

[quote=KugsCheese]

The hit was at 8:00, 8:30, 8:40 yet gold is trending up.

[/quote]

 

It's still down a good $12, and silver is still in the basement.  It'll be interesting to see if they hit it again tonight/tomorrow.

  • Tue, Aug 15, 2017 - 04:06pm

    #5

    davefairtex

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    Retail Sales

A big hit for gold came at 830 am, probably triggered by a strong retail sales report: 0.6% m/m, which is 7.2% annualized.  This can be a market-moving report – and it was today.

Gold did manage to recover all of its retail sales losses, but silver – not so much.  Silver looks pretty unhappy right now (down -0.46), but as always we should wait for the close to see for sure.

Miners seem to be doing ok given how badly silver is off.

  • Tue, Aug 15, 2017 - 04:28pm

    #6

    KugsCheese

    Status Gold Member (Offline)

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    Re: Retail Sales

This report looks suspect.   Car sales tanked in July.

  • Tue, Aug 15, 2017 - 07:53pm

    #7
    MJB

    MJB

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    Old discussion – Dave

Looking for an old discussion we had about Bitcoin. One fear you had about long term value/viability  was that the internet may be cut off. The blockchain just went into outer space via Blockstream Satellite.

Thoughts? 

https://blockstream.com/2017/08/15/announcing-blockstream-satellite.html

  • Wed, Aug 16, 2017 - 03:11am

    #8

    davefairtex

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    banking connection

MJB-

So satellites aren't permanent, invulnerable fixtures in the sky.  They're pretty easy to take out.

But my focus these days isn't on the internet partition issue – its on the banking connection to the exchanges.  Sever the banking connection (and that actually happened to bitfinix) and then nobody can turn bitcoin into cash any longer.  One day you have $100,000 worth of bitcoin.  Next day: how much is it worth if you can't get it out?

If you have a bank deposit of $100,000 in a bank that doesn't allow you to make withdrawals…is it really a bank deposit?

CHS says that they won't pull the plug this way – and he could well be right.  I certainly didn't let it stop me from buying my ETH.  Then again, I have a lot more money in bank deposits than I do in ETH.

  • Wed, Aug 16, 2017 - 04:23pm

    #9
    MJB

    MJB

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    The day will come when you no

The day will come when you no longer will need to turn your BTC or crypto into fiat.. crypto is a bank killer. You and I are fairy young, we will see this before we pass away.

TenX is a crypto debit card, upload and spend. It works well from what I hear and the TenX (PAY) Token is shooting off like a rocket.

Just so we are clear you think internet cut off AND satellites shot down or scrambled? How far down this rabbit hole are you going to go?!

ETH is good. LTC is the current call. 

LTC = .15 ETH 8/16/17

LTC  > .5 ETH 10/31/17

I like time stamps with concrete calls. We will see in two and a half months.

Cheers.

 

  • Wed, Aug 16, 2017 - 05:33pm

    #10

    davefairtex

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    rabbit holes

MJB-

I've gone over the limited war scenario a number of times.  I guess one more time won't hurt.  A limited war between major powers could easily result in a partition of the Internet.  It is also quite possible it would result in a large amount of space debris that would take down most if not all satellites in low earth orbit, depending on how enthusiastic the other side was in taking down the US space advantage.

https://worldview.stratfor.com/article/real-danger-space-weapons

You call it a rabbit hole (which, I interpret, means "this could never happen so its stupid to even consider") while I think it has a real chance of occurring.  Being a student of history, I look back at the pre-WW1 period, where the consensus was that war could never happen.  Presumably to them, war was a "rabbit hole" which was foolish to go down – especially a four year war that for all practical purposes ended the British Empire.

The limited war scenario doesn't stop me from trading bitcoin, but I'm keenly aware of what trades I'm going to make if I start to assess that such a war is starting to become more likely.

[Total war is a scenario too, but since it is largely not survivable, it is not one I spend any time on]

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