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PM Daily Market Commentary – 8/6/2019

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  • Wed, Aug 07, 2019 - 03:15am

    #1

    davefairtex

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    PM Daily Market Commentary – 8/6/2019

Gold jumped +10.95 [+0.74%] to 1486.77 on very heavy volume, while silver climbed +0.05 [+0.30%] to 16.45 on moderate volume. The buck moved up slightly [+0.11%], the 10-year fell slightly [10Y yield +0.4 bp], SPX recovered from yesterday’s drop [+1.30%], while crude fell hard [-2.68%].

Gold gapped up at the open, made a new high in Asia, sold off, and then move steadily higher back up, closing at the highs at end of day. The spinning top candle was somewhat bearish (40%), but forecaster moved higher into a very strong uptrend. Today was a yet another new 6 year high. Gold remains in a strong uptrend in all 3 timeframes.

COMEX GC open interest rose 4,748 contracts.

Futures are projecting a 100% chance of one rate cut in September, a 19% chance of two rate cuts. The December projection is 100% chance of one rate cut, a 90% chance of two cuts, a 50% chance of 3 cuts. That’s down a bit in September.

Silver more or less chopped sideways all day long. The doji candle was slightly bearish, and forecaster inched higher, just barely moving into an uptrend. The move was enough to pull SI back above its 9 MA. That’s a positive sign. Silver is now in an uptrend in all 3 timeframes.

COMEX SI open interest rose 1,508 contracts.

The gold/silver ratio rose +0.45 to 89.94. That’s bearish. Silver continues to underperform.

The miners mostly just moved sideways today; GDX rose +0.24% on moderate volume, while GDXJ fell -0.51% on moderate volume also. XAU rose +0.24%, the long white candle was unrated, and forecaster fell sharply but remains in an uptrend. XAU remains in an uptrend in all 3 timeframes, but the uptrends are all fading somewhat. Not sure what the forecaster sees, but I get the sense that miner momentum is fading fairly substantially.

The GDX:gold ratio fell -0.49%, while the GDXJ:GDX ratio dropped -0.75%. That’s bearish.

Platinum fell -0.37%, palladium rose +1.38%, and copper moved up +0.63%. The copper rally, after such a long decline, was bound to happen. Is it a reversal? The bullish engulfing doesn’t look all that bullish, but forecaster did manage to rise – not enough for an uptrend, but it is a positive sign. This lines up with the SPX and JNK rally today.

The buck rose +0.11 [+0.11%] to 97.18. The thrusting candle was somewhat bullish (40%), but forecaster continued moving deeper into a downtrend. The buck remains in a downtrend in the daily and monthly timeframe.

Large currency moves include: JPY [-0.40%], CNY [-0.35%]. CNY has strengthened somewhat (USD/CNY falling = CNY strengthening) after leaping above 7 over the weekend; it closed yesterday at 7.03. Interestingly, bitcoin also moved down off its highs as the CNY recovered.

After watching bitcoin’s movements of late, I’m becoming more convinced that bitcoin will act as a safety valve in the event of capital controls – and what this ends up looking like is, BTC will rally when the perceived need for a safety valve increases. It appears to be moving (roughly) along with CNY/USD over the last 6 months. Bitcoin isn’t gold – but the bitcoin network does act as an escape mechanism that allows people to flee their home currency. The increased demand for such a vehicle ends up being positive for bitcoin.  As long as it remains operative and generally accessible, of course.

SPX rose +37.03 [+1.30%] to 2881.77. SPX fell hard early in Asia, and then bounced back – rallying clear through to the close. Most of the gains came in the futures markets in the overnight session. The bullish harami was mildly bullish (+39%), and forecaster moved higher but remains in a very strong downtrend. Today’s rally was enough to unwind the monthly reversal – this leaves SPX in a downtrend in just the daily and weekly timeframes.

Sector map was led higher by tech (XLK:+1.66%) and financials (XLF:+1.61%), while energy (XLE:-0.12%) and materials (XLB:+0.12%) did worst. This was a bullish sector map.

VIX plunged -4.42 to 20.17. That’s a big decline.

TLT rose +0.80%, making yet another new high. The long white candle was bearish (58%) and forecaster moved lower but remains in a very strong uptrend. TY hardly moved; up +0.05%; the high wave candle was slightly bearish (36%) and forecaster moved a bit lower but remains in a very strong uptrend. The 10-year yield moved up +0.4 bp to 1.74%.

JNK rallied +0.62%, the bullish tasuki line was very bullish (63%), forecaster jumped higher but it is not quite enough for an uptrend. The BAA.AAA differential fell -3 bp to +0.84. There is still no concern at all about low grade credit. This doesn’t line up at all with any sort of concern about recessions. I think money has figured out that the central banks will feel the need to buy up all the crappy corporate debt in order to “stimulate the economy” and/or keep all those zombies alive for longer.

CRB fell -0.55%; 2 of 5 sectors fell, led by livestock (-1.81%). Commodities overall are quite close to the 2017 and 2018 lows – it is just 2.4% away.

Gold just continues to grind higher.  Periodic intraday attempts to “move price lower” don’t seem to work so well – they just provide gold at a discount to the crop of interested buyers.  “How’s that manipulation thing working for you?”  Armstrong always said this stuff doesn’t work.  Or rather – it works great in a downtrend.  You think you’re an all-powerful genius.  Right up until the trend changes, lots of interested buyers appear, and the whole scheme falls apart.

And you are left with a large short position in a rising market.

In early Asia trading, gold has broken above round number 1500.  What’s more, silver has finally decided to catch up with gold, breaking to a new multi-year high of 16.85.

Once silver decides to take off, it could really move quite rapidly.  Same is true with platinum.  We will have to see how it goes, but things continue to look positive for the metals.

And equities – hard to know if this was just a dead cat bounce or not.  Shorts are probably ringing the cash register after a great last couple of days.

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  • Wed, Aug 07, 2019 - 10:25am

    #2

    davefairtex

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    from my lips; silver +0.70

Silver has broken cleanly through the previous high of 16.68, and also through round number 17, and is now trading at 17.19, up +0.74 in just one day.

Can you imagine what the shorts – not that there are many left – must be going through?

Just saying. You all know I’m long PSLV.  And a few other things too.

Oh yeah, gold is through 1500 to 1517, up $32.80.

Poor gold, only up +2.27%.

“How’s that suppression thing working for you?”

  • Wed, Aug 07, 2019 - 11:51am

    #3

    Cold Rain

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    And

How bout that equity ramp?  Just severe buying all day long, after the morning low.  Let’s see where the PBOC sets the yuan tonight.

  • Wed, Aug 07, 2019 - 12:51pm

    #4

    Chris Martenson

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    ""Markets""

Heh heh.

This is now into parody zone.

This is what happens when a small cabal of unelected bureaucrats decide they know better than everyone else what the right prices for everything should be.

In other words, Soviet era communists would be right at home in the US banking/Federal Reserve organizations.

 

 

 

  • Wed, Aug 07, 2019 - 01:03pm

    #5

    Cold Rain

    Status Gold Member (Offline)

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    Lol

And now look at gold cratering into the close.  I knew they wouldn’t let it close above $1500.  Will be lucky to close in the $1480s at this rate.

  • Wed, Aug 07, 2019 - 04:36pm

    #6

    Cold Rain

    Status Gold Member (Offline)

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    Shocking

I am shocked that they actually let gold bounce back and close above $1500.  Seemed like it was going south pretty strong as everything else was reversing.

Charles Nenner says that gold is at a near term top and that equities should rally for a while before turning down again in September.

  • Thu, Aug 08, 2019 - 06:34pm   (Reply to #6)

    #7
    ao

    ao

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    re: Shocking

Today was another “shocking” day.  The volcano of gold keeps erupting upward and the rain of manipulators can’t seem to quench it.  Very interesting.  While Nenner said gold is at a near term top, he also said it is in a new bull market and should hit $2500 in the not too distant future (2020/2021?).  To me, as Chris mentioned, the complete disinterest of the masses in gold at the present time is very bullish.  Palladium has done very well and has not lost much from its top and rhodium has done extremely well.  The red headed stepchild at this stage is platinum which has just started to do a turn around but is still rather sluggish.  I have no interest in equities until I see a major market crash, not when I can make money with physical PM holdings.

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