PM Daily Market Commentary – 9/25/2018

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  • Tue, Sep 25, 2018 - 09:25pm

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    davefairtex

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    PM Daily Market Commentary – 9/25/2018

Gold rose +2.39 [+0.20%] to 1208.38 on moderate volume, while silver rallied +0.21 [+1.44%] to 14.49 on very heavy volume. While gold chopped sideways, silver shot higher for reasons unknown; the buck fell -0.07%, which is practically unchanged.

Gold moved slowly higher in a narrow range today. The short white/NR7 candle was unrated. Forecaster jumped +0.42 to -0.07; gold is now back above the 9 MA, and remains in an uptrend in both the weekly and monthly timeframes.

COMEX GC open interest fell -1,765 contracts.

Rate rise chances (September 2018) roe to 95%. FOMC meeting issues its statement tomorrow at 2pm with a press conference at 2:30.

Silver chopped sideways for much of the day but started moving higher around 6 am, and really took off a bit after 9:10 am, breaking sharply above its recent trading range, breaking out above its downtrend line, holding most of its gains into the close. The reason for the rally? I didn’t see one. All the usual suspects were silent; copper actually fell, as did platinum; the buck wasn’t the cause. In short, silver just decided to rally all on its own, for reasons that remain a mystery. Silver remains in an uptrend in both the daily and weekly timeframes.

COMEX SI open interest rose 14 contracts.

The gold/silver ratio fell -1.05 to 83.22. That’s bullish – and the current level for the ratio suggests PM could be at or near a long term low.

Miners tried rallying again today – they failed once more. GDX rose +0.27% on moderate volume, and GDXJ climbed +0.39% on moderately light volume. XAU moved up +0.63%, printing a shooting star candle that was just a bullish continuation. XAU remains in an uptrend in the daily timeframe, but is in a downtrend on the weekly and monthly. No change in the miners today.

The GDX:$GOLD ratio rose +0.07%, and the GDXJ:GDX ratio moved up +0.13%. That’s neutral.

Platinum fell -0.60%, palladium moved up +0.15%, while copper dropped -0.23%.

The buck moved down -0.04 [-0.04%] to 93.75. The trading range was fairly wide, but the buck ended up going nowhere. The doji candle was unrated, and forecaster remained in a downtrend in both the daily and weekly timeframes.

Crude fell -0.09 [-0.13%] to 71.90. Crude made a new high to 72.78 but was not able to hang on to the gains, partly because of a somewhat bearish API report (crude: +2.9m, gasoline: +0.9m, distillates: -0.9m) which yanked prices down 30 cents on release. Still, crude remains in an uptrend in all 3 timeframes. Nick Cunningham wrote an article in which he noted that BAML has a price target for Brent crude of $95 by Q2 2019. Sanctions on Iran play a big part in this story. https://oilprice.com/Energy/Oil-Prices/100-Oil-Is-A-Distinct-Possibility.html

SPX fell -3.81 [-0.13%] to 2915.56. The mild drop took SPX down to its 9 MA, but not below. SPX remains in an uptrend in all 3 timeframes. Utilities did worst (XLU:-1.37%), while energy was best (XLE:+0.64%). Sector map was slightly bearish.

VIX rose +0.22 to 12.42.

TLT fell -0.10%; TY also fell, losing -0.06%, making a new low. So far, no bullish reversal for TY, although the pace of the downtrend appears to be slowing down. TY remains in a downtrend in all 3 timeframes. The 10-year yield rose +2.4 bp to 3.10%. Are we heading for a break above the previous high? We are right there today.

JNK rose +0.03%, effectively going nowhere. JNK is in no mans land right now, neither uptrend nor downtrend.

CRB rose +0.17%, with 3 of 5 sectors rising, led by energy (+0.68%). CRB is right at its 200 MA.

Rates have moved up to their previous high; a move above 3.10% and we could see a rapid move higher as traders who bought bonds a few months ago get stopped out of their trades.  Its hard to know which way things will go, but the more shots the market has at the high, the more likely a breakout is to occur.  Fed is rolling off $50 billion per month, the US government has a large deficit, and that large amount of new supply on the market is a force moving long rates higher.  Absent some sort of flight to safety, I’d expect 3.10% to be broken – probably sooner rather than later.

As for silver – I have no idea what happened to cause it to rally today.  Currently silver is quite close to a buy signal in the monthly timeframe, and it already looks quite strong on both the weekly and daily.  We didn’t see substantial short-covering today, but I suspect that will change if prices makes it back above 15 – although it could happen sooner, its hard to say.  Once the commercials decide its time for silver to rally, things could get disorderly pretty quickly.

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