PM Daily Market Commentary - 1/10/2017
Gold rose +6.40 to 1187.60 on moderate volume, while silver climbed +0.22 to 16.60 on heavy volume. PM continued to move higher today, even though the dollar showed a bit of strength; possibly the strength in PM was due to strength in industrial metals and especially copper. Copper had a massive rally today, up +3.08% to 2.61.
Gold moved higher, at one point making a new high to 1190.60, and then more or less moved sideways into the close. Today's candle print: opening white marubozu, which is a 16% chance of a high. Gold is moving up slowly and surely to its date with destiny at 1200/the 50 MA.
Open interest at COMEX for GC rose by 10,058 contracts. It sure felt to me as though the commercials jumped in short as gold approached 1190. I expect to see more of this in the next few days, as gold approaches the 50.
Rate rise chances (May 2017) remains at 34%.
Silver rallied much more strongly today, momentarily popping over the 50 MA before retreating into the close. Candle print was a long white candle, which probably will not mark a high. Today's volume was solid, which is a positive sign as silver approaches the 50. Silver is not yet overbought, so it still may have some more room to run. If it can get through the 50, the next resistance line is at 17.30. Today silver strongly outperformed gold, sending the gold/silver ratio down -0.57 to 70.59. That's bullish. Perhaps silver's out-performance was tied to the big move in copper.
GDX moved up +0.71% on moderate volume, while GDXJ rallied +2.36% on moderately heavy volume. GDX printed a high wave/long-legged doji, which has a 19% chance of marking a high. GDXJ printed a high wave candle too, which the code says is a 48% chance of a high. That's not great. Intraday, the miners didn't look all that strong, with an early rally stuffed within the first 30 minutes of trading by a wave of selling. Over the last few days, there has been a fair amount of distribution in the mining shares, and that's a negative for PM.
Platinum rallied +0.17%, palladium climbed +0.99%, and copper shot up a huge +3.08. Over the past week, copper found support on its 50 MA and has climbed back up to 2.60, and now appears to be headed for a re-test of the 2.75 high set back in November. Go copper!
USD rallied just +0.08 to 101.97, first selling off then recovering to move higher. Candle print was just a spinning top, which does not mark a low. The buck is still trying to figure out if its in a downtrend; it remains below its 9 EMA, but it is trying really hard not to decline.
Crude fell hard for a second day, dropping -0.97 to 51.22. Volume is accelerating, which is bearish. Candle print was a closing black marubozu, which tells us that crude closed at the lows of the day, and intraday, there just weren't any buyers. Candle code says today's print has a 19% chance of marking the low. Crude is just starting to become oversold – we could have another couple days of selling ahead of us before crude finds support – possibly at the 50 MA and/or round number 50. The API report after market close indicated a 1.5 million barrel build, which is nominally bearish, but was more or less ignored by the market. That could be positive. The EIA petroleum status report is tomorrow at 10:30. If this report is more bearish than the API report, we could see further declines through Friday.
SPX was unchanged, at 2268.90, printing a “doji” candle for the day. Doji candles typically don't tell us very much; this one is slightly bullish. Industrials led (XLI:+0.42%) while energy fell (XLE:-0.91%). SPX remains just above its 9 EMA. VIX fell -0.07 to 11.49. Puts remain cheap.
TLT fell -0.07%, but still managed to close above the 50 MA. I think the 50 is falling faster than TLT at this point, which accounts for the crossing on a day TLT actually dropped.
JNK rose +0.05%, basically unchanged on the day, printing a high wave/northern doji – almost a gravestone doji - which the candle code found very disagreeable: a 49% chance of marking a top. JNK remains in a strong uptrend, above all 3 moving averages, but the failed rally today is bearish.
CRB rose +0.28%, torn between a strong rally in livestock and industrial metals, and the medium-sized drop in energy. CRB will struggle as long as oil prices continue to decline.
The strong move today in silver was a distinctly positive note, as was the relative strength in PM even though the dollar came back from negative territory. The only bearish part continues to be the mining shares, which are enduring some selling pressure; the GDX:$GOLD ratio has been (more or less) declining since the highs made last Thursday. Are the miners just taking a rest, or is this the signal of a top?
I'm torn. Miners do tend to lead, and while they haven't actually dropped yet, the candle code is nervous. On the other hand, silver is now looking good, the buck is relatively weak, and that gold COT report remains strong. Support from industrial metals looks good too.
Also, that 50 MA is approaching quickly.
At the end of the day, current PM (short term) uptrend remains in place. A close for silver above the 50 would be awfully nice.
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