PM Daily Market Commentary - 2/16/2017

davefairtex
By davefairtex on Fri, Feb 17, 2017 - 7:38am

Gold rose +5.40 to 1240.10 on moderate volume, and silver climbed +0.18 to 18.16 on heavy volume. A big drop in the buck resulted in a moderate rally in gold, silver, and the miners.

As the dollar fell, gold climbed steadily for most of the day, hitting a high of 1243.70 just before noon in the US. Gold's candle print was a two-candle swing low, which the candle code finds bullish; a 66% of marking a low. Gold was not able to make a new high today. Given the magnitude of the dollar decline today, I believe gold should have done better.

Open interest at COMEX for GC rose by +11,944 contracts.

Rate rise chances (May 2017) remain at 42%.

Silver did substantially better than gold, making a new high to 18.14, closing more convincingly above the 200 MA. Candle print was just a “short white” candle, but the candle code did not see today's move as bearish. The gold/silver ratio fell -0.38 to 68.29.

Miners rose, with GDX up +1.08% on light volume, while GDXJ climbed +1.49% on moderate volume. Today's candle print was a relatively low grade two-candle swing low, which is a 46% chance of marking a low. Today's move in the miners was a bit weak given the strong drop in the buck.  GDX has moved back above its 200 MA, which is good news.

Platinum rose +0.14%, palladium climbed +0.44%, and copper fell -1.20%. Palladium looks ready to break out to new highs.

The buck fell hard today, dropping -0.73 to 100.38, following through off yesterday's failed rally. Today's candle print was a two-candle swing high, which the candle code rates as only somewhat bearish; a 37% chance of marking a high. That's not a very exciting swing high.  Today's candle looked really bearish to me; I'm not sure why the candle code wasn't impressed.  I sure was.  The buck sold off all day long, and closed right at the lows.  Gold in Euros fell slightly; its not the end of the world, but not strong either.

Crude rose +0.42 to 53.74, moving towards the top of its recent trading range. Candle print was a spinning top, which the candle code says is bullish. However, oil equities sold off hard, with XLE down -1.36%. XLE is now back below its 9 EMA. The divergence between crude and equities is a bit disturbing; its hard to know which one is leading and which one is the follower.

SPX fell -2.03 to 2347.22, printing a “hanging man” candle which turns out to be neutral – not bullish, not bearish. Utilities led (XLU:+1.00%) while energy did worst (-1.36%). The market might be getting a bit tired; it remains quite overbought. VIX fell -0.22 to 11.76.

TLT rose +0.55%, moving back up close to the 50 MA. TLT remains in a downtrend, even after today's rally.

JNK fell -0.11%, although it remains in a strong uptrend, a few pennies from its high.  Faint hint of risk off in JNK.

CRB dropped -0.26%, slipping back below its 9 EMA. 4 of 5 sectors fell, led lower by agriculture. CRB is more or less chopping sideways in the medium term, but over the longer haul it remains in an uptrend.

Today's move in PM was surprisingly weak, given the big drop in the buck.  I kind of expected to see more fireworks, but all we got was a mild move higher.  Gold appears to be back in an uptrend, and silver is looking good having broken out to new highs, but the miners are struggling.  I'll say it again - I was expecting more, especially given the big rebound yesterday.

Let's see how things go tomorrow.  The equity market rally might be getting a bit tired, and a reversal in equities might cause more money to rotate into PM.

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