PM Daily Market Commentary - 12/13/2017

davefairtex
By davefairtex on Thu, Dec 14, 2017 - 12:37am

Gold rose +11.70 [+0.94%] to 1258.10 on moderately heavy volume, and silver rose +0.36 [+2.25%] to 16.10 on moderately heavy volume also. The buck plunged -0.73% - this accounted for a good chunk of gold's move, most of which happened following the FOMC announcement at 2pm.

Gold's rally came in two phases today; a first spike up following the US CPI report at 8:30 am, and a second, stronger rally following the FOMC announcement at 2pm. Candle print from today's move was a swing low/confirmed hammer, which was a 54% chance of a bullish reversal – just an average rating. Forecaster issued a buy signal, jumping +0.37 to +0.20. Gold is back in an uptrend.

COMEX GC open interest jumped by 10,648 contracts.  That's 33 tons of new paper gold.

Rate rise chances (March 2018) fell 13% to 45%.

Silver tried to rally after the CPI report but the rally failed, however as the FOMC announcement time drew closer, buyers continually pushed prices higher, culminating in a big rally immediately after the announcement itself. Silver printed a swing low, which was a 55% chance of a bullish reversal. Silver forecaster issued a buy signal, jumping +0.44 to +0.34.  A note of caution: today's volume isn't quite as high as I'd like to see.

COMEX SI open interest rose by 3,589 contracts.

The gold/silver ratio fell -1.02 to 78.14. That's bullish.

The miners screamed higher today, with GDX up +3.45% on extremely heavy volume, and GDXJ rose +3.81% on extremely heavy volume also. GDX printed a highly rated swing low (80% chance of a reversal). Buy signals in both GDX and GDXJ. Some individual silver miners I follow rallied 10%. Yesterday I mentioned that silver miners were being accumulated over the past few weeks. Here we see the result. Sometimes we are blessed by those ratios giving us a clue as to what will happen. SIL:GDX did just that. HUI forecaster rose +0.50 to +0.49. That's a buy signal.  Today I give you the GDX chart - only to include the massive volume bar.  The heavy volume today is a good sign.

This doesn't mean I think you should buy tomorrow at the open, mind you. Miners may well retrace for a few days after today's big gain, but the momentum has definitely shifted, and the trend is now up.

Today, the GDXJ:GDX ratio rose, as did the GDX:$GOLD ratio. That's bullish.

Platinum rose +0.80%, palladium climbed +0.50%, and copper rallied +1.11%. Platinum's move higher wasn't quite enough to trigger a buy. Copper continues to slowly recover from its big plunge last week.

The buck plunged -0.68 [-0.73%] to 93.04, with most of the move coming after the FOMC announcement at 2pm. Print today was a swing high (56% bearish reversal). Forecaster plunged -0.53 to -0.03, which is a sell signal for the buck. Today's drop wiped out an entire week's worth of gains. The buck is now back below all 3 moving averages - and looking bearish.

Crude fell today, dropping -0.80 [-1.39%] to 56.66. The EIA report looked ok (crude -5.1m, gasoline +5.7m, distillates -1.4m) but the market wasn't pleased, selling off after the report came out. Print was a swing high (54% bearish reversal) and forecaster dropped -0.21 to -0.33.  Today's swing high confirmed the forecaster sell signal that triggered yesterday.  Of course, there has a been a lot of back and forth in recent weeks; it will take a drop below 55 to get me worried about crude.

SPX fell -1.26 [-0.05%] to 2662.85. SPX had another failed rally today, making a new all time high (to 2671.85) before dropping. The dark clound cover print was mildly bearish (37% chance bearish reversal), and the forecaster declined -0.14 to +0.40. Consumer staple did best (XLP:+0.57%) while financials were hit worst (XLF:-1.24%).

VIX rise +0.26 to 10.18.

TLT rallied strongly, up +0.75%, with the forecaster up +0.99 to +0.58, which is a buy signal for TLT. TY rallied sharply too, up +0.44%, however TY forecaster remains in a downtrend: up +0.27 to -0.09. The rally in both items was sparked by the CPI report at 8:30 am, which showed effectively “no inflation” in the “core” inflation reading. Its almost comical given the asset price bubbles we see, alongside the massive increases in healthcare insurance prices, but there you have it: no inflation – and that's good for bonds. I think what they really mean is “no wage inflation.”

Michael Flynn could get 5 years in prison for lying to the FBI, but when the US government lies to us routinely about inflation?  Situation normal.  Its even rewarded with a bond market rally!

JNK was unchanged today, but its forecaster saw something it didn't like, dropping -0.16 to -0.05. That's a sell signal for JNK.

CRB edged down -0.03%, with only 2 of 5 sectors dropping – led by energy (-1.28%).

Both gold and silver liked the FOMC announcement at 2pm, but silver was rallying well in advance of the release. I don't quite know why things happen like this, but the metals often sell off in the week prior to FOMC, and then rally on the day of the announcement – and even a little bit before. Is this engineered? Or simply the market worrying about some extreme hawkishness from the Fed that goes away once the announcement occurs?

Trend is now reversed in PM – silver is back above 16, and its monthly chart looks somewhat better. The buck is headed downhill and looking bearish once more; if it continues, that should help PM continue moving higher.

I'm guessing this week's COT report will show a large number of new managed money shorts ready for squeezing, especially in silver. If the commercials pursue the shorts, it could lead to a rally in silver back to $17 in pretty short order.  That said - there might be a day or two of retracement prior to the next phase up.

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