SD Midweek: Gold, silver, platinum and palladium are all poised and looking ready to rally, even if there is that open-ended problem…
On the fundamental side, today could be a very big day. Is the house going to release their tax plan today? What is the Fed going to put in its FOMC statement due to hit the tape at 2:00 p.m. EST? Are we going to get another terrorist attack?
With all the uncertainty, the “fear” barometer doesn’t even care:
Unbelievable that the VIX has gaped down. Of course, the Fed wouldn’t want any eyebrows raised going into the finishing day of the two-day meeting. There is no press conference this month, and as a reminder, nearly everybody is certain the Fed will hold and absolutely nobody believes the Fed will cut:
The dollar is starting to look more like a bear rally than a head-n-shoulders pattern:
The dollar needs to get to 96 in a hurry or it risks fizzling out on the charts. We were skeptical when we called out the forming pattern a few weeks back, because the left-side shoulder was not pronounced, but a gradually sloping descent. Sure, we could get a gradually sloping ascent up to 96, but it would be unwise to call it a bottom in the dollar. The dollar now has over three full years of strength, and our President openly wants a weaker dollar.
And as such, the yield on the 10-year is back under 2.4%:
After spending the last several days in wait-and-see, it seems the yield on the 10-year is running out of patience. Though things could definitely get going today, especially if the tone of the FOMC statement is overtly and overly “dovish” or “hawkish”.
If the tone of the statement is “dovish”, that means the Fed is looking for easy monetary policy. It means they are happy to keep printing to pump up the stock market. A dovish Fed means interest rates are going lower, and to use the time-tested metaphor – There is more liquor and fruit punch at the ready to refill the punch-bowl.
If the tone of the FOMC statement is “hawkish”, that means the Fed is looking to “tighten” monetary policy. This means the Fed is ready to take the punch bowl away and end the party. As such, interest rates would be going up, and the money printing would theoretically subside.
No matter the tone, look for the MSM to cheer-lead the Fed every sentence of the way. That’s part of the game. Everybody loves’ the Fed on Wall Street and in the Mainstream, even if it is their publicly stated objective to devalue the US dollar by 2% per year so that we all pay more for the things we need every single day.
When the Fed statement “hit’s the tape”, that is to say, at 2:00 p.m. exactly, because Bloomberg terminal is expensive and nano-seconds are fiat, everything in the markets will get to moving.
Don’t be surprised to see the knee-jerk reaction in gold & silver. Typically, there could be a spike up in the price, followed by a slow digestion over a minute or two of the bids and asks, followed by fingers at the ready in an attempt to dial back down the price.
However, the Fed and the ESF are stuck, because open interest is still very high. Open interest has to come down, but are they really just going to keep issuing paper to get back to substantially surpass all-time record high levels of open interest?
Sure, a belt-fed machine gun can fire thousands of rounds a minute (open interest), but after just several minutes of non-stop firing (naked shorting the markets with paper gold and paper silver), the barrel will melt and warp (physical supply will dry up).
We’ll see what happens, but silver has managed to hang in there over the last couple of days:
At the bottom of the chart, we can see that open interest hasn’t budged yet, but other key technicals such as the RSI and MACD are healthy. Two things immediately jump out on the silver chart.
First, the 50-day moving average has fought back to stay above the 200-day. The silver price really needs to turn that blue line up in a hurry.
Secondly, check out that big, bullish candle that formed overnight. It appears to have saved silver from the dreaded lower-low. That would have killed sentiment. If it holds, that would be a higher-low on the chart and would be a bullish signal.
All said, silver is looking good right now in spite of the cartel’s desire to smash price.
In fact, the gold-to-silver ratio is affording the gift of silver right now:
That’s like free ounces in your pocket.
Gold is holding the 200-day moving average right now:
Notice how the volume over the last two days was particularly weak. Overnight, gold has put in nearly half of the volume over Monday and Tuesday. Very bullish, especially since we know the metals will move today off of the data releases and Fed statement.
Platinum is looking like it can come off of life support and move from critical to stable status:
There is not the problem of being overbought. In fact, if was nearly severely oversold just a few days ago on the middle Relative Strength Index indicator in the middle of the lower-bound studies. All things considered, platinum looks poised with the rest of the metals, and the precious metal is in much better shape than at the start of the week.
Palladium even looks that it could put in a new high:
As of now, palladium didn’t even come down to test the 50-day.
On Monday the mood could be described as cautiously bullish but preparing for the worse.
Today, on Wednesday, it should be noted that the charts have set up even more bullish than just two days ago.
We know the metals are set to make a big move here, we just don’t know the direction. Sure, we could be in a bullish fake-out right now, but for the cartel to achieve that, they’re going to need a bunch of paper on top of the huge mountain of trash they have already piled sky high.
Get ready to pay more at the pump:
Crude oil is looking overbought here, but it takes time for the price of crude to turn into the price at the pump, and there is no denying that since April, the price trend has been higher. Well, get ready for the prices over everything, taking their inputs from the price of energy, to climb even higher yet.
For all those quick to call out the rampant Chinese speculation on copper:
The base metal has yet to test the 50-day simple moving average, and other key indicators are turning up again.
Today’s stock market bubble is brought to you by the Nasdaq 100:
However, in an alarming development, President Trump is not confined to just pumping the stock market.
Our President must now pump the consumer “confidence”:
— Donald J. Trump (@realDonaldTrump) October 31, 2017
And even the housing market:
— Donald J. Trump (@realDonaldTrump) October 31, 2017
Of course, since he’s a real estate guy, seems reasonable he’s glad that anybody interested in buying a house must now pay more than ever before.
Although, we are far from in the clear. ADP payrolls, the President’s Fed Chair nomination, and Friday’s BLS Jobs Report have the potential to turn things on a dime.
– Half Dollar