SD Friday Wrap: There’s also a bad omen in gold. Here’s why…
First of all, from an Iraq War Veteran to fellow Veterans out there – Thank you for your service.
I bring up up military service to make a point about bad omens:
You know them when you see them.
Anybody who ever rolled into an Iraqi town and saw the civilians disappear and the streets turn empty knows what that bad omen means:
Somebody is about to get hit.
You just don’t know where the attack is coming from or how intense the attack is going to be. All you know is that something bad is about to happen.
Which is where we stand today with the precious metals. The bad omens are all around us. It stands to reason that since the cartel has been ineffective flushing the open interest so far, they will have to paint the charts a little more before they are able to.
And so in silver we have a “Death Cross”
We needed to blow up the daily real nice and big to make the cross visible. Sure, there is a chance the cross could reverse if price can get moving, but with each passing day it’s not looking good for the home team.
Since the rise last Wednesday, there have been several days of wild price swings. These are the signs of a market that’s ready to break-out or break-down. It would naturally be breaking out, but with price smashes like the one today, we are seeing wild downside action after the price rises.
Here’s a close-up of that price smashing:
No, it is not natural to just come during a time when there is not much price action one way or another and all of the sudden panic sell thousands upon thousands of contracts.
No real and rational person or institution legitimately buying or selling anything would do what happened this morning at 11:08 a.m. EST and flood the market in this manner.
That is what we call pure, unadulterated precious metals price suppression.
Over the course of the week, on the 15 minute chart, we can see just how ugly it has been for silver:
That is what we call “monkey hammering”. It does show just how hard of a time the cartel has had in keeping the price down. We can’t even call ’em dips. They are flat out smashes, and the smashes are bought.
Looking at the weekly, however, we see more uncertainty than anything:
Since bottoming out in December of 2015, there is a pronounced channel between $16 and $18. After several weeks of hovering at the $17 price range, right in the middle of the channel, something is about to happen to the upside or the downside. We first said this two weeks ago, and again this week, but the more prices consolidate at $17, the more coiled the spring becomes.
Looking at the bad omen on the daily (the first chart above), the cartel will do everything in their power to make sure the silver price visits the bottom of the channel.
Here’s another channel who’s underlying (the GSR) is like a pinball bouncing around on the bumpers of the 50-day and the 200-day:
Going from 73.50 to 76, and then doing it all over again in a matter of days on the gold to silver ratio, this type of action only highlights the convulsing price action we have seen over the past week and a half in the actual metals.
Gold has a bad omen of its own:
The weekly in gold is starting to look like it has put in two lower-lows and now a third lower-high.
Recall that bull markets are indicated by higher-lows and higher-highs, and bear markets are indicated by lower-highs and lower-lows.
Now, it is in our opinion (as it is in that of most precious metals analysts) that the metals bottomed at the end of 2015/beginning of 2016, so while we are talking about bearish dynamics, we are talking about short-term price action. Arguably, since that is a weekly chart, where each candlestick represents one week’s worth of price, it could be considered “medium-term”, but that’s prior to the Fedspeak from a few years back, there was never a “medium-term”. Nonetheless, the bearish painting of the chart is designed, for sure, to further kill sentiment.
Seems like they have indeed killed sentiment yet again, right?
Because, believe it or not, the metals are up on the week, but it sure doesn’t feel like it.
Although it’s not clear if this is the start of the reversal, or just a bump up on the way back down.
On the 15 minute chart, we see that gold has not felt the pain quite like silver has:
We can see the ever so slight uptrend in gold since the markets opened last Sunday. Yet, instead of being up $25 on the week, gold is up $10.
Platinum had better get above $950 in a hurry:
That would give the platinum price a higher-high on the daily to go along with the higher-low.
Palladium continues to be the star of the year and sure enough, we saw another high this week:
That channel is parallel. And with the actual dip today, because palladium is not subject to the same brutality as gold and silver are, the support line of the channel should hold, and a dip below it from here or even riding the line for a few days should bring about the next run to authoritatively staying above $1,000.
But the base metal that we have been keen on following all year (Dr. Copper) is continuing the breakdown:
Keeping in tune with our themes of bullish and bearish trends, that’s three lower-highs and two lower-lows on the chart (bearish).
The great unknown right now is crude oill:
After the Saudi Purge pop in the price of crude, the price has consolidated at the $57 level. Going back to the recent low of $42, we can see that after periods of consolidation, the price of crude has faded only to rise in the next up-leg after the shorts and the longs work out their positions.
The dollar looks like it is breaking down coming off of the inverse head-and-shoulders pattern:
Recall the upside target has been 96, but it sure looks to be rolling over on the daily above.
If there is a counter-omen, it would be the dollar right now in general, and USD/JPY in specific. Looking at a chart of USD/JPY shows a similar roll over.
If the dollar starts breaking down even more, that could provide upside support for gold and silver regardless of the negative sentiment and bearishness they have painted on the gold & silver charts.
The yield on the 10-year surged today to close the week:
After nearly falling below 2.3% on Tuesday, yield shot up to 2.4% today (Friday).
Something else is starting to wake up again:
Fear (the VIX) is starting to creep back into the market, which it should considering all the domestic and geo-political hot-beds nationally and globally.
Which is one or the reasons for the stock market actually pulling back:
After hitting yet another record high on Tuesday, the Dow has finished down two of the last three days. However, thinking that this is the start of the reversal is something that has only ended in a trader’s worst nightmare:
But the chart of the week is sponsored by BTC:
A drop of 16% in two days is a little, well, not very “store of value-ish”.
Enjoy the sale and stack accordingly…
– Half Dollar