evening wrap, june 5
market vibes
“Hell hath no fury.” William Congreve, 1697
NY metals enjoyed a relatively busy day for a change, led by silver. Gold followed but got hammered in two sequential slugs of volume, one just before the Comex and one in the first hour of the stock market, but silver was strong coming in and at settlement. Stocks were choppy. Oil tried to rally again but stalled at the recent highs and finished +$0.50/barrel in the front.
June Bitcoin held the May 8 lows of $102,010 by $10 with a low of $102,020. I always say, “Dimes count.” However, the bullish image has grown steadily negative, including a DMI red bar indicating the 10-bar moving average net new lows is now greater than the opposite value of net new highs.
S&Ps whipped up and down on dovish data and some program selling in front of NFP. We’ll see what happens tomorrow.
Tesla sliced through its 200-day MA on the highest volume in three years. It’s a big stock, so the averages are going to need an offsetting champion (or two) tomorrow. Musk went a little crazy, and whether his tantrum turns out to be on point or not, he hurt himself and his company, in my opinion.
I won’t say the longs are in control of WTI yet, but they have the upper hand at the top of the range. There is going to be a PnL swing if Iran goes rogue or succumbs to a backchannel or a better deal. The longer the range persists, the heavier rising OI will get.
The facts, as I see them, are declining demand in China and soft economic data in the US. Europe is slowing and cutting. Supplies are not excessive but definitely on the high side of ample. Gasoline is weak. The biggest COT long position is commercial. Bear in mind oil is worth nothing if it is not refined. As long as the front spreads are in backwardation, the carry is positive. So, keep close on the July/August/September fly.
July silver made new contract highs at $36.27, topping the October highs of $36.10 without a narrative or commentary; nothing. Prices settled above the 2025 highs of $35.715. Tomorrow is an insignificant expiration of about 3 million shares (1 share = 21 ounces) ATM at $32/share or better. SLV settled at $32.40. There’s about 50 odd million of notional June SLV circa current levels, and there is gamma there.
Copper was up today because inventories are down. The narrative is known: AI needs copper etc. Silver made new contract highs on record high inventories and no narrative at all. Strange…
Since April 3, Comex gold rallied $500/toz, sold off $400, rallied $250, and transacted > 12 million contracts. The net change in open interest is +/- 30k lots. Spec length is the lowest in 16 months; very strange.
The arb’d silver in question is worth about $7 billion at settlement, not horrific, but if silver goes to $40, the carry will be painful. The gold in question is worth about $68 billion. If futures trade higher, the spot side won’t rally dollar for dollar with futures much because there is so much of it. As a friend said, “The metal could just sit here until the arbs open.” Or the carry diverges again.
In other markets the dollar was unchanged.
my vibe
The Trump Musk crack up is the unintended consequence of the century. What comes next? Whatever it is, everyone that can use it will use it to hurt the Trump agenda. There is a line out the door.
Cooler heads say, “Cooler heads will prevail.” If not, the Trump story will be told in time. The Musk story is live right now. At any rate for us … “it’s on to Cincinati” (ht KW).
a very weird day…night all…
PS: cut my silver 50%
JJ
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"Shores of Normandy": my dad and 4 uncles enlisted and lived while so many enlisted and died. The next YouTube song up was "Hotel California": desperately sad - sad that the song had to be written and sung and sung and sung, but so gorgeously. Then came "Bridge over troubled water", and redemption. Thanks Alyosha - I needed a good cry. Lest We Forget.
TSLA sub 250 may be a trade if you believe in the Robotaxi which launches this month.