just charts today…
market vibes
January 12… )
"A billion here, a billion there, and pretty soon you're talking real money," Senator Everett Dirksen, March 8, 1962
the markets
COMEX March silver is making new all-time highs into some predictable selling on light volume. Open interest is falling because the index rebalancing is selling March futures and the buyers are shorts so OI goes down. Since settlement Friday Jan 9, OI is down 20 million toz and 28 million ounces were sold last week so net 8 million new longs by my ken. Another 42 million toz coming in by COB Wednesday evening and the market doesn’t want to wait for them. This is a strong trend resolving a brief period of congestion in the 70s and appears to be accelerating higher.
The March silver profile looks like a vanilla breakout with a strong tail of single prints off the lows at $79.75, which is also the top of value of the January profile going back to Dec 26. There is a single print at 82 that day longs can use as a mental stop. I don’t think it’s going to happen but prices under 79.75 would imply a retest of the January point of control at 75.00.
The same behavior in gold as silver today, only a little more subdued and OI is rising indicating new length in futures. Since silver is so broken we can reasonably use gold as a proxy for flows and AUM is obviously moving, competing with an organic imbalance already in force.
The day structure in gold is exactly the same as silver, a big tail of single prints off the lows (at new all-time highs) a single print void between 55 and 67 basis Feb futures that day longs can use as a mental risk manager. Obvious new lows on the session would be a failed auction and imply more time in the January range to push higher later in the month.
Platinum wants to go higher but the exchange data implies no one is buying it (or selling it). Sooner or later the activity in gold will memo the PGM markets and they’ll catch up, I think. The trouble is platinum is unforgiving getting in and lethal if you’re wrong so it’ll be the pros that kick it off. I would keep an eye on NYMEX volume if you’re keen to play.
I’m not a fan of S&Ps because there is no technical reason to be a fan. Stocks can’t hold a rally. If I had a dollar for every time I’d written those words in Q4 I’d have enough to buy a large pizza, maybe two.
The low for January is 6866.75. If S&Ps violate that low and close below it, I’m not touching the left hand side of the blotter until they make all-time highs which are a scant 53 handles from here. This is an easy market to wait on the bus stop for the bus.
WTI is another market that has good internal data without going up. Better said oil gets longer every day but prices are flat. These developments in Lat Am … where there is a shit ton of oil are … beginning to look like an Argentinian trend. The banana republics might be morphing into an oil kingdom.
The President’s oil council last week was instructive. Exxon’s CEO seemed unhappy about the prospect of liberating Lat Am oil reserves not just Venezuela’s. I get it. XOM pumps ≈ 4 mm bpd. Every dollar lower is negative $1.5 billion/year. Do the math at $50 or $45 that’s money. No matter, the wildcatters will do it and sell it to XOM in the market.
RBOB cracks are higher, heat cracks in the ditch, spreads are falling after a spike in London this morning. The range is extremely powerful. The bids are Putin and Iranian uncertainty which is reasonable if you’re a refiner. This is no place to make a killing. It is one where you can get killed. No one needs to be short oil unless you have price risk in the tank…which is why when and if it does break… the break will be swift.
I think I might stop covering bitcoin every day. Fink and Dimon gutted it and it’s simply a slave for fees now. There’s a massive trapped long just below the market and everyone knows it. Same thing with S&Ps although the soggy length is foisted on record leverage… same idea.
The glaring absence of alpha in stocks and crypto is more than conspicuous. It’s almost fishy-stinky… Especially with gold and silver far far from Wall Street’s obsession with vol control. Bitcoin is becoming Conan Doyle’s “dog that didn’t bark.” I might use that as a title someday but credit Doomberg with first usage
my vibe
Gold and silver … and PGMs and base metals are sucking marginal capital away from equities at a time when they are highly leveraged and in most need of fresh AUM. This is the ghost of William Simon wagging his finger at the global financial leadership for allowing gold and silver to be so infected with complacency for so many years.
There are > 7 billion ounces of gold out there and every ounce is preciously (no pun) accounted for. A hundred dollar rally in gold is pretty common, $700 billion. A thousand dollar rally … just 22%… is $7 trillion… an incremental $1000 rally in gold is more than 10% of the S&P.
This feels like an easy Monday. Read a book. Take a walk.
Take a nap with …
JJ
If you like reading market vibes please hit the like button, and type in your e mail below to become a free or paid-up subscriber. Thank you.
Share selectively with friends and colleagues and follow me on X @Alyosha745
Charts and data CQG and Bloomberg
Market vibes is not a registered investment advisor. Comments, thoughts and opinions are entirely those of the author without any representations to accuracy and are for informational use only. Any mention of a particular security, index, derivative, or other instrument is NOT a recommendation to buy, sell, or hold that security, index, derivative, or any other related instrument.
I guess the BCOM rebalance isn't going to be as big an issue as we thought
Illuminating point on $XOM. Friday headlines made it sound like the White House confab with oil execs was a bust. But watching the actual video footage, it was more convivial, upbeat. Seemed to me that the $XOM exec was simply defining table stakes as at the start of any business negotiation. Cautious like big companies are wont to be. The wildcatters, execs from privately held companies, however, seemed eager to exploit a business chance, rarin’ to go. Visions of a LatAm oil kingdom indeed.