Apple Reports

Good Morning Traders,

As of this writing 5 AM EST, here’s what we see:

US Dollar: Down at 96.890 the US Dollar is down 65 ticks and trading at 96.890.

Energies: December Crude is down at 43.48.

Financials: The Dec 30 year bond is up 11 ticks and trading at 158.12.
Indices: The Dec S&P 500 emini ES contract is down 14 ticks and trading at 2058.75.

Gold: The December gold contract is trading down at 1165.60. Gold is 6 ticks lower than its close. Initial Conclusion

This is a not a correlated market. The dollar is down- and crude is down- which is not normal but the 30 year bond is trading higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The indices are down and Crude is trading down which is not correlated. Gold is trading down which is not correlated with the US dollar trading down. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don’t have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

All of Asia traded mainly lower with the exception of Hang Seng and Shanghai which traded higher. As of this writing all of Europe is trading lower.

Possible Challenges To Traders Today

- Core Durable Goods Orders m/m is out at 8:30 AM EST. This is major.

- Durable Goods Orders m/m is out at 8:30 AM EST. This is major.

- S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is major.

- Flash Services PMI is out at 9:45 AM EST. This is not major.

- CB Consumer Confidence is out at 10 AM EST. This is major.

- Richmond Manufacturing Index is out at 10 AM EST. This is major.

Currencies

Yesterday the Swiss Franc made it’s move at around 9:15 AM EST before New Home Sales came out. The USD hit a high at around that time and the Swiss Franc hit a low. If you look at the charts below the USD gave a signal at around 9:15 AM EST, while the Swiss Franc also gave a signal at just about the same time. Look at the charts below and you’ll see a pattern for both assets. The USD hit a high at around 9:15 AM EST and the Swiss Franc hit a low. These charts represent the latest version of Trend Following Trades and I’ve changed the timeframe to a Renko chart to display better. This represented a long opportunity on the Swiss Franc, as a trader you could have netted 20 plus ticks on this trade. We added a Donchian Channel to the charts to show the signals more clearly. Remember each tick on the Swiss Franc is equal to $12.50 versus $10.00 that we usually see for currencies.

Charts Courtesy of Trend Following Trades built on a NinjaTrader platform

Bias

Yesterday we said our bias was to the downside and the markets didn’t disappoint as the Dow dropped 24 points. Today we aren’t dealing with a correlated market and our bias is neutral.

Could this change? Of Course. Remember anything can happen in a volatile market.

Commentary

Today after the markets close Apple will report earnings. As many readers know it is rare that we ever discuss any single stock or stocks in general for that matter. Apple is the exception to that rule because as a single stock it has the ability and capability to move the markets. Many are expecting a stellar earnings report however time will tell…

Yesterday the Dow dropped 24 points on not-too-stellar New Home Sales. Those who subscribe to us on a regular basis knew at 5 AM EST that the markets would falter, as it did.

Share: Analysis feed

Trading performance displayed herein is hypothetical. The following Commodity Futures Trading Commission (CFTC) disclaimer should be noted.

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Trading in the commodities markets involves substantial risk and YOU CAN LOSE A LOT OF MONEY, and thus is not appropriate for everyone. You should carefully consider your financial condition before trading in these markets, and only risk capital should be used.

In addition, these markets are often liquid, making it difficult to execute orders at desired prices. Also, during periods of extreme volatility, trading in these markets may be halted due to so-called “circuit breakers” put in place by the CME to alleviate such volatility. In the event of a trading halt, it may be difficult or impossible to exit a losing position.