Veterans Day

Good Morning Traders,

As of this writing 4:20 AM EST, here’s what we see:

US Dollar: Down at 99.190 the US Dollar is down 200 ticks and trading at 99.190.
Energies: December Crude is down at 43.72.
Financials: The Dec 30 year bond is down 15 ticks and trading at 152.04.
Indices: The Dec S&P 500 emini ES contract is up 22 ticks and trading at 2083.50.
Gold: The December gold contract is trading down at 1088.20. Gold is 3 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 and the 30 year bond is trading lower. 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 up and Crude is trading down which is 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.

Asia traded mixed with half the exchanges higher and the other half lower. As of this writing all of Europe is trading higher.

Possible Challenges To Traders Today

- Bank Holiday – All day.

- Mortgage Delinquencies.

- No real economic news to speak of.

Currencies

Yesterday the Swiss Franc made it’s move at around 9:30 AM EST with no real economic news in sight. 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 9:30 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 9:30 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 about 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 as the Financials were trading higher. The Dow gained 28 points however the Nasdaq lost 12 and the S&P gained 3. All in all a mixed day. Today we aren’t dealing with a correlated market however our bias is to the upside.

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

Commentary

Yesterday we didn’t have much in the way of economic news and you would think that after the fallout on Monday, the markets would gravitate much higher. Whereas the Dow did gain 28 points, it doesn’t make up for the loss incurred on Monday when the Dow lost by triple digit numbers. The markets drifted lower from the opening bell and it was only late in the afternoon session when it finally picked up some steam. Today is Veterans Day and if you know a Vet, give thanks. Given that it’s a bank holiday we won’t get crude oil inventories and the bond markets are closed. We expect a light trading day, but don’t worry that will change tomorrow….