Happy Easter

Good Morning Traders,

As of this writing 4:30 AM EST, here’s what we see:

US Dollar: Up at 96.275 the US Dollar is up 211 ticks and trading at 96.275.

Energies: May Crude is down at 39.29.

Financials: The June 30 year bond is up 4 ticks and trading at 163.20.
Indices: The June S&P 500 emini ES contract is down 31 ticks and trading at 2021.00.

Gold: The April gold contract is trading down at 1216.90. Gold is 71 ticks lower than its close.

Initial Conclusion

This is not a correlated market. The dollar is up+ and crude is down- which is normal and 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 lower which is not correlated. Gold is trading down which is correlated with the US dollar trading up. 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 mainly lower with the exception the Sensex exchange which traded fractionally higher. As of this writing all of Europe is trading lower.

Possible Challenges To Traders Today

- FOMC Member Bullard Speaks at 8:15 AM EST. This is major.

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

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

- Unemployment Claims are out at 8:30 AM EST. This is major.

- Flash Services PMI is out at 9:45 AM EST. This is major.

- Natural Gas Storage is out at 10:30 AM EST.

Good Friday – 3/25/16

- Final GDP q/q is out at 8:30 AM EST. This is major.

- Final GDP Price Index q/q is out at 8:30 AM EST. This is major.

Currencies

Yesterday the Swiss Franc made it’s move at around 9 AM EST before the economic news was reported. 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 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 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 ticks plus per contract 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 the $10.00 that we usually see for currencies.

Charts Courtesy of Trend Following Trades built on a NinjaTrader platform

Bias

Yesterday we gave the markets an upside bias as the Bonds and Gold were both trading lower and this usually represents an upside bias. The Dow dropped 80 points and the other indices lost ground as well. Today we aren’t dealing with a correlated market and our bias is to the downside.

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

Commentary

Yesterday morning it seemed as though the global markets may have gotten over the terrorist attack on Brussels but apparently that wasn’t the case as the US markets immediately dropped into negative territory at the sound of the opening bell. The economic news wasn’t plentiful and not enough to drive the markets higher. New Home Sales came in at 512,000 as expected and crude oil inventory came in remarkably higher than expected. It just seemed as though the market was going thru a muddle thru day. On a positive note tomorrow is Good Friday and the US markets are closed. Europe is closed on both Good Friday and Easter Monday (yes, they do celebrate an Easter Monday) so our next edition will be out on Monday, 3/28 as our markets are open on Monday. I wish all of you a great and joyous Easter Holiday!!!!

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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.

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