Bulls Come Roaring Back [Video]

US Dollar: Sept USD is Down at 98.055.

Energies: Oct '19 Crude is Up at 55.92.

Financials: The Sept 30 year bond is Down 9 ticks and trading at 164.17.

Indices: The Sept S&P 500 emini ES contract is 17 ticks Lower and trading at 2924.00.

Gold: The Dec Gold contract is trading Down at 1508.90  Gold is 69 ticks Lower than its close.

 

Initial Conclusion

This is not a correlated market.  The dollar is Down- and Crude is Up+ which is normal but 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 S&P is Lower and Crude is trading Higher which is correlated. Gold is trading Lower 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.

Currently Asia is trading Mixed with half the exchanges Higher and the other half Lower.  At this time Europe is trading Mixed as well.  

 

Possible Challenges To Traders Today

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

• Flash Manufacturing PMI is out at 9:45 AM EST.  This is major.

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

• CB Leading Index m/m is out at 10 AM EST.  This is major.

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

 

Treasuries

We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) and The YM futures contract.  The YM contract is the DJIA and the purpose is to show reverse correlation between the two instruments.  Remember it's liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZB made a major move at around 9 AM EST.  The ZB hit a Low at around that time and the YM hit a High.  If you look at the charts below ZB gave a signal at around 9 AM EST and the YM was moving Lower at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 9 AM and the YM was moving Lower at the same time.  These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15 minute chart to display better.  This represented a Long opportunity on the 30 year bond, as a trader you could have netted about 30 ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for both the ZB and YM contract is now September, 2019 and I've changed the format to Renko bars such that it may be more apparent and visible.

 

Charts Courtesy of MultiCharts built on an AMP platform.

 

 

Bias

Yesterday we gave the markets an Upside bias as the USD and Bonds were trading Lower yesterday morning and this is usually indicative of an Upside day.  The markets didn't disappoint as the Dow rose 240 points and the other indices gained ground as well.  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

Yesterday we did have economic news that did move the markets.  Existing Home Sales came in at 5.42 versus 5.41 expected and beat expectation.  The US markets are still heavily driven by real estate and anything associated with that sector.  Banking, Appliance manufacturing, flooring and just about anything used for the construction or betterment of the Housing Sector will benefit.  Today we have Unemployment Claims, Flash Manufacturing PMI and Natural Gas Storage to drive the markets.  Will they?  Only time will tell...