Eco News Boosts Markets [Video]

US Dollar: June USD is Down at 97.035.

Energies: May '19 Crude is Up at 65.57.

Financials: The Jun 30 year bond is Down 8 ticks and trading at 146.19.

Indices: The June S&P 500 emini ES contract is 30 ticks Lower and trading at 2902.50.

Gold: The June Gold contract is trading Up at 1280.20.  Gold is 43 ticks Higher than its close.

Initial Conclusion

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

At this hour all of Asia is trading Lower with the exception of the Japanese Nikkei and Singapore exchanges which are Higher at this time. Currently all of Europe is trading Higher with the exception of the London and Milan exchanges which are Lower at this time.

Possible Challenges To Traders Today

• Existing Home Sales is out at 10 AM EST. This is major.

• Lack of major economic news.

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 8 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 8 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 8 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 12 ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for the ZB contract is now June, 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

Last Thursday we gave the markets a Downside bias as Gold, the Bonds and the USD were all trading Higher Thursday morning and this usually reflects a Downside bias.  The Dow closed higher by 110 points and the other indices traded higher 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

Last Thursday we mentioned that we had a virtual tsunami of economic reports waiting to be released.  Retail Sales and Core Retail Sales rose significantly and Unemployment Claims were lower which is positive for the markets.  This news showed a strong US economy and the markets reacted accordingly.  Today we have only Existing Home Sales and please bear in mind that it's Easter Monday in Europe and all the exchanges are closed.