Happy Thanksgiving

Good Morning Traders,

As of this writing 4:10 AM EST, here’s what we see:

US Dollar: Dec. USD is Down at 96.470.
Energies: Jan '19 Crude is Up at 54.50.
Financials: The Dec 30 year bond is Down 15 ticks and trading at 139.18.
Indices: The Dec S&P 500 emini ES contract is 76 ticks Higher and trading at 2659.00.
Gold: The Dec Gold contract is trading Up at 1224.60. Gold is 34 ticks Higher than its close.

Initial Conclusion

This is a nearly 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 Higher and Crude is trading Higher which is not correlated. Gold is trading Up+ which is correlated with the US dollar trading Lower. 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 Asia is trading Mixed with half the exchanges trading Higher and the other half Lower. Currently all of Europe is trading Higher.

Possible Challenges To Traders Today

• Core Durable Goods Orders is out at 8:30 AM EST. This is major.

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

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

• Revised UoM Consumer Sentiment is out at 10 AM EST. This is not major.

• Revised UoM Inflation Expectations is out at 10 AM EST. This is not major.

• CB Leading Index m/m is out at 8:30 AM EST. This is major.

• Existing Home Sales is out at 8:30 AM EST. This is major.

• Crude Oil Inventories is out at 10:30 AM EST. This is major.

• Natural Gas Storage is out at 12 noon. This is 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 it's move at around 9:30 AM EST. The ZB hit a High at around that time and the YM hit a Low. If you look at the charts below ZB gave a signal at around 9:30 AM EST and the YM was moving Higher at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a High at around 9:30 AM and the YM was moving Higher at the same time. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 30 minute chart to display better. This represented a Shorting opportunity on the 30 year bond, as a trader you could have netted about 10 ticks per contract on this trade. Each tick is worth $31.25.

Charts Courtesy of MultiCharts built on an AMP platform.

Bias

Yesterday we gave the markets a Downside bias as both the USD and the Bonds were trading Higher yesterday morning. The markets didn't disappoint as the Dow fell by 552 points and the other indices lost ground as well. Today we are dealing with a nearly correlated market and our bias is to the Upside.

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

Commentary

Yesterday we gave the markets a Downside bias as both the USD and the Bonds were trading Higher yesterday morning and this usually signifies a Downside day. Whereas the real estate numbers came in as predicted, it stop the markets from its downward plunge. Today we have 9 economic reports due to the Thanksgiving holiday on Thursday with many of those reports that would have been released on Thursday; have now been moved into Wednesday. On another note and given that tomorrow is Thanksgiving Day in the United States, we should all give thanks for whatever we have and trust that the dawn to come will bring a brighter day. There will be no edition tomorrow or Friday due to the Thanksgiving holiday, we'll be back on Monday, the 26th. The markets will have an abbreviated session on Friday and will close early at 1 PM.