Job Numbers Propel Markets

US Dollar: Dec USD is Down at 97.615.

Energies: Jan'20 Crude is Down at 58.65.

Financials: The Mar'20 30 year bond is Up 11 ticks and trading at 157.31.

Indices: The Dec S&P 500 emini ES contract is 12 ticks Lower and trading at 3143.00.

Gold: The Feb'20 Gold contract is trading Up at 1466.90. Gold is 18 ticks Higher than its close.

 

Initial Conclusion

This is not a correlated market.  The dollar is Down- and Crude is Down-  which is not 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 S&P is Lower and Crude is trading Lower which is not 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 time  Asia is trading mainly Higher  with the exception of the Hang Seng and Singapore exchanges which is Lower at this point. Currently all of Europe is trading Lower.

 

Possible Challenges To Traders Today:

• No major economic news to speak of..

• 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 S&P futures contract.  The S&P contract is the Standard and Poor's 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.

On Friday the ZB made a major move at around 7:30 AM EST.  The ZB hit a High at around that time and the S&P moved Higher.  If you look at the charts below ZB gave a signal at around 7:30 AM EST and the S&P moved 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 7:30 AM and the S&P was moving Higher shortly thereafter.  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 Shorting opportunity on the 30 year bond, as a trader you could have netted about 30 plus ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for the ZB is now March '20.  The S&P contract is still  December.  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

On Friday we gave the markets a Neutral bias as is our custom on Jobs Friday.  The Dow rose by 337 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

Well another Jobs Friday has come and gone but this one was quite special. The number of net new jobs created in the United States during November was 266,000 versus 161,000 expected. This plus the Unemployment Rate dropped to 3.5%. This ignited the markets to zoom higher with the Dow gaining 337 points and the other indices gained ground as well. Today we have no economic news to speak of so the markets will be left to its own devices today.