Jobs Friday – not good

US Dollar: Dec. USD is Up at 96.575.

Energies: Jan '19 Crude is Down at 52.53.

Financials: The Mar 30 year bond is Down 2 ticks and trading at 143.09.

Indices: The Dec S&P 500 emini ES contract is 54 ticks Lower and trading at 2622.50.

Gold: The Dec Gold contract is trading Down at 1251.90.   Gold is 7 ticks Lower than its close.

Initial Conclusion

This is not a correlated market.  The dollar is Up+ and Crude is Down-  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 Lower which is not correlated. Gold is trading Down-  which is correlated with the US dollar trading Higher.   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 many of the exchanges trading in negative triple digit territory.  At the current time all of Europe is trading Lower as well.

Possible Challenges To Traders Today

• Jolts Job Openings 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 it's 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 30 minute chart to display better.  This represented a Long 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 contract is now March, 2019

Charts Courtesy of MultiCharts built on an AMP platform.

 

Bias

On Friday we gave the markets a Neutral bias as it was Jobs Friday and we always maintain a Neutral bias on that day.  The Dow dropped 559 points and the other indices lost ground as well.  Today we aren't dealing with a correlated market and will retain a Neutral bias.

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

Commentary

Given that Friday was Jobs Friday we maintained a Neutral bias as is our custom on that day.  There are two days in any given that we give a Neutral bias: Jobs Friday and FOMC Day.  It appears that the US economy created 155,000 net new jobs when 198,000 was projected.  The market did not take this news very well and the Dow dropped 559 points with the other indices losing ground as well.  Today we have Jolts Job Openings and that is considered major.