Market recap: Neutral bias prevails, focus on Empire State Manufacturing and consumer sentiment

USD: Mar '24 is Up at 103.015.

Energies: Apr '24 Crude is Down at 80.31.

Financials: The June '24 30 Year T-Bond is Up 13 ticks and trading at 119.04.

Indices: The Mar '24 S&P 500 emini ES contract is 44 ticks Higher and trading at 5229.00.

Gold: The Apr'24 Gold contract is trading Up at 2171.00.  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30-year T-Bond is trading Higher. The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa. The S&P is Higher and Crude is trading Lower which is correlated. Gold is trading Higher which is not correlated with the US dollar trading Up.  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.  Asia is trading Lower with the exception of the Shanghai exchange which is Higher.  Currently all of Europe is trading Higher.  

Possible challenges to traders

• Empire State Manufacturing Index is out at 8:30 AM EST. This is Major.

• Import Prices m/m is out at 8:30 AM EST. This is Major.

• Industrial Production m/m is out at 9:15 AM EST. This is Major.

• Capacity Utilization Rate is out at 9:15 AM EST. This is Major.

• Prelim UoM Consumer Sentiment is out at 10 AM EST. This is Major.

• Prelim UoM Inflation Expectations is out at 10 AM EST. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) 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 likened to a seesaw, when up goes up the other should go down and vice versa.  

Yesterday the ZN migrated Lower at around 8:40 AM EST as the S&P hit a Low at around the same time.  If you look at the charts below the S&P gave a signal at around 8:40 AM and the ZN started its Downward slide.  Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 8:40 AM and migrated Higher.  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 Short opportunity on the 10-year note, as a trader you could have netted about 30 ticks per contract on this trade.   Each tick is worth $15.625.  Please note: the front month for both the ZN and the S&P are now Jun '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of MultiCharts built on an AMP platform

ZN -Jun 2024 - 03/14/24

S&P - Mar 2024 - 03/14/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we didn't see much in the way of market correlation Thursday morning. The markets however veered to the Downside as the Dow dropped 138 points and the other indices traded Lower 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 gave the markets a Neutral bias as we didn't see much in the way of Market Correlation yesterday morning.  Remember that a Neutral or Mixed bias means the markets could go anywhere in terms of directions.  The markets dived Lower and stayed there for the remainder of the session.  Today we have Empire State Manufacturing and Preliminary numbers for both Consumer Sentiment and Inflation Expectations. On a lighter note, Sunday is St. Patricks Day. Now I'm not Irish but I am told and have it on good authority that everyone is Irish on St Patrick's Day. That being said, everyone have a great and Happy St. Patrick's Day!