Market says yes to the upside [Video]
|US Dollar: Sept '21 USD is Up at 92.735.
Energies: Sept '21 Crude is Up at 72.01.
Financials: The Sept '21 30 Year bond is Up 11 ticks and trading at 164.15.
Indices: The Sept '21 S&P 500 emini ES contract is 65 ticks Lower and trading at 4398.00.
Gold: The Aug'21 Gold contract is trading Down at 1798.40. Gold is 10 ticks Lower than its close.
Initial conclusion
This is not a correlated market. The dollar is Up+ and Crude is Up+ which is not 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 Lower which is 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. All of Asia is trading Lower with the exception of the Japanese Nikkei which is currently Higher. At this time all of Europe is trading Lower.
Possible challenges to traders today
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Core Durable Goods Orders m/m is out at 8:30 AM EST. This is Major.
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Durable Goods Orders m/m is out at 8:30 AM EST. This is Major.
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HPI m/m is out at 9 AM EST, This is Major.
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S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is Major.
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CB Consumer Confidence is out at 10 AM EST. This is Major.
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Richmond Manufacturing Index is out at 10 AM EST. This is Major.
Bias
Yesterday we gave the markets a Downside bias as Crude and the Bonds were trading Higher Monday morning and that usually reflects a Downside day. The markets however had other ideas as the Dow gained 83 points and the other indices closed Higher. Today we aren't dealing with a correlated market and our bias is to the Downside.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
It would appear as though the markets are truly in an uptrend as Monday had one economic report: New Home Sales that did not meet expectations coming in at 676,000 versus 800,000 expected yet the markets closed to the Upside. We can only conclude that Smart Money wanted to see the markets Higher and so it was. Today we have far more reports, all of which are Major. Durable Goods and Core Durable Goods are out at 8:30 AM EST. HPI and Consumer Confidence are also out and tomorrow we have FOMC Day.
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