Markets higher again

USD: Jun '24 is Up at 105.140.

Energies: Jun '24 Crude is Up at 79.85.

Financials: The June '24 30 Year T-Bond is Down 4 ticks and trading at 116.20.

Indices: The Jun '24 S&P 500 emini ES contract is 64 ticks Lower and trading at 5255.00.

Gold: The Jun'24 Gold contract is trading Up at 2379.40  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but the 30 Year T-Bond is trading Lower.  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 Higher which is not 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.  All of Asia is trading Higher.  Currently all of Europe is trading Higher as well. 

Possible challenges to traders

• FOMC Member Bowman Speaks at 9 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.

• Mortgage Delinquencies - tentative.  This is Major.

• FOMC Member Barr Speaks at 1:30 PM EST.  This is Major.

• Federal Budget Balance is out at 2 PM EST.  This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 10 year (ZN) to the 30 year (ZB).  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 ZB migrated Higher at around 8:30 AM EST as the S&P hit a High at around that time and the ZB moved Higher.  If you look at the charts below the ZB gave a signal at around 8:30 AM and started its Upward climb.  Look at the charts below and you'll see a pattern for both assets. S&P moving Lower at around 8:30 AM and the ZB moving Higher at around the same time.  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 Long opportunity on the 30-year note, as a trader you could have netted about 13 ticks per contract on this trade.   Each tick is worth $31.25.  Please note: the front month for both the ZB 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

ZB -Jun 2024 - 05/09/24

S&P - Jun 2024 - 05/09/24

Bias

Yesterday we gave the markets a downside bias as the USD, Crude and Gold were both trading Higher, and this usually represents a Down Day.  The markets had other ideas as the Dow closed Higher by 331 points and the other indices traded Higher as well.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

As I mentioned yesterday the markets are getting tougher and tougher to handicap and determine direction.  This goes to show that the markets are acting in a normal, orderly fashion and as traders you have to take profits when you can and exit the arena.  We are using the 30 year bond as the profit potentially is higher at 31.62 per tick versus 15.62 for the 10 year.  Today we have more economic reports than we've seen in a while.  University of Michigan Consumer Sentiment and Inflation expectations are major as is Federal Budget Balance and the FOMC members speaking.