Markets up despite GDP miss [Video]

US Dollar: Sept '21 USD is Down at 91.805.

Energies: Sept '21 Crude is Down at 73.43.

Financials: The Sept '21 30 Year bond is Up 10 ticks and trading at 164.04.

Indices: The Sept '21 S&P 500 emini ES contract is 115 ticks Lower and trading at 4383.00. 

Gold: The Aug'21 Gold contract is trading Down at 1833.60.  Gold is 22 ticks Lower than its close.

Initial conclusion

This is not a correlated market. The dollar is Down- and Crude is Down- which is not normal but 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 Lower which is not 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.  All of Asia is trading mainly Lower with the exception of the Indian Sensex exchange which is Higher at this time. Currently, all of Europe is trading Lower.

Possible challenges to traders today

• Core PCE Price Index m/m is out at 8:30 AM EST. This is Major.

• Employment Cost Index q/q is out at 8:30 AM EST. This is Major.

• Personal Income m/m is out at 8:30 AM EST. This is Major.

• Personal Spending m/m is out at 8:30 AM EST. This is Major.

• Chicago PMI is out at 9:45 AM EST.  This is Major.

• Revised UOM Consumer Sentiment is out at 10 AM EST. This is not Major.

• Revised UOM Inflation Expectations is out at 10 AM EST, This is not Major.

• FOMC Member Brainard Speaks at 8:30 PM EST.  This is not Major, after-hours no effect on trading session.

Bias

Yesterday we gave the markets an Upside bias as both the USD and the Bonds were trading Lower and that usually signifies an Upside day. The markets didn't disappoint as the Dow closed Higher by 134 points and the other indices traded Higher 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 at 8:30 AM EST Advanced GDP numbers were released that didn't meet expectations coming in at 6.5% versus 8,5% expected. GDP Prices rose as well, Unemployment Claims came in at 400,000 versus 382,000 expected and Pending Home Sales fell.  In fact, no report released yesterday meet expectations yet the markets rose. We suggested an Upside day based upon our rules of Market Correlation and nothing else and usually, those rules are correct.  So what are we suggesting? We are saying that in a given situation 80% of the time these rules work. When may they not work? Usually, during a geopolitical situation or a surprise during the trading day, or on occasion, the Smart Money may shift gears and go in a different direction but usually when a path is chosen (and all things being equal) the markets will lean towards the correlated direction.