Markets up despite Powell talk

USD: Sep '23 is Down at 103.990.

Energies: Oct '23 Crude is Up at 79.94.

Financials: The Sep '23 30 Year T-Bond is Up 3 ticks and trading at 119.27.

Indices: The Sep '23 S&P 500 emini ES contract is 21 ticks Higher and trading at 4419.50. 

Gold: The Aug'23 Gold contract is trading Up at 1941.50.  Gold is 16 ticks Higher than its close.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, but 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 Higher which is not correlated. Gold is trading Higher which is 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 Higher.  Currently all of Europe is trading Higher as well.

Possible challenges to traders

• No Major Economic News to Speak of.

• Lack of Major Economic News.

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.

On Friday the ZN migrated Higher at around 10:45 AM EST as the S&P hit a High at around the same time.  If you look at the charts below the S&P gave a signal at around 10:45 AM and the ZN started its Upward ascend.  Look at the charts below and you'll see a pattern for both assets. S&P hit a High at around 10:45 AM and migrated Lower.  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 10-year note, as a trader you could have netted about 20 plus ticks per contract on this trade.   Each tick is worth $15.625.  Please note: the front month for the ZN is now Sept '23.  The S&P contract is now Sep' 23.   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 - Sept 2023 - 8/25/23

S&P - Sep 2023 - 8/25/23

Bias

On Friday we gave the markets an Upside bias as the bonds and Gold were trading Lower Friday morning.  The markets didn't disappoint as the Dow traded Higher by 247 points and the other indices closed Higher as well.  Today we aren't dealing with a correlated market and our bias is to teh Upside.

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

Commentary

It seemed as though the global markets were all waiting for Fed Chair Powell to speak on Friday.  He did speak but gave no indication as to when the Federal Reserve will start to ease on interest rates.  Despite this the markets did zoom Higher on Friday, so it would appear that the scenario of one day down, next day up worked well.  There was no real economic news to speak of, so the markets were left to their own devices, and it seemed as though the intuitionals aka the Smart Money was determined to drive the markets Higher, and they did.  Will this continue today?  That would be hard to answer given the fact that there's no economic news scheduled for release today.  But as in all things, only time will tell.