Neutral Bias = Mixed Day [Video]

US c: Sept USD is Up at 98.255.

Energies: Oct '19 Crude is Down at 55.25.

Financials: The Sept 30 year bond is Down 31 ticks and trading at 163.04.

Indices: The Sept S&P 500 emini ES contract is 51 ticks Higher and trading at 2935.00.

Gold: The Dec Gold contract is trading Down at 1505.20  Gold is 33 ticks Lower than its close.

 

Initial Conclusion

This is not a correlated market.  The dollar is Up+ and Crude is Down- which is normal but 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 Higher and Crude is trading Lower 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.

Currently Asia is trading Higher with the exception of the Singapore exchange which is Lower.  At this time all of Europe is trading Higher.  

 

Possible Challenges To Traders Today

• Fed Chair Powell Speaks at 10 AM EST.  This is major.

• New Home Sales are out at 10 AM EST.  This is major.

• Jackson Hole Symposium  - Day Two.  This is major.

 

Treasuries

We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) and The YM futures contract.  The YM contract is the DJIA and the purpose is to show reverse correlation between the two instruments.  Remember it's liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZB made a major move at around 11 AM EST.  The ZB hit a High at around that time and the YM hit a Low.  If you look at the charts below ZB gave a signal at around 11 AM EST and the YM was moving Higher at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a High at around 11 AM and the YM was moving Higher at 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 Shorting opportunity on the 30 year bond, as a trader you could have netted about 15 ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for both the ZB and YM contract is now September, 2019 and I've changed the format to Renko bars such that it may be more apparent and visible.

 

Charts Courtesy of MultiCharts built on an AMP platform

 

 

Bias

Yesterday we gave the markets a Neutral bias as we saw no signs of correlation hence the Neutral bias.  All in all the markets traded Mixed with the Dow up 50 points but the S&P and Nasdaq trading Lower.  Today we aren't dealing with a correlated market and our bias is to the Upside.

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

 

Commentary

Yesterday the markets was waiting on its hands for news from the Jackson Hole Symposium to listen for some clue from the Fed regarding interest rate cuts, they got none.  What they did get was a lot of rumors flying around but nothing truly substantial.  Today at 10 AM EST Fed Chair Powell will be speaking so we hope to hear something substantial today but as in all things, only time will tell....