News Tsunami Doesn’t Propel Markets [Video]

US Dollar: March USD is Up at 95.420.

Energies: March '19 Crude is Up at 55.38.

Financials: The Mar 30 year bond is Down 5 ticks and trading at 145.25.

Indices: The Mar S&P 500 emini ES contract is 10 ticks Lower and trading at 2701.75.

Gold: The Feb Gold contract is trading Down at 1316.00.  Gold is 61 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 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 Lower and Crude is trading Higher which is correlated. Gold is trading Lower which is correlated with the US dollar trading Higher.   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.

At this hour Asia is trading Mixed with half the exchanges Higher and the other half Lower.  Currently Europe is trading mainly Lower with the exception of the London exchange which is Higher at this time..

Possible Challenges To Traders Today

• Factory Orders is out at 10 AM EST.  This is major.

• Loan Officer Survey.  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.

On Friday the ZB made a major move at around 8 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 8 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 8 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 30 minute chart to display better.  This represented a Shorting opportunity on the 30 year bond, as a trader you could have netted about 30 ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for the ZB contract is now March, 2019

Charts Courtesy of MultiCharts built on an AMP platform.

 

Bias

On Friday we gave the markets a Neutral bias as it was Jobs Friday and we always maintain a Neutral Bias on that day.  The Dow gained 64 [points, the S&P gained 2 but the Nasdaq dropped 18 points.  All in all a Mixed or Neutral day.  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

Another Jobs Friday has come and gone; apparently the US economy added 304,000 new jobs in January which beat and exceeded expectation.  However the Unemployment Rate crept higher by 1 10th of 1 percent to 4.0 as a total.  The reason for this was the fluidity of the job market in January (retailers laying off temporary or Holiday workers, weather, etc...).  The news tsunami didn't do anything to propel the markets forward.  For example Total Vehicle Sales did not meet expectation and in fact dropped in January.  This is significant because autos and all industries related to autos are market drivers (no pun intended).  Therefore we witness a mixed or neutral market.  Could this change today?  Only time will tell....