NFP is DOA [Video]

US Dollar: June USD is Up at 100.790.

Energies: May'20 Crude Down at 27.60.

Financials: The June'20 30 year bond is Down 54 ticks and trading at 180.28.

Indices: The June S&P 500 emini ES contract is 360 ticks Higher and trading at 2573.00.

Gold: The June '20 Gold contract is trading Up at 1668.40.   Gold is 227 ticks Higher 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 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.

At this time Asia is trading mainly Higher with the exception of the Indian Sensex and Shanghai exchanges which are Lower.  Currently all of Europe is trading Higher.

 

Possible Challenges To Traders Today:

• No Major Economic News to speak of.

• Lack of Major Economic News.

 

Treasuries

We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) 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 liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZB made a move at around 8:30 AM EST.  The ZB hit a Low at around that time and the S&P moved Lower.  If you look at the charts below ZB gave a signal at around 8:30 AM and the S&P moved Higher at around the same time.  Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 8:30 AM EST and the S&P was moving Lower shortly thereafter.  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 over 30 plus ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for the ZB is now June '20.  The S&P contract is now June '20 as well.  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

ZB - June 2020 - 4/3/20

SP June 2020 - 4/3/20

 

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 dropped 361 points and the other indices lost ground as well.  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

So at 8:30 AM EST on Friday the Jobs Number came out and as it turned out there were no net new jobs created.  What the report showed was a deficit of 701,000 jobs lost in the past month.  I don't believe in the all the years I've spent analyzing the markets that I've ever seen this.  During the 2008 meltdown, in the depths of the Great Recession I don't think we ever saw a situation where hundreds of thousands of jobs were lost in a months time.  Today we have no news to speak so the markets will be left to it's devices and only time will tell what direction it will take.