Real estate gives markets a boost [Video]
|US Dollar: Jun '21 USD Down at 91.110.
Energies: Jun'21 Crude is Down at 63.13.
Financials: The June '21 30 year bond is Up 9 ticks and trading at 158.09.
Indices: The June'21 S&P 500 emini ES contract is 24 ticks Lower and trading at 4170.25.
Gold: The June'21 Gold contract is trading Up at 1788.70. Gold is 85 ticks Higher 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 Higher which is correlated with the US dollar trading Lower. 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 with the exception of the Indian Sensex exchange which is Lower at this time. Currently Europe is trading Higher with the exception of the German Dax and the Milan exchange.
Possible challenges to traders today
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No Major economic news to speak of.
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Lack of Major economic news.
Bias
On Friday we gave the markets a Neutral bias as there was no correlation between the USD and the Bonds. However the markets did advance as the Dow gained 165 points and the other indices gained ground 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
On Friday we gave the Markets a Neutral or Mixed as we didn't see correlation between the Bonds and the USD. However as the session progressed it became clear that the markets would advance. Why? Build Permits and Housing Starts were released and both beat expectations handily. It must be kept in mind that the US economy is very much based on real estate as when real estate does well the rest of the economy seems to flourish. Look at it this way when a house is being built think of and consider all the raw materials and components that go into a new home. Think of the sheetrock, paint, flooring, appliances, etc. and everything else that goes into building that home. The same would hold true for Building Permits. A new addition to a home or a deck or possibly a fireplace. Today we have no economic news to drive the markets so they will be left to their own devices.
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