The bulls stampede [Video]
|US Dollar: Sept '21 USD is Down at 91.730.
Energies: Jul '21 Crude is Down at 73.07.
Financials: The Sept '21 30 Year bond is Down 2 ticks and trading at 159.28.
Indices: The Sept '21 S&P 500 emini ES contract is 25 ticks Higher and trading at 4261.25.
Gold: The Aug'21 Gold contract is trading Up at 1783.40. Gold is 67 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 and 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 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 mainly Higher. Currently, all of Europe is trading mainly Lower with the exception of the London and Milan exchanges which are Higher.
Possible challenges to traders today
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Core PCE Price Index m/m is out at 8:30 AM EST. This is Major.
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Personal Income m/m is out at 8:30 AM EST. This is Major.
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Personal Spending m/m is out at 830 AM EST. This is Major.
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Revised UoM Consumer Sentiment is out at 10 AM EST. This is not Major.
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Revised UoM Inflation Expectations is out at 10 AM EST. This is not Major.
Bias
Yesterday we gave the markets an Upside bias as we saw correlation amongst the various instruments.The markets didn't disappoint as the Dow rose 323 points and the other indices gained 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
Although yesterday we suggested that the markets would rise, none of the economic reports met or beat expectation with the exception of Final GDP which met it's an expectation at 6.4%. So what does this tell us? What does this say? It says market correlation works most of the time. We came to the conclusion that the markets would rise prior to 6 AM EST yesterday morning and the economic news began pouring in at around 8:30 AM EST. Today we have Personal Income and Personal Spending both of which are major and proven market movers. Will this trend continue? Only time will tell...
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