The day after [Video]

US Dollar: Dec '21 USD is Down at 93.150.

Energies: Nov '21 Crude is Down at 72.18.

Financials: The Dec '21 30 Year bond is Down 1 tick and trading at 163.23.

Indices: The Dec '21 S&P 500 emini ES contract is 144 ticks Higher and trading at 4420.00. 

Gold: The Dec'21 Gold contract is trading Down at 1772.00.  Gold is 68 ticks Lower 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 Lower which is not 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.   Currently Asia is trading mainly Higher with exception of the Japanese Nikkei which is Lower at this time.   All of Europe is trading Higher at this time.

Possible challenges to traders today

• Unemployment Claims are out at 8:30 AM EST.  This is Major.

• Flash Manufacturing PMI is out at 9:45 AM EST.  This is Major.

• Flash Services PMI is out at 9:45 AM EST.  This is Major.

• CB Leading Index m/m is out at 10 AM EST.  This is Major.

• Natural Gas Storage is out at 10:30 AM EST.  This is Major.

Treasuries

Traders please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10 year bond (ZN) 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 ZN made it's move at around 2:30 PM EST.  The ZN hit a High at around that time and the S&P moved Higher.  If you look at the charts below ZN gave a signal at around 2:30 PM EST 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. ZN hit a High at around 2:30 PM EST and the S&P was moving Higher 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 10 year note, as a trader you could have netted about 20 plus ticks per contract on this trade. Each tick is worth $15.625.  Please note: the front month for the ZN is now Dec '21.  The S&P contract is now Dec '21 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

ZN - Dec 2021 - 9/22/21

S&P - Dec 2021 - 9/22/21

Bias

Yesterday we gave the markets a Neutral or Mixed as it was FOMC Day and we always maintain a Neutral bias on that day.  The Dow rose 338 points and the other indices rose 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

Yesterday the Fed announcement came out and the members kept interest at bay by leaving as they are currently.  However the Fed also claimed that they will be raising in the future (possibly starting at the next meeting) but most certainly by mid 2022.  The markets cheered this I believe for a couple of reasons:

 - The markets experienced a dead cat bounce whereby it went low, low low and then bounced Higher probably by Short Covering.

 - The markets cheered the prospect of Higher rates as the High Net worth folks who own fixed instruments aka bonds would get a Higher yield or rate of interest off of them. This is of course pure subjection on my part but it would make sense.

Quite frankly it doesn't make sense to me that the markets would rise if interest rates rose but remember yesterday was FOMC Day and the markets never show any sense of "normalcy" on that day.  Time will tell how it all works out.