Uptrend Continues

US Dollar: Dec. USD is Up at 97.375.

Energies: Jan '19 Crude is Up at 51.99.

Financials: The Dec 30 year bond is Up 1 tick and trading at 139.30.

Indices: The Dec S&P 500 emini ES contract is 14 ticks Higher and trading at 2687.00.

Gold: The Dec Gold contract is trading Down at 1213.20.   Gold is 2 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 and 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 Higher and Crude is trading Higher which is not correlated. Gold is trading Down-  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 all of Asia is trading Higher.  At this time all of Europe is trading Higher as well.

Possible Challenges To Traders Today

• Prelim GDP is out at 8:30 AM.  This is major.

• Prelim GDP Price Index is out at 8:30 AM EST.  This is major.

• Goods Trade Balance is out at 8:30 AM.  This is major.

• Prelim Wholesale Inventories is out at 9:30 AM.  This is major.

• New Home Sales is out at 10 AM EST.  This is major.

• Richmond Manufacturing Index is out at 10 AM.  This is major.

• Crude Oil Inventories is out at 10:30 AM EST.  This is major.

• Fed Chair Powell Speaks at 12 Noon EST.  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.

Yesterday the ZB made it's move at around 10:30 AM EST.  The ZB hit a Low at around that time and the YM hit a High.  If you look at the charts below ZB gave a signal at around 10:30 AM EST and the YM was moving Lower at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 10:30 AM and the YM was moving Lower 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 a dozen ticks per contract on this trade.  Each tick is worth $31.25.

Charts Courtesy of MultiCharts built on an AMP platform.

 

Bias

Yesterday we gave the markets a Neutral as the indices lacked direction Tuesday morning and as such the Neutral bias.  The Dow gained 108 points and the other indices gained ground although fractionally.  Today we aren't dealing with a correlated market and will maintain a Neutral bias.

Could this change? Of Course.  Remember anything can happen in a volatile market. 

Commentary

Yesterday we gave the markets a Neutral bias.  Whereas the USD and the Bonds were trading Higher Tuesday morning; the indices were trading Higher as well.  This did not show firm, solid direction as the indices should have been pointed Lower and they were not.  Remember that a Neutral bias means the markets could go in any direction and often does.  Today we have 8 economic reports, all of which are major and will set the tone of today's trading activities.