Waiting for the Fed [Video]

US Dollar: Jun '21 USD is Down at 90.470.

Energies: Jun'21 Crude is Up at 72.25.

Financials: The Sept '21 30 year bond is Up 2 ticks and trading at 158.19.

Indices: The Jun'21 S&P 500 emini ES contract is 16 ticks Lower and trading at 4232.50. 

Gold: The Aug'21 Gold contract is trading Up at 1860.40. Gold is 40 ticks Higher than its close.

Initial conclusion

This is not a correlated market. The dollar is Down- and Crude is Up+ which is 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 Higher 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 Lower. Currently Europe is trading Lower as well.

Possible challenges to traders today

• Building Permits is out at 8:30 AM EST. This is Major.

• Housing Starts is out at 8:30 AM EST. This is Major.

• Import Prices is out at 8:30 AM EST. This is Major.

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

• FOMC Economic Projections is out at 2 PM EST.  This is Major.

• FOMC Statement is out at 2 PM EST. This is Major.

• Federal Funds Rate is out at 2 PM EST. This is Major.

• FOMC Press Conference starts at 2:30 PM EST. This is Major.

Bias

Yesterday we gave the markets a Neutral bias as we saw no evidence of Market Correlation hence the Neutral or Mixed bias. The markets traded to the Downside as the Dow dropped by 94 points and the other indices lost ground as well. Given that today is FOMC Day we will maintain a Neutral bias as the markets have never shown any sense of normalcy on this day.  

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

Commentary

Yesterday we suggested a Neutral day as the markets didn't seem to have any sense of itself.  The economic news reported wasn't very stellar at all.  PPI or Producer Price Index was Higher which means Higher prices based on to the consumer, Retail Sales was down as was Empire State Manufacturing Index. The markets are apparently waiting for the Federal Reserve to make their statement today so as to un-nerve the indices. Oracle reported stellar earnings yet the stock price dropped due to the nervousness of the markets.  Do we see the Fed raising rates?  No.  But inflation (even temporary) is here and everyone wants to know what the Fed will say about it so as to give some guidance going forward.  As always on FOMC Day our bias is Neutral or Mixed which means the markets could go anywhere today.