This is not a correlated market. The USD is Up and Crude is Up which is not normal, and the 30 Year T-Bond is trading Higher. The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa. The S&P is Higher and Crude is trading Higher which is not correlated. Gold is trading Higher which is not correlated with the US dollar trading Up. 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. Asia is trading mainly Higher with the exception of the Sensex and Singapore exchanges which are Lower. Currently Europe is trading Higher.

Possible challenges to traders

Core PCE Price Index m/m is out at 8:30 AM EST. This is Major
Personal Income m/m is out at 8:30 AM EST. This is Major.
Personal Spending m/m is out at 8:30 AM EST. This is Major.
Revised UoM Consumer Sentiment is out at 10 AM EST. This is not Major.
Revised UoM Inflation Expectations is out at 10 AM EST. This is not 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 likened to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZN migrated Higher at around 10 AM EST as the ZN hit a Low at around that time and the S&P moving Lower. If you look at the charts below the ZN gave a signal at around 10 AM and started its Upward climb. Look at the charts below and you'll see a pattern for both assets. S&P hit a High at around 10 AM and migrated Lower. 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 Long opportunity on the 10-year note, as a trader you could have netted about a dozen ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for both the ZN and the S&P are now Jun '24. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of MultiCharts built on an AMP platform

ZN -Jun 2024 - 04/25/24

S&P - Jun 2024 - 04/25/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint. The Dow dropped 375 points, and the other indices lost ground as well. Today we aren't dealing with a correlated market and our bias is to the Upside. I will preface this by saying that we are dealing with an "all boats rising markets" which is to say that all instruments are Higher. Please keep this in mind and using stop loss if trading.

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

Commentary

Yesterday the GDP numbers were released at 8:30 AM EST and to say the least, didn't wow the markets. In fact, the markets fell dramatically after the news release. The Dow closed Lower by 375 points, the S&P lost 23 and the Nasdaq dropped 101. These numbers are especially important as the Fed uses these numbers to determine interest rates going forward. Today we have Personal Income and Spending. These are Major and proven market movers. Let's hope that this news can reverse the downward trend from yesterday.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD consolidates around 1.0900, bullish bias remains ahead of key US data

The EUR/USD pair is seen consolidating its strong gains registered over the past two days and oscillating in a narrow band during the Asian session on Tuesday. Spot prices currently trade around the 1.1900 mark, just below an over one-week high touched the previous day.

GBP/USD edges lower below 1.3700 on UK political risks, BoE rate cut bets

The GBP/USD pair trades on a weaker note around 1.3685 during the European session on Tuesday. The Pound Sterling edges lower against the US Dollar amid political risk in the United Kingdom and rising expectations of near-term Bank of England rate cuts.

Gold: Will US Retail Sales data propel it above $5,100?

Gold hovers below weekly highs of $5,087 early Tuesday, await US Retail Sales data. The US Dollar enters a downside consolidation phase amid persistent Japanese Yen strength and worsening labor market. Gold settled Monday above $5,000, now looks to take out $5,100 amid bullish daily RSI.

Top Crypto Gainers: World Liberty Financial, MemeCore and Quant gain momentum

World Liberty Financial, MemeCore, and Quant are leading gains over the last 24 hours as the broader cryptocurrency market stabilizes after last week’s correction. Still, the technical outlook for altcoins remains mixed due to prevailing downside pressure and vulnerable market sentiment.

Follow the money, what USD/JPY in Tokyo is really telling you

Over the past two Tokyo sessions, this has not been a rate story. Not even close. Interest rate differentials have been spectators, not drivers. What has moved USD/JPY in local hours has been flow and flow alone.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.