Blowout numbers doesn’t move markets [Video]

US Dollar: Sep '22 USD is Down at 106.415.

Energies: Aug '22 Crude is Down at 88.36.

Financials: The Sep '22 30 Year bond is Up 17 ticks and trading at 141.24.

Indices: The Sep '22 S&P 500 emini ES contract is 33 ticks Higher and trading at 4155.00.

Gold: The Dec'22 Gold contract is trading Up at 1792.70. Gold is 15 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, 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 the 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. Asia is trading mainly Higher with the exception of the Hang Seng and Singapore exchanges which are Lower. Currently all of Europe is trading Higher.

Possible challenges to traders today

No Major News to speak of.
Lack of Major News.

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.

On Friday the ZN made its move at around 9:30 AM EST. The ZN hit a High at around that time and the S&P moved Higher shortly thereafter. If you look at the charts below ZN gave a signal at around 9:30 AM 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 9:30 AM 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 a dozen plus ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Sep '22. The S&P contract is also Sep' 22 as well. The front months are now Sep' 22. I've changed the format to Heikin-Ashi such that it may be more apparent and visible.

Charts courtesy of MultiCharts built on an AMP platform

ZN - Sep 2022 - 08/05/22

S&P - Sep 2022 - 08/05/22

Bias

On Friday we gave the markets a Neutral or Mixed bias as it was Jobs Friday, and we always maintain a Neutral bias on that day. Why? Because the markets have never shown any sense of normalcy on that day. The Dow traded 77 points Higher, but the other indices lost ground. The S&P dropped 7 and the Nasdaq lost 63. 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

On Friday we witnessed blowout job numbers in the respect that the US economy created 528,000 net new jobs versus the 250,000 expected. Yet the markets didn't greet this stellar news as expected. President Biden took a victory lap on Friday yet in our opinion this was very premature. The markets traded Mixed on Friday because the Smart Money knows what's happening and what will happen. Anyone who has studying business cycles knows what's happening. Inflation is running wild in the US and the Fed is determined to reduce that or decrease it. Their way of doing this is to raise interest rates which they have been doing all year. The concern is should the Fed go overboard with raising interest rates they will shut down demand. They shut down demand and that's when we have massive layoffs, and the recession begins. The Smart Money knows this, and the Fed must tred very carefully so as not to tip the scales too readily and shutdown demand. In other words, create a soft landing. Only time will tell if they are successful in doing this.

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Trading performance displayed herein is hypothetical. The following Commodity Futures Trading Commission (CFTC) disclaimer should be noted.

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

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