Durable Goods, Core Durable Goods and other news to drive the markets

USD: Sept '24 is Down at 103.985.

Energies: Aug '24 Crude is Down at 76.71.

Financials: The Sept '24 30 Year T-Bond is Up 20 ticks and trading at 118.21.

Indices: The Sept '24 S&P 500 emini ES contract is 20 ticks Higher and trading at 5474.50.

Gold: The Aug'24 Gold contract is trading Down at 2373.10 . 

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Down which is not normal, but the 30 Year T-Bond is trading Up. 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 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.  All of Asia traded Lower. Currently all of Europe is trading Lower as well. 

Possible challenges to traders

• Advance GDP q/q is out at 8:30 AM EST. This is Major.

• Advance GDP Price Index q/q is out at 8:30 AM EST. This is Major.

• Core Durable Goods Orders m/m is out at 8:30 AM EST. This is Major.

• Durable Goods is out at 8:30 AM EST. This is Major.

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

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

Traders, please note that we've changed the Bond instrument from the 10 year (ZN) to the 2 year (ZT). They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10-year Treasury notes (ZN) and the S&P futures contract. The YM contract is the Dow Jones Industrial Average, 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 ZT migrated Higher at around 8 AM EST with no economic news reported as of that time. If you look at the charts below the ZT gave a signal at around 8 AM and started its Upward ascend.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8 AM and the ZT moved Higher at around the same time.  These charts represent the newest version of BarCharts, and I've changed the timeframe to a 15-minute chart to display better.  This represented a Long opportunity on the 2-year note, as a trader you could have netted about 20 plus ticks per contract on this trade. Each tick is worth $7.625. Please note: the front month for ZT is Sept and the Dow is now Sept '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of barcharts

ZT -Sept 2024 - 07/24/24

Dow - Sept 2024 - 07/24/24

Bias

Yesterday we gave the markets a Downside bias and the indices didn't disappoint.  The Dow closed Lower by 504 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.

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

Commentary

Yesterday we gave the markets a Downside bias and the indices didn't disappoint.  So, the question is has Kamala lost her euphoria?  Well, she wasn't present at the Netanyahu Congressional speech and quite frankly she should have been there.  She wasn't alone though as many Democrats didn't attend either.  Is she kowtowing to the more progress wing of the Democratic party?  I suppose only time will tell but another pressing matter is after this week the US Congress will be on break for 6 weeks and won't be returning until September 9 after Labor Day.  So, the average Joe and Jane are lucky to get two weeks and these folks get 6 weeks.  You what the most pressing matter will be when they return?  Funding the US government after the fiscal year ends on September 30.  Thats right, they'll have exactly three weeks to decide what the budget will look like for 2025 and based on their past performance, that's a stretch.  Today we have Durable Goods, Core Durable Goods and other news to drive the markets.  Will they put us on the right track going forward?  Only time will tell.