Nick Mastrandrea
Market Tea Leaves
US Dollar: Jun '21 USD is Down at 90.465.
Energies: Jun'21 Crude is Up at 71.41.
Financials: The Sept '21 30 year bond is Up 1 tick and trading at 159.07.
Indices: The Jun'21 S&P 500 emini ES contract is 9 ticks Higher and trading at 4250.00.
Gold: The Aug'21 Gold contract is trading Down at 1857.10. Gold is 225 ticks Lower 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 Higher and Crude is trading Higher which is not 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. Asia is trading Higher with the exception of the Shanghai and Singapore exchanges which are Lower. Currently all of Europe is trading Higher.
Possible challenges to traders today
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No economic news to speak of.
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Lack of economic news.
Bias
On Friday we gave the markets a Neutral or Mixed bias as we didn't see much in the way of correlation Friday morning. The markets surged Higher with the Dow gaining about 13 points and the other indices gained 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
Friday morning we gave the markets a Neutral or Mixed bias and perhaps I should explain what that means. A Neutral bias means the markets could go anywhere either up or down depending upon events that occur that day. Now we didn't really have much ion the way of economic news except the University of Michigan (UOM) numbers reflecting Consumer Sentiment and Inflation expectations. Both of these numbers came in positive which in all likelihood contributed to the market upswing on Friday. The markets didn't gain much but any gain in this market is a victory. Additionally positive news came in from Europe's G7 meeting as all hailed President Biden's "America is Back" comments....
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.
Trading in the commodities markets involves substantial risk and YOU CAN LOSE A LOT OF MONEY, and thus is not appropriate for everyone. You should carefully consider your financial condition before trading in these markets, and only risk capital should be used.
In addition, these markets are often liquid, making it difficult to execute orders at desired prices. Also, during periods of extreme volatility, trading in these markets may be halted due to so-called “circuit breakers” put in place by the CME to alleviate such volatility. In the event of a trading halt, it may be difficult or impossible to exit a losing position.
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