US Dollar: Dec USD is Up at 98.015.
Energies: Oct '19 Crude is Down at 58.80.
Financials: The Dec 30 year bond is Up 18 ticks and trading at 159.31.
Indices: The Dec S&P 500 emini ES contract is 14 ticks Lower and trading at 3004.50.
Gold: The Dec Gold contract is trading Down at 1509.40. Gold is 40 ticks Lower than its close.
This is not a correlated market. The dollar is Up+ and Crude is Down- which is normal and 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 Lower which is not correlated. Gold is trading Lower which is 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.
All of Asia is trading Lower with the exception of the Shanghai and Sensex exchanges. Currently all of Europe is trading Higher at this time.
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.
Crude Oil Inventories is out at 10:30 AM EST. This is major.
FOMC Economic Projections is out at 2 PM EST. 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. Major.
We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) and The YM futures contract. The YM contract is the DJIA and the purpose is to show reverse correlation between the two instruments. Remember it's liken to a seesaw, when up goes up the other should go down and vice versa.
Yesterday the ZB made a major move at around 9:45 AM EST. The ZB hit a Low at around that time and the YM hit a High. If you look at the charts below ZB gave a signal at around 9:45 AM EST and the YM was moving Lower at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 9:45 AM and the YM was moving Lower at the same time. 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 30 year bond, as a trader you could have netted about 20 ticks per contract on this trade. Each tick is worth $31.25. Please note: the front month for the ZB is now December. The YM contract remains at September, 2019 (for the time being) and I've changed the format to Renko bars such that it may be more apparent and visible.
Charts Courtesy of MultiCharts built on an AMP platform
Yesterday we gave the markets a Neutral bias as we didn't see any sign of correlation yesterday morning. The Dow gained 34 points and the other indices gained ground as well. Given that today is FOMC Day, we will maintain a Neutral bias as is our custom on this day. For those of you who are new comers to our service, we always maintain a Neutral bias on FOMC Day 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.
So it appears as though the crude dilemma may have been a one day affair as crude traded as low as 58.68 a barrel which is below 60. So the question today is what will the Fed do? Everyone's thinking that the Fed will lower rates and they just might do that or they might stay neutral and leave rates as they are. At this point I'm not clear as to what they'll do. I certainly don't think that they'll hike rates but as in all things, only time will tell...….
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.