FOMC members take the stage today

USD: Mar '24 is Up at 104.030.

Energies: Mar '24 Crude is Down at 76.11

Financials: The Mar '24 30 Year T-Bond is Up 10 ticks and trading at 119.30.

Indices: The Mar '24 S&P 500 emini ES contract is 1 tick Higher and trading at 5044.00.

Gold: The Feb'24 Gold contract is trading Down at 2036.20.  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, but 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 (fractionally) and Crude is trading Lower which is 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.  Asia is trading Lower with the exception of the Hang Seng and Shanghai exchanges.  All of Europe is trading Higher with the exception of the London exchange..

Possible challenges to traders

• FOMC Member Bowman Speaks at 9:20 AM EST. This is Major.

• FOMC Member Barkin Speaks at 12 noon. This is Major.

• Federal Budget Balance is out at 2 PM EST. This is 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.  

On Friday the ZN migrated Lower at around 10 AM EST as the S&P hit a Low at around the same time.  If you look at the charts below the S&P gave a signal at around 10 AM and the ZN started its Downward trend.  Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 10 AM and migrated Higher.  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 Short 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 the ZN is now Mar '24.  The S&P contract is now Mar' 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 - Mar 2024 - 02/09/24

S&P - Mar 2024 - 02/09/24

Bias

On Friday we gave the markets a Mixed or Neutral bias as we didn't evidence of a correlated market, hence the Neutral bias.  The markets traded Mixed on Friday as the Dow dropped 55 points, but the other indices managed to gain ground and closed Higher.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

On Friday when we first viewed the markets, we saw no evidence of a correlated market or Market Correlation, hence the Neutral or Mixed market.  The markets traded and closed Mixed on Friday.  Perhaps it was the anticipation of the Super Bowl or perhaps it was the report that came out on President Biden's mental capacity.  Either way the markets traded and closed Mixed, as suggested.  Today we have two FOMC members speaking and the Federal Budget Balance out at 2 PM EST, so we have more today as opposed to Friday.  Will this be enough for unilateral direction either up or down?  As in all things, only time will tell...