US Dollar: Dec '21 USD is Up at 93.620.

Energies: Nov '21 Crude is Up at 76.28.

Financials: The Dec '21 30 Year bond is Down 32 ticks and trading at 159.20.

Indices: The Dec '21 S&P 500 emini ES contract is 126 ticks Lower and trading at 4396.00. 

Gold: The Dec'21 Gold contract is trading Down at 1738.30.  Gold is 138 ticks Lower than its close.

Initial conclusion

This is not a correlated market.  The dollar is Up and Crude is Up which is not normal and the 30 year Bond is trading Lower.  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 Higher 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. Currently Asia is trading Lower with the exception of the Hang Seng and Shanghai exchanges which are Higher. All of Europe is trading Lower at this time.

Possible challenges to traders today

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

  • Prelim Wholesale Inventories is out at 8:30 AM EST.  This is Major.

  • FOMC Member Evans Speaks at 9 AM EST.  This is Major

  • HPI is out at 9 AM EST.  This is Major

  • S&P/CS Composite-20 HPI is out at 9 AM EST.  Major.

  • Fed Chair Powell Testifies at 10 AM EST.  Major.

  • CB Consumer Confidence is out at 10 AM EST.  This is Major.

  • Richmond Mfg Index is out at 10 AM EST.  This is Major.

  • FOMC Member Bowman Speaks at 1:40 PM EST.  Major.

  • FOMC Member Bostic Speaks at 3 PM EST.  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 liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZN made it's move at around 9 AM EST.  The ZN hit a Low at around that time and the S&P moved Lower.  If you look at the charts below ZN gave a signal at around 9 AM EST and the S&P moved Lower at around the same time.  Look at the charts below and you'll see a pattern for both assets. ZN hit a Low at around 9 AM EST and the S&P was moving Lower 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 Long 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 Dec '21. The S&P contract is now Dec '21 as well.  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

Chart

ZN - Dec 2021 - 9/27/21

Chart

S&P - Dec 2021 - 9/27/21

Bias

Yesterday we gave the markets an Upside bias as the Bonds and Gold were all trading Higher Monday morning and that is indicative of an Upside day.  The markets had other ideas and the Dow closed 71 points Higher, however the other indices closed Lower and as such the markets traded Mixed.  Today we aren't dealing with a correlated market and our bias is Neutral.

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

Commentary

Much was said yesterday morning concerning the goings on in DC this week as many major bills will be voted on. There's a 1.5 Trillion dollar (yes that's not a typo) infrastructure package as well as the 3.5 Trillion dollar reconciliation bill that will cover such things as Education, Social Security and Medicare amongst other items. Whether this comes to fruition or gets passed only time will tell but until a clear direction is set, the markets will trade with increased volatility.  Today we have the Fed Chair Powell Testifying before a congressional committee and this may set market direction.

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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