US Dollar: Dec '20 USD Up at 90.205.
Energies: Jan'21 Crude is Up at 53.37.
Financials: The Mar '21 30 year bond is Up 8 ticks and trading at 168.14.
Indices: The Mar'21 S&P 500 emini ES contract is 12 ticks Lower and trading at 3791.50.
Gold: The Feb'21 Gold contract is trading Up at 1854.20. Gold is 100 ticks Higher than its close.
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 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 Higher which is not 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 Mixed with half the exchanges Higher and the other half Lower. Currently Europe is trading Mixed as well.
Possible Challenges To Traders Today
CPI is out at 8:30 AM EST. This is Major. Core CPI is out at 8:30 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
FOMC Member Brainard Speaks at 1 PM EST. This is Major
30-y Bond Auction starts at 1 PM EST. This is Major.
Beige Book is out at 2 PM EST. This is Major.
Federal Budget Balance is out at 2 PM EST. This is Major.
FOMC Member Clarida Speaks at 3 PM EST. This is Major.
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 10 AM EST. The ZN hit a High at around that time and the S&P moved Higher. If you look at the charts below ZN gave a signal at around 10 AM EST and the S&P moved Higher at around the same time. Look at the charts below and you'll see a pattern for both assets. ZN hit a High at around 10 AM EST and the S&P was moving Higher 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 Shorting opportunity on the 10 year note, as a trader you could have netted about 10 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Mar '21. The S&P contract is now March '21. 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 an Upside bias as both the USD and Gold were trading Lower Tuesday morning and that usually signifies an Upside day. The markets didn't disappoint as the Dow gained 60 points and the other indices gained ground as well. 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.
Well it appears as though Vice President Pence won't invoke the 25th Amendment relieving President Trump of his duties and power as the POTUS. I didn't really think he would do it either he may appear as a traitor to the Trump loyal. As such it seems that the new and latest Articles of Impeachment will be voted on and acted upon in Congress. It may pass the House of Representatives with flying colors but it would still have to go thru the Senate and they won't reconvene until January 19th one day before Biden is inaugurated as President. Marketwise it seems as though the markets have accepted the fact that we had a government upheaval last week and the effects of that is wearing off as the markets gained ground yesterday. Will that continue today? 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.