Nick Mastrandrea
Market Tea Leaves
US Dollar: Dec '20 USD Down at 91.790.
Energies: Apr'21 Crude is Up at 61.19.
Financials: The June '21 30 year bond is Down 5 ticks and trading at 157.00.
Indices: The June'21 S&P 500 emini ES contract is 22 ticks Higher and trading at 4138.25.
Gold: The June'21 Gold contract is trading Down at 1742.40. Gold is 52 ticks Lower than its close.
Initial Conclusion
This is not a correlated market. The dollar is Down- and Crude is Up+ which is 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 Higher and Crude is trading Higher which is not correlated. Gold is trading Lower which is not correlated with the US dollar trading Lower. 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 mainly Higher with the exception of the Singapore and Nikkei exchange. Currently Europe is trading Higher with the exception of the Milan exchange which is down fractionally.
Possible challenges to traders today
-
Import Prices are out at 8:30 AM EST. This is Major.
-
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
-
Fed Chair Powell Speaks at 12 noon EST. This is Major.
-
Beige Book is out at 2 PM EST. This is Major.
-
FOMC Member Williams Speaks at 2:30 PM EST. This is Major.
-
FOMC Member Clarida Speaks at 3:45 PM EST. This is Major.
-
FOMC Member Bostic Speaks at 4 PM EST. No effect.
Bias
Yesterday we gave the markets an Upside bias as the USD, Bonds and Gold were all trading Lower yesterday morning and under ordinary circumstances would have been an Upside day. The S&P and Nasdaq did trade Higher however the Dow dropped 68 points. 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
Yesterday we gave the markets an Upside bias as just about all the instruments we use for Market Correlation purposes indicated an Upside day. Then a funny thing happened around 7 AM EST. It was announced that the JNJ vaccine that only requires one dose was put on hold as some people developed blood clots in their brain allegedly due to this vaccine. However it should be understand that about 7 million JNJ vaccines were administered and out of those only six (6) persons were affected this way. That is minuscule and those persons were women ages 18-48. No women outside of that age range have been affected. This drove the Dow lower and as such the Dow was the only index to lose ground yesterday. Both the S&P and Nasdaq gained ground. Today we have a bit more economic news so we shall see if this changes market direction today.
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.
Recommended Content
Editors’ Picks
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
FBI cautions against non-KYC Bitcoin and crypto money transmitting services as SEC goes after MetaMask
US FBI has issued a caution to Bitcoiners and cryptocurrency market enthusiasts, coming on the same day as when the US Securities and Exchange Commission is on the receiving end of a lawsuit, with a new player adding to the list of parties calling for the regulator to restrain its hand.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.