Jobs Friday

USD: Dec '24 is Down at 101.625.

Energies: Nov '24 Crude is Up at 74.79.

Financials: The Dec '24 30 Year T-Bond is Down 3 ticks and trading at 123.11

Indices: The Dec '24 S&P 500 emini ES contract is 56 ticks Higher and trading at 5763.00.

Gold: The Dec'24 Gold contract is trading Down at 2678.00.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, and the 30 Year T-Bond is trading Lower.  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 and Crude is trading Higher which is not correlated. Gold is trading Lower which is not correlated with the US dollar trading Down.  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 traded mainly Higher with the exception of the Sensex exchange.  Europe is trading Higher with the exception of the London exchange. 

Possible challenges to traders

• Average Hourly Earnings m/m is out at 8:30 AM EST.  This is Major.

• Non-Farm Employment Change is out at 8:30 AM EST.  This is Major.

• Unemployment Rate is out at 8:30 AM EST.  This is Major. 

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

Traders, please note that we've changed the Bond instrument from the 10 year (ZN) to the 2 year (ZT).  They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 2-year Treasury notes (ZT) and the S&P futures contract.  The YM contract is the Dow Jones Industrial Average, 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.

Yesterday the ZT migrated Higher at around 8:30 AM EST with no real economic news in sight and began its Downward slide.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM and the ZT moved Lower at around the same time.  These charts represent the newest version of Bar Charts, and I've changed the timeframe to a 15-minute chart to display better.  This represented a Short opportunity on the 2-year note, as a trader you could have netted about 20 ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is Dec and the Dow is now Dec '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of Barcharts

ZT -Dec 2024 - 10/03/24

Dow - Dec 2024- 10/03/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets veered to the Downside.  The Dow dropped 185 points, and the other indices lost ground as well.  Given that today is Jobs Friday we will maintain a Neutral or Mixed bias.

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

Commentary

Another Jobs Friday comes our way, but this one is especially critical as it is the last one prior to the November presidential election.  The markets veered to the downside yesterday as it is assumed that the Israeli Defense Force will attack Iran's oil supply sending prices much Higher.  All this being said we will maintain a Neutral bias today as it is Jobs Friday and the markets have never shown any sense of normalcy on that day.