Jobs Friday [Video]

US Dollar: Dec '21 USD is Up at 96.190.

Energies: Jan '22 Crude is Up at 68.11.

Financials: The Mar '22 30 Year bond is Up 12 ticks and trading at 162.22.

Indices: The Dec '21 S&P 500 emini ES contract is 51 ticks Lower and trading at 4561.75.

Gold: The Dec'21 Gold contract is trading Up at 1772.20. Gold is 95 ticks Higher 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 Higher. The Financials should always correlate with the US dollar such that if the dollar is lower then the bonds should follow and vice-versa. The S&P is Lower and Crude is trading Higher which is 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. Currently, Asia is trading Mixed. All of Europe is trading Mixed as well at this time.

Possible challenges to traders today

Average Hourly Earnings is out at 8:30 AM EST. This is Major.
Non-Farm Employment Change is out at 8:30 AM EST.Major.
Unemployment Rate is out at 8:30 AM EST.This is Major.
Final Services PMI is out at 9:45 AM EST.This is Major.
ISM Services PMI is out at 10 AM EST.This is Major.
Factory Orders are out at 10 AM EST.Major.
Treasury Currency Report. 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.

Yesterday the ZN made its move at around 9:30 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 9:30 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 9:30 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 20 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Mar '22. The S&P contract is now Mar '22 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

ZN - Mar 2022 - 12/02/21

S&P - Mar 2022 - 12/02/21

Bias

Yesterday we gave the markets an Upside bias and the markets didn't disappoint. The Dow gained 618 points on the day and the other indices leaped forward as well. Given that today is Non-Farm Payrolls or as we call it Jobs Friday, we will maintain a Neutral or Mixed bias as is our custom. Why? Because the markets have never shown any sense of normalcy on this day.

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

Commentary

This has been a tough week as we all know. A week ago we find out about a new strain or variant of Covid 19. The Fed did not offer any positive news about tapering and now we understand that we might have a Debt Ceiling issue liken to what we saw in October and could face a government shutdown. Bottom line we need some good news this week and today we got in the Unemployment Claims report that showed claims of 222,000 versus the 238,000 expected. Today as is our custom we will maintain a Neutral or Mixed bias as it is Jobs Friday and the markets have never shown any sense of normalcy on this day.

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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.