Jobs moves markets [Video]

US Dollar: Dec '22 USD is Down at 110.400.

Energies: Dec '22 Crude is Down at 92.58.

Financials: The Dec '22 30 Year note is Up 7 ticks and trading at 119.21.

Indices: The Dec '22 S&P 500 emini ES contract is 76 ticks Higher and trading at 3798.25. 

Gold: The Dec'22 Gold contract is trading Up at 1679.10. Gold is 25 ticks Higher than its close.

Initial conclusion

This is not a correlated market. The dollar is Down, and Crude is Down which is not normal, but 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 Higher, and Crude is trading Lower which is correlated. Gold is trading Higher which is 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. Currently all of Asia is trading Higher. Europe is trading mainly Higher except the London and Spanish Ibex exchange.

Possible challenges to traders today

• Loan Officer Survey is Major and tentative.

• Consumer Credit is out at 3 PM EST. Major.

• FOMC Member Mester Speaks is out at 3:40 PM EST. Major.

• FOMC Member Collins Speaks at 3:40 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 likened to a seesaw, when up goes up the other should go down and vice versa.

On Friday the ZN made its move at around 10 AM EST. The ZN hit a Low at around that time and the S&P moved Lower shortly thereafter. If you look at the charts below ZN gave a signal at around 10 AM and the S&P gave a signal 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 10 AM and the S&P moved 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 20 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Dec '22. The S&P contract is also Dec' 22. 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 - Dec 2022 - 11/04/22

S&P - Dec 2022 - 11/04/22

Bias

On Friday we gave the markets a Neutral bias as it was Jobs Friday, and we always maintain a Neutral bias on that day. The markets veered to the Upside as the Dow closed Higher by 359 points and the other indices closed Higher as well. 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

Well finally we have a market that traded Higher based on good economic news.  The all-important monthly Non-Farm Payrolls was released on Friday, and it turns out that the US economy created 261,000 net new jobs versus 197,000 expected.  The market took off on this news sending the Dow Higher by 359 points.  Today we don't have much on economic news as Consumer Credit is out at 3 PM EST and two FOMC Members are scheduled to speak shortly before the session ends. So, time will tell how that works out.