Nick Mastrandrea
Market Tea Leaves
US Dollar: Sept '21 USD is Up at 92.735.
Energies: Sept '21 Crude is Up at 72.01.
Financials: The Sept '21 30 Year bond is Up 11 ticks and trading at 164.15.
Indices: The Sept '21 S&P 500 emini ES contract is 65 ticks Lower and trading at 4398.00.
Gold: The Aug'21 Gold contract is trading Down at 1798.40. Gold is 10 ticks Lower 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 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 Lower and Crude is trading Higher which is correlated. Gold is trading Lower which is 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. All of Asia is trading Lower with the exception of the Japanese Nikkei which is currently Higher. At this time all of Europe is trading Lower.
Possible challenges to traders today
-
Core Durable Goods Orders m/m is out at 8:30 AM EST. This is Major.
-
Durable Goods Orders m/m is out at 8:30 AM EST. This is Major.
-
HPI m/m is out at 9 AM EST, This is Major.
-
S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is Major.
-
CB Consumer Confidence is out at 10 AM EST. This is Major.
-
Richmond Manufacturing Index is out at 10 AM EST. This is Major.
Bias
Yesterday we gave the markets a Downside bias as Crude and the Bonds were trading Higher Monday morning and that usually reflects a Downside day. The markets however had other ideas as the Dow gained 83 points and the other indices closed Higher. Today we aren't dealing with a correlated market and our bias is to the Downside.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
It would appear as though the markets are truly in an uptrend as Monday had one economic report: New Home Sales that did not meet expectations coming in at 676,000 versus 800,000 expected yet the markets closed to the Upside. We can only conclude that Smart Money wanted to see the markets Higher and so it was. Today we have far more reports, all of which are Major. Durable Goods and Core Durable Goods are out at 8:30 AM EST. HPI and Consumer Confidence are also out and tomorrow we have FOMC Day.
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
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Bitcoin price could be primed for correction as bearish activity grows near $66K area
Bitcoin (BTC) price managed to maintain a northbound trajectory after the April 20 halving, despite bold assertions by analysts that the event would be a “sell the news” situation. However, after four days of strength, the tables could be turning as a dark cloud now hovers above BTC price.
Bank of Japan's predicament: The BOJ is trapped
In this special edition of TradeGATEHub Live Trading, we're joined by guest speaker Tavi @TaviCosta, who shares his insights on the Bank of Japan's current predicament, stating, 'The BOJ is Trapped.'