Markets continue upward trend

USD: Jun '24 is Up at 105.085.

Energies: Jun '24 Crude is Down at 78.17.

Financials: The June '24 30 Year T-Bond is Up 13 ticks and trading at 116.20.

Indices: The Jun '24 S&P 500 emini ES contract is 10 ticks Higher and trading at 5209.00.

Gold: The Jun'24 Gold contract is trading Down at 2323.30.  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30 Year T-Bond is trading Higher.  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 Lower 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.  Asia is trading Mixed with half the exchanges Higher and the other half Lower.  Currently all of Europe is trading Higher. 

Possible challenges to traders

• RCM/TIPP Economic Optimism - tentative. This is Major.

• Consumer Credit m/m is out at 3 PM EST. 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 migrated Lower at around 9 AM EST as the S&P hit a Low at around that time and the ZN hit a High moving Lower.  If you look at the charts below the ZN gave a signal at around 9 AM and started its Downward slide.  Look at the charts below and you'll see a pattern for both assets. S&P moving Higher at around 9 AM and the ZN moving Lower at around the same time.  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 plus ticks per contract on this trade.   Each tick is worth $15.625.  Please note: the front month for both the ZN and the S&P are now Jun '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of MultiCharts built on an AMP platform

ZN -Jun 2024 - 05/06/24

S&P - Jun 2024 - 05/06/24

Bias

Yesterday we suggested a Neutral or Mixed bias as we saw no evidence of Market Correlation as all instruments were pointed Higher.  The markets closed to the Upside with the Dow 177 points Higher and the other indices Higher as well.

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

Commentary

Yesterday when we first viewed the markets all instruments were pointed Higher, and this reflected a Neutral or Mixed bias.  This means the markets could go in any direction and often does.  Whenever you have a situation where all instruments are pointed Higher or conversely pointed Lower, you do not have a correlated market. This means it could go anywhere. Yesterday it zoomed Higher but could have easily gone Lower.  Today we don't have much in the way of economic news.  We do have Consumer Credit, out at 3 PM.  This is Major as it gives a snapshot on Consumer Spending which is a major driver for the US markets. The US economy is comprised of 70 % consumer spending with the balance business spending.