US Dollar: Dec '22 USD is Down at 105.205.

Energies: Jan '23 Crude is Down at 76.10.

Financials: The Mar '23 30 Year T-Bond is Up 13 ticks and trading at 129.07.

Indices: The Dec '22 S&P 500 Emini ES contract is 9 ticks Lower and trading at 4001.00. 

Gold: The Feb'23 Gold contract is trading Up at 1787.00. Gold is 57 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 T-Bond is trading Lower. 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 Asia is trading Mixed with half the exchanges Higher and the other half Lower. Currently all of Europe is trading Lower.

Possible challenges to traders today

  • Trade Balance is out at 8:30 AM EST. This is Major.

  • Lack of major economic news.

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 Bonds hit a High at around 10:20 AM EST. The S&P hit a Low at around that time and the Bonds moved Lower shortly thereafter. If you look at the charts below ZN gave a signal at around 10:20 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 High at around 10:20 AM and the S&P moved 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 Short opportunity on the 10-year note, as a trader you could have netted about a dozen plus 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

TYAZ

ZN - Dec 2022 - 12/05/22

EPZ

S&P - Dec 2022 - 12/05/22

Bias

Yesterday we gave the markets a Downside bias as the USD, the Bonds and Crude were trading Higher yesterday morning, and this represents a Downside Day. The markets didn't disappoint as the Dow dropped 483 points and the indices dropped as well. Today we aren't dealing with a correlated market and our bias is Neutral or Mixed. 

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

Commentary

Yesterday we didn't have any earth-shattering economic news to drive the markets with the exception that OPEC will maintain it's status quo on oil production and will not increase supply. This was neither here nor there. The fact is the markets were correlated to the Downside and down they went. All the indices lost ground yesterday so it wasn't a Mixed Day or a day where some indices could gain while others couldn't. Today we don't have much in terms of economic news so the markets will be left to its own devices. Will this drive the markets Higher? Only time will tell on that one.

 

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD: Inside day Friday opens risk of a lower close on Monday, 0.7050 eyed

AUD/USD: Inside day Friday opens risk of a lower close on Monday, 0.7050 eyed

AUD/USD was the best performer for the G7 last week and Aussie bulls could be trapped up high for the week ahead which holds a number of key data events. The following illustrates a bearish bias for the initial balance of the week, Monday with 0.7050 eyed.

AUD/USD News

EUR/USD faces fragile barricades below 1.0900 ahead of German GDP data

EUR/USD faces fragile barricades below 1.0900 ahead of German GDP data

The EUR/USD pair is struggling to extend its recovery move above the immediate resistance of 1.0870 in the early Tokyo session. The major currency pair delivered a rebound move from the previous week’s low around 1.0840 amid a restricted upside in the US Dollar index (DXY).

EUR/USD News

Gold bears await Federal Reserve decision, United States Non-farm Payrolls

Gold bears await Federal Reserve decision, United States Non-farm Payrolls

Gold price holds lower ground near $1,925 after posting an indecisive weekly closing as the metal traders await the key United States data and the Federal Reserve’s (Fed) monetary policy decision. Also important will be central bank meetings of the European Central Bank (ECB), Purchasing Managers’ Indexes data and the US employment numbers for January.

Gold News

Hedera missed the opportunity to reach that target before the fade kicked in

Hedera missed the opportunity to reach that target before the fade kicked in

Hedera (HBAR) price has been shooting for the starts but looks to be dropping like a stone now. Just like Icarus, who flew too close to the sun, this time, Hedera came just not close enough to the projected price target for this rally.

Read more

Central bank fest as dollar continues its decline

Central bank fest as dollar continues its decline

The focus this week is the Federal Reserve meeting, the Bank of England rate decision and Monetary Policy Report and the ECB meeting. This troika of central bank decisions could set the tone for the rest of the year: the Federal Reserve passing the baton of global leader when it comes to tightening monetary policy.

Read more

Majors

Cryptocurrencies

Signatures