US Dollar: Jun '21 USD is Down at 91.150.

Energies: Jun'21 Crude is Up at 63.68.

Financials: The June '21 30 year bond is Down 14 ticks and trading at 156.26.

Indices: The June'21 S&P 500 emini ES contract is 64 ticks Higher and trading at 4190.50. 

Gold: The June'21 Gold contract is trading Up at 1776.60.  Gold is 89 ticks Higher than its close.

Initial conclusion

This is a nearly correlated market.  The dollar is Down- and Crude is Up+ which is 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 Higher and Crude is trading Higher which is not 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.   All of Asia is trading Lower. Conversely, all of Europe is trading Higher.

Possible challenges to traders today

  • Final Manufacturing PMI is out at 9:45 AM EST.  This is Major.

  • ISM Manufacturing PMI is out at 10 AM EST.  This is Major.

  • Construction Spending m/m is out at 10 AM EST.  This is Major.

  • ISM Manufacturing Prices is out at 10 AM EST.  This is Major.

  • Wards Total Vehicle Sales is out All Day by Brand.  This is Major.

  • Loan Officer Survey is out at 2 PM EST.  This is Major.

  • FOMC Member Williams Speaks at 2:10 PM EST.  This is Major.

  • Fed Chair Powell Speaks at 2:20 PM EST.  This is Major.

Bias

On Friday we gave the markets a Downside bias as we saw no evidence of Market Correlation Friday morning.  The Dow traded Lower by about 186 points and the other indices lost ground as well.  Today we are dealing with a nearly correlated market and our bias is to the Upside.

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

Commentary

Well, it would appear as though the Biden speech rally ended Friday as the markets fell.  Not by much mind but they retreated nonetheless.  Saturday represented May Day globally which is an official celebration of the start of spring with many nations celebrating with Music, Food and dance.  I think of it as either an early Labor Day or Octoberfest.  In any case, many of the banks in Europe are closed for a bank holiday.  Of course, we in the United States are still open.  This may either serve to stabilize the markets or confuse them all together.  Of course, time will tell how this works out.  We do have the Fed chair Powell speaking this afternoon.

 

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.

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