Nick Mastrandrea
Market Tea Leaves
US Dollar: Jun '21 USD Down at 90.950.
Energies: Jun'21 Crude is Up at 64.19.
Financials: The June '21 30 year bond is Down 15 ticks and trading at 157.01.
Indices: The June'21 S&P 500 emini ES contract is 8 ticks Lower and trading at 4153.50.
Gold: The June'21 Gold contract is trading Down at 1766.80. Gold is 48 ticks Lower than its close.
Initial conclusion
This is not a 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 Lower and Crude is trading Higher which is correlated. Gold is trading Lower which is not correlated with the US dollar trading Lower. 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 mainly Lower with the exception of the Indian Sensex and Hang Seng exchanges which are Higher at this time. Currently all of Europe is trading Lower.
Possible challenges to traders today
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No Major economic news to speak of.
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Lack of Major economic news.
Bias
Yesterday we gave the markets a Neutral bias as there was no correlation between the USD and the Bonds. Unlike Friday where the markets traded Higher, yesterday the Dow fell by 123 points and the other indices lost ground as well. Today we aren't dealing with a correlated market and our bias is Neutral.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
Yesterday represented Patriots Day in the US state of Massachusetts. No, we aren't referring to the New England Patriots football team, its is a state holiday as it refers to the start of the American Revolutionary war and specifically the battle of Lexington and Concord in 1775. Well that didn't help the markets yesterday as the Dow and the other indices fell. In truth there were other factors that contributed to this. The Derek Chauvin trial in Minnesota, the Wright shooting in Brooklyn Center MN, the Indianapolis shooting at a FedEx facility. Today as in yesterday we have no economic news to drive the markets one way or the other.
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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