US Dollar: Jun '21 USD Down at 91.110.

Energies: Jun'21 Crude is Down at 63.13.

Financials: The June '21 30 year bond is Up 9 ticks and trading at 158.09.

Indices: The June'21 S&P 500 emini ES contract is 24 ticks Lower and trading at 4170.25.

Gold: The June'21 Gold contract is trading Up at 1788.70. Gold is 85 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 Bond is trading Higher. 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 Lower which is not correlated. Gold is trading Higher which is 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. All of Asia is trading Higher with the exception of the Indian Sensex exchange which is Lower at this time. Currently Europe is trading Higher with the exception of the German Dax and the Milan exchange.

Possible challenges to traders today

  • No Major economic news to speak of.

  • Lack of Major economic news.

Bias

On Friday we gave the markets a Neutral bias as there was no correlation between the USD and the Bonds. However the markets did advance as the Dow gained 165 points and the other indices gained 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

On Friday we gave the Markets a Neutral or Mixed as we didn't see correlation between the Bonds and the USD. However as the session progressed it became clear that the markets would advance. Why? Build Permits and Housing Starts were released and both beat expectations handily. It must be kept in mind that the US economy is very much based on real estate as when real estate does well the rest of the economy seems to flourish. Look at it this way when a house is being built think of and consider all the raw materials and components that go into a new home. Think of the sheetrock, paint, flooring, appliances, etc. and everything else that goes into building that home. The same would hold true for Building Permits. A new addition to a home or a deck or possibly a fireplace. Today we have no economic news to drive the markets so they will be left to their own devices.

 

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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