US Dollar: Dec USD is Up at 98.080.

Energies: Dec '19 Crude is Down at 56.59.

Financials: The Dec 30 year bond is Down 19  ticks and trading at 158.02.

Indices: The Dec SP 500 emini ES contract is 38 ticks Higher and trading at 3106.50.

Gold: The Dec Gold contract is trading Down  at 1464.80.   Gold is 84 ticks Lower than its close.

 

Initial Conclusion

This is not a correlated market.  The dollar is Up+ and Crude is Down- which is normal but 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 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.

At this time all of Asia is trading Higher with the exception of the Shanghai exchange which is Lower.  Currently all of Europe is trading Higher.  

 

Possible Challenges To Traders Today

  • Retail Sales is out at 8:30 AM EST.  This is Major.

  • Core Retail Sales is out at 8:30 AM EST.  This is Major.

  • Empire State Manufacturing Index is out at 8:30 AM EST.  This is Major.

  • Import Prices m/m are out at 8:30 AM EST.  This is Major.

  • Capacity Utilization Rate is out at 9:15 AM EST.  This is Major.

  • Industrial Production m/m is out at 9:15 AM EST.  This is Major.

  • Business Inventories m/m is out at 10 AM EST.  This is Major.

 

Treasuries

We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) 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 liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZB made a major move at around 9:15 AM EST.  The ZB hit a Low at around that time and the S&P hit a High.  If you look at the charts below ZB gave a signal at around 9:15 AM EST and the S&P moved Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 9:15 AM and the S&P was moving Lower 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 Shorting opportunity on the 30 year bond, as a trader you could have netted about a dozen plus ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for the ZB is now December.  The S&P contract is now at December as well and 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

ZB

ZB - December, 2019 - 11/14/19

SP

SP December 2019- 11/14/19

 

Bias

Yesterday we gave the markets a Neutral bias  as we didn't what we saw on the USD yesterday morning hence the Neutral bias.  The Dow dropped 2 points, the S&P gained 3 and the Nasdaq dropped 3, all in all a Mixed or Neutral day. Today we aren't dealing with a correlated market and our bias is to the Upside.

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

 

Commentary

After a one day hiatus the impeachment hearings will resume today on CNN.  Today we'll hear from the former Ambassador to the Ukraine and Bill Taylor's staff member who allegedly overheard a phone conversation with President Trump.  Whereas this makes for interesting viewing what will make it more interesting is the impact on the markets.  Time will tell how that works.

 

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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