St. Patrick’s Day

US Dollar: Mar. USD is Down at 89.955.

Energies: April '18 Crude is Up at 61.28.

Financials: The June 30 year bond is Up 11 ticks and trading at 145.05.

Indices: The June S&P 500 emini ES contract is 3 ticks Higher and trading at 2756.25.

Gold: The April gold contract is trading Up at 1319.00.  Gold is 12 ticks Higher than its close.

Initial Conclusion

This is not a correlated market.  The dollar is Down- and Crude is Up+ which is 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 Higher and Crude is trading Up+ which is not correlated. Gold is trading Up+ 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.

At this hour all of Asia is trading Lower.  At this time all of Europe is also trading Higher.

Possible Challenges To Traders Today

• Building Permits are out at 8:30 AM EST.  This is major.

• Housing Starts 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 is out at 9:15 AM EST.  This is major.

• Prelim UoM Consumer Sentiment is out at 10 AM EST.  This is major.

• Prelim UoM Inflation Expectations is out at 10 AM EST.  This is major.

• JOLTS Job Openings 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 YM futures contract.  The YM contract is the DJIA 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 it's move at around 10 AM.  The ZB hit a High at around that time and the YM hit a Low.  If you look at the charts below ZB gave a signal at around 10 AM EST and the YM was moving Higher at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a High at around 10 AM and the YM hit a Low.  These charts represent the newest version of MultiCharts and I've changed the timeframe to a 30 minute chart to display better.  This represented a Shorting opportunity on the 30 year bond, as a trader you could have netted about 15 plus ticks per contract on this trade.  Each tick is worth $31.25.

Charts Courtesy of MultiCharts built on an AMP platform.

Bias

Yesterday we gave the markets a Neutral bias as all instruments were pointed higher and this included the indices themselves.  The Dow gained 116 points but the other indices closed lower.  Today we aren't dealing with a correlated market and our bias is to the Downside.

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

Commentary

Yesterday we gave the markets a Neutral bias as all the instruments we track for Market Correlation purposes were pointed Higher except Gold which was down fractionally yesterday morning.  A Neutral bias means the markets can go in any direction and often does.  The Dow gained 116 points but the other indices lost ground.  Today we have 7 economic reports, all of which are major and proven market movers.  Building Permits, Housing Starts are all real estate related and this will tie in neatly with what the Fed may do next week at the FOMC Meeting to be held on March 21st.