US Dollar: Dec USD is Down at 97.690.
Energies: Nov '19 Crude is Up at 56.89.
Financials: The Dec 30 year bond is Down 34 ticks and trading at 157.29.
Indices: The Dec S&P 500 emini ES contract is 54 ticks Higher and trading at 3089.00.
Gold: The Dec Gold contract is trading Down at 1485.50. Gold is 77 ticks Lower than its close.
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 Higher and Crude is trading Higher which is not correlated. Gold is trading Lower which is not 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 time all of Asia is trading Higher. Currently all of Europe is trading Higher as well.
Possible Challenges To Traders Today
· Unemployment Claims is out at 8:30 AM EST. This is Major. · Natural Gas Storage is out at 10:30 AM EST. This is Major. · 30-y Bond Auction is out at 1 PM EST. This is Major. · Consumer Credit m/m is out at 3 PM EST. This is Major.
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 10:30 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 10:30 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 10:30 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 long opportunity on the 30 year bond, as a trader you could have netted about a 15 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
Yesterday we gave the markets a Neutral bias as we didn't see much in the way of market correlation yesterday morning hence the Neutral bias. The markets didn't really disappoint as the Dow dropped less than a point, the S&P gained 2 and the Nasdaq dropped 24 points. All in all a Mixed or Neutral day. Today we aren't dealing with a correlated market however our bias is to the Upside.
Could this change? Of Course. Remember anything can happen in a volatile market.
Yesterday there was a report that suggested the trade talks between the US and China may be stalled and the tariffs that was supposed to be eliminated now won't be till December. This is nothing new as earlier this year we heard that the trade deal was a "piece of cake" and it never happened. Why? The Chinese won't tolerate the "my way or the highway" attitude of this Administration and as such until both parties get what they want it will be a dictate. BTW - dictates don't work in politics. The last people who tried that were the dictators from the 20th Century and they aren't around anymore.
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.