US Dollar: Sept '21 USD is Up at 91.900.

Energies: Jul '21 Crude is Down at 70.49.

Financials: The Sept '21 30 year bond is Up 13 ticks and trading at 160.04.

Indices: The Jun'21 S&P 500 emini ES contract is 1 tick Lower and trading at 4212.00. 

Gold: The Aug'21 Gold contract is trading Up at 1792.80. Gold is 184 ticks Higher than its close.

Initial conclusion

This is not a correlated market. The dollar is Up+ and Crude is Down- which is normal and 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 not 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. Asia is trading Lower with the exception of the Hang Seng exchange.  Currently, Europe is trading Lower with the exception of the Paris exchange.

Possible challenges to traders today

  • No Major economic news to speak of.

  • Lack of Major economic news.

Bias

Yesterday we gave the markets a Neutral bias as we didn't see much in the way of correlation.  The Dow dropped 210 points, the S&P dropped a fractional 2 points but the Nasdaq gained on the day by 122.  Pretty much a down day for the Dow.  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

Well the day after the FOMC meeting came and went and apparently the markets weren't too pleased with the Fed's hawkish tone on Wednesday after the announcement.  The issue is whether or not the spike we are seeing with inflation is permanent or temporary.  Most believe that it is permanent.  The major issue confronting this is labor shortages and wages.  Unfortunately for the last 30 years the US hasn't really seen inflation rear it's ugly head and many believe that labor costs should be kept to it's barest minimum.  The minimum wage established by Congress is a joke.  $7.25 an hour can't even fill a tank of gas on a regular basis.  It is not a living wage and my stance has always been if businesses want or need people to buy their goods and services then a living wage is a prerequisite.  The more disposable income people have the more they'll be able to buy the very goods and services that business owners need.  Unfortunately, because this has been going on for so long we are in a period of everyone playing catchup and only time will tell how it all works out.

 

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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