Today we have Housing Starts and Building Permits

USD: Dec '24 is Up at 106.355.

Energies: Dec '24 Crude is Down at 68.84.

Financials: The Dec '24 30 Year T-Bond is Up 19 ticks and trading at 116.29.

Indices: The Dec '24 S&P 500 emini ES contract is 72 ticks Lower and trading at 5902.25.

Gold: The Dec'24 Gold contract is trading Up at 2636.60.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30 Year T-Bond is trading Higher.  The Financials should always correlate with the US dollar such that if the dollar is Higher, then the 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. All of Asia traded Lower.   Currently all of Europe is trading Higher. 

Possible challenges to traders

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

• Housing Starts are out at 8:30 AM EST.  This is Major.

• FOMC Member Schmid Speaks at 1:10 PM EST.  This is Major.

Traders, please note that we've changed the Bond instrument from the 10 year (ZN) to the 2 year (ZT).  They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 2-year Treasury notes (ZT) and the S&P futures contract.  The YM contract is the Dow Jones Industrial Average, and the purpose is to show reverse correlation between the two instruments.  Remember it's likened to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZT migrated Higher at around 8 AM EST with no economic news pending.  The Dow migrated Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8 AM and the ZT moved Higher at around the same time.  These charts represent the newest version of Bar Charts, and I've changed the timeframe to a 15-minute chart to display better.  This represented a Long opportunity on the 2-year note, as a trader you could have netted about 20 plus ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is Dec and the Dow is now Dec '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of Barcharts

ZT -Dec 2024 - 11/18/24

Dow - Dec 2024- 11/18/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint.  The Dow closed Lower by 55 points, but the other indices migrated into positive territory.  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 didn't see much in the way of correlation Monday morning.  In fact, it would be safe to say that nothing was correlated hence the Neutral or Mixed bias.    The indices traded Mixed with only the Dow closed in negative territory, the other indices closed in positive territory.  Today we have Housing Starts and Building Permits; both of which are key to the real estate market.  Will this change market direction?  Only time will tell...