US Dollar: Dec '20 USD Down at 90.260.

Energies: Jan'21 Crude is Down at 52.84.

Financials: The Mar '21 30 year bond is Down 15 ticks and trading at 168.29.

Indices: The Mar'21 S&P 500 emini ES contract is 29 ticks Higher and trading at 3811.00. 

Gold: The Feb'21 Gold contract is trading Down at 1839.60.    Gold is 158 ticks Lower than its close.

Initial Conclusion

This is not a correlated market.  The dollar is Down- and Crude is Down- which is not 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 Lower which is 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.

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

Possible Challenges To Traders Today

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

  • 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.

  • Fed Chair Powell Speaks at 12 noon.  This is Major.

Treasuries

Traders please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN).  They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10 year bond (ZN) 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 ZN made it's move at around 7:30 AM EST.  The ZN hit a Low at around that time and the S&P moved Lower.  If you look at the charts below ZN gave a signal at around 7:30 AM EST and the S&P moved Lower at around the same time.  Look at the charts below and you'll see a pattern for both assets. ZN hit a Low at around 7:30 AM EST 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 10 year note, as a trader you could have netted about 30 ticks per contract on this trade.   Each tick is worth $15.625.  Please note: the front month for the ZN is now Mar '21.  The S&P contract is now March '21.  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

NZ

ZN - Mar 2021 - 1/13/21

SP

S&P - Mar 2021 - 1/13/21

Bias

Yesterday we gave the markets a Neutral bias as all instruments we use for market correlation purposes were trading Higher and this does not reflect a correlated market.  The Dow dropped 8 points, the S&P gained 9 and the Nasdaq gained 57; all in all a Mixed or Neutral day.  Today we aren't dealing with a correlated market and our bias is Neutral.

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

Commentary

Well it was finally confirmed today.  The House of Representatives voted to impeach President Trump making him the only President of the United States to be impeached twice.  Now the Articles of Impeachment will be sent to the Senate but unfortunately the Senate is on break until January 19th, one day before Inauguration Day.  One has to wonder why go thru all this when Trump has a week to go before he's out of office?  My take on this is as follows: The folks in DC don't want Trump to ever hold or run for office again and the only way to ensure that is to successfully impeach him.  They view him as a clear and present danger to the United States and they aren't wrong to think that.  Time will tell how this all pans 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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