Job number propel markets

USD: Dec '24 is Up at 102.360.

Energies: Nov '24 Crude is Up at 76.33.

Financials: The Dec '24 30 Year T-Bond is Down 10 ticks and trading at 121.21.

Indices: The Dec '24 S&P 500 emini ES contract is 117 ticks Lower and trading at 5770.75.

Gold: The Dec'24 Gold contract is trading Up at 2676.00.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but the 30 Year T-Bond is trading Lower.  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 Higher which is 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 traded mainly Higher with the exception of the Sensex exchange.  Europe is trading Higher with the exception of the German Dax exchange. 

Possible challenges to traders

FOMC Member Bowman Speaks at 1 PM EST. This is Major.

FOMC Member Kashkari at 1:50 PM EST. This is Major.

Consumer Credit is out at 3 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.

On Friday the ZT migrated Higher at around 8:30 AM EST with no real economic news in sight and began its Downward slide.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM and the ZT moved Lower 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 Short opportunity on the 2-year note, as a trader you could have netted about 20 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 - 10/04/24

Dow - Dec 2024- 10/04/24

Bias

On Friday we gave the markets a Neutral or Mixed bias as it was Jobs Friday, and we always maintain a Neutral bias on that day.  The markets veered to the Upside as the Dow gained 341 points on the day and the other indices gained ground as well.  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, another Jobs Friday came and went and to our surprise the numbers reported were very good.  The US economy created 254,000 net new jobs versus the expectation of 147,000.  Both political parties will take aim at this, but the Democrats have far more to gain as they can said with authority that "Bidenomics" is working and creating more opportunity.  The GOP will probably say the numbers are wrong, it's fake, its phony but the proof is there.  Today we are light on economic news, but we do have a couple of FOMC members speaking this afternoon, so time will tell.