Jobs Friday

USD: Sept '24 is Down at 100.985.

Energies: Oct '24 Crude is Up at 69.43.

Financials: The Dec '24 30 Year T-Bond is Down 132 ticks and trading at 126.05.

Indices: The Sept '24 S&P 500 emini ES contract is 12 ticks Higher and trading at 5480.00.

Gold: The Dec'24 Gold contract is trading Up at 2549.80.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, and 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 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. Currently  Asia is trading Lower.  All of Europe is trading Lower as well.

Possible challenges to traders

• Average Hourly Earnings m/m is out at 8:30 AM EST. This is Major.

• Non-Farm Employment Change is out at 8:30 AM EST. This is Major.

• Unemployment Rate is out at 8:30 AM EST. This is Major.

• FOMC Member Williams Speaks at 8:45 AM EST. This is not Major.

• FOMC Member Waller Speaks at 11 AM EST. This is not 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 Lower at around 8:30 AM EST after Unemployment Claims was released 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 30 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 still Sept '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 - 09/05/24

Dow - Sept 2024- 09/05/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we didn't see much in the way of correlation Thursday morning.  The markets closed Mixed with the Nasdaq Higher but the other indices Lower.  Given that today is Jobs Friday our bias is Neutral or Mixed.

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 and gave the markets a Neutral or Mixed bias.  The markets didn't disappoint as only the Nasdaq rose and all others didn't.  Today given that it is Jobs Friday we will maintain a Neutral or Mixed bias.