Nick Mastrandrea
Market Tea Leaves
USD: Sept '24 is Down at 100.305.
Energies: Oct '24 Crude is Up at 69.00.
Financials: The Dec '24 30 Year T-Bond is Up 1 tick and trading at 126.24.
Indices: The Sept '24 S&P 500 emini ES contract is 26 ticks Higher and trading at 5636.00.
Gold: The Dec'24 Gold contract is trading Up at 2614.10.
Initial conclusion
This is not a correlated market. The USD is Down and Crude is Up which is normal, but 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 Higher and Crude is trading Higher which is not 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 Mixed. All of Europe is trading Higher. with the exception of the German Dax exchange.
Possible challenges to traders
-
Empire State Manufacturing Index is out at 8:30 AM EST. This is Major.
-
Lack of Major Economic News
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 Lower at 8:30 AM EST as the Import Price data 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 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 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 - 09/13/24
Dow - Sept 2024- 09/13/24
Bias
On Friday we gave the markets a Neutral or Mixed as we didn't see much in the way of Market Correlation Friday morning. The markets migrated to the Upside after the Import Price news was released. Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
On Friday we had University of Michigan Consumer Sentiment and Inflation Expectations. These are major and clearly moved the markets to the upside on Friday. The Dow gained 297 points and the other indices gained ground as well. Today we have Empire State Manufacturing Index which is major and a proven market mover. However this is the only news today.
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.
Recommended Content
Editors’ Picks
AUD/USD weighed down by China, tariffs
AUD/USD remained on the back foot, slipping back to the area of multi-year lows around 0.5950 on the back of mounting fears surrounding tariffs and their impact on the Chinese economy.
EUR/USD refocuses on 1.1000 amid tariffs jitters
EUR/USD reversed two daily pullbacks in a row an d managed to advance to the boundaries of the 1.1000 barrier on the back of fresh weakness hurting the US Dollar and persistent tariff fears.
Gold erases gains, back to the $2,980 zone
Gold prices now lose extra ground and slip back to the area of daily troughs near $2,980 mark per troy ounce following an unsuccesful attempt to maintain the trade above the critical $3,000 level earlier in the day.
XRP drops 3% as Ripple announces $1.25 billion acquisition of prime brokerage firm Hidden Road
Ripple announced on Tuesday that it is acquiring prime brokerage firm Hidden Road to enhance its institutional offerings and increase the adoption of the RLUSD stablecoin and the XRP Ledger (XRPL).
The Fed is looking at a hefty price level
We are still in thrall to tariffs, the faux-macro “data” driving markets. The WSJ editorial board advised other countries to take their tariffs to zero so that Trump’s “reciprocal” tariffs will have to be zero, too. Cute, but no cigar.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.