Markets up despite interview

USD: Sept '24 is Up at 101.760.

Energies: Oct '24 Crude is Down at 72.20.

Financials: The Dec '24 30 Year T-Bond is Up 1 tick and trading at 123.05.

Indices: The Sept '24 S&P 500 emini ES contract is 128 ticks Lower and trading at 5629.00.

Gold: The Dec'24 Gold contract is trading Up at 2531.00.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, but the 30 Year T-Bond is trading Down.  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. Currently  Asia traded Lower with the exception of the Aussie and Singapore exchanges.  All of Europe is trading Lower.

Possible challenges to traders

• Final Manufacturing PMI is out at 9:45 AM EST.  This is Major.

• ISM Manufacturing PMI is out at 10 AM EST.  This is Major.

• ISM Manufacturing Prices is out at 10 AM EST.  This is Major.

• Chicago PMI is out at 9:45 AM EST.  This is Major.

• Construction Spending m/m is out at 10 AM EST.  This is Major.

• RCM/TIPP Economic Optimism is tentative.  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.

Last Friday the ZT migrated Lower at around 8:30 AM EST after the Income and Spending numbers were 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 BarCharts, 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 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 - 08/30/24

Dow - Sept 2024- 08/30/24

Bias

Last Friday we gave the markets an Upside bias as we finally saw some correlation between crude and the indices.  The markets rose and the Dow closed  228 points HIgher an dteh 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

Last Thursday evening the world got a glimpse of what an administration under President Harris would be like.  The problem was no one thought the interview was outstanding as VP Harris flip flopped on a number of issues and didn't address that well.  No discussion was made on Women's Rights, the Border or other issues deemed to be important.   The problem is VP Harris will soon debate former President Trump and if she conducts herself as she did last Thursday, he will destroy her.