Mixed market as suggested

USD: Mar '24 is Down at 102.925.

Energies: Mar '24 Crude is Down at 74.19.

Financials: The Mar '24 30 Year T-Bond is Up 19 ticks and trading at 120.13.

Indices: The Dec '23 S&P 500 emini ES contract is 46 ticks Higher and trading at 4915.00.

Gold: The Feb'24 Gold contract is trading Up at 2034.00.  

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not 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 Lower 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.  Asia is trading mainly Higher with the exception of the Japanese Nikkei which is Down.  Currently all of Europe is trading Higher.

Possible challenges to traders

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

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

• Crude Oil Inventories is out at 10:30 AM EST. 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 likened to a seesaw, when up goes up the other should go down and vice versa.  

Yesterday the ZN migrated Lower at around 9:30 AM EST as the S&P hit a Low at around the same time. If you look at the charts below the S&P gave a signal at around 9:30 AM and the ZN started its Downward trend.  Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 9:30 AM and migrated Lower.  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 Short opportunity on the 10-year note, as a trader you could have netted about 12 ticks per contract on this trade. Each tick is worth $15.625.  Please note: the front month for the ZN is now Mar '24. The S&P contract is now Mar' 24. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of MultiCharts built on an AMP platform

ZN - Mar 2024 - 01/23/24

S&P - Mar 2024 - 01/23/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we didn't much in the way of correlation Tuesday morning. The markets however didn't disappoint as the Dow closed Lower by 96 points and the other indices closed Lower. All in all, a Neutral or Mixed day. Today we aren't dealing with a correlated market and our bias is to the Upside.

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

Commentary

Yesterday we predicted a Neutral or Mixed day due to the New Hampshire primary. Today we have the PMI numbers and crude oil inventories.  Will this provide a trend for the markets today?  Only time will tell...