Will Biden step away?

USD: Sept '24 is Up at 104.035.

Energies: Aug '24 Crude is Down at 81.02.

Financials: The Sept '24 30 Year T-Bond is Down 15 ticks and trading at 119.11

Indices: The Sept '24 S&P 500 emini ES contract is 16 ticks Higher and trading at 5598.00.

Gold: The Aug'24 Gold contract is trading Down at 2409.02  

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 Higher and Crude is trading Lower which is correlated. Gold is trading Lower which is 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 Lower with the exception of the Shanghai exchange.   Currently all of Europe is trading Lower. 

Possible challenges to traders

• FOMC Member Williams Speaks at 10:40 AM EST.  This is Major.

• FOMC Member Bostic Speaks at 1 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 10-year Treasury notes (ZN) 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 Higher at around 8:30 AM EST after the economic news was released.  If you look at the charts below the ZT gave a signal at around 8:30 AM and started its Upward climb.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8:30 AM and the ZT moved Higher 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 Long 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 Sept and the Dow is now 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 -Sept 2024 - 07/18/24

Dow - Sept 2024 - 07/18/24

Bias

Yesterday we gave the markets an Upside bias as we felt there was enough evidence of market correlation.  The markets however had other ideas as the Dow fell by 533 points and the other indices lost ground as well. 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 when we viewed the markets, we felt there was enough evidence to call for an Upside Day and initially the markets rose.  After 11 AM EST it became apparent that the markets would drop, and they did.  Additionally, it was rumored that President Biden may decide to drop out of the race altogether as he now has Covid (again) and the major players of the Democratic party are clamoring him to step down.  Former President Obama, Former Speaker Pelosi and other major democrats are advising him to consider stepping down.  No doubt this had an effect on yesterday's markets.  Will the same hold true today?  Only time will tell...