The Bulls Roar [Video]

US Dollar: Sept USD is Down at 97.415.

Energies: Aug '19 Crude is Up at 57.08.

Financials: The Sept 30 year bond is Up 7 ticks and trading at 154.16.

Indices: The Sept S&P 500 emini ES contract is 38 ticks Lower and trading at 2998.50.

Gold: The Aug Gold contract is trading Up at 1425.90. Gold is 49 ticks Higher than its close.

Initial Conclusion

This is not a correlated market.  The dollar is Down and Crude is Up+ which is normal but the 30 year Bond is trading Higher.  The Financials should always correlate with the US dollar such that if the dollar is lower then 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 Higher with the exception of the Singapore and Sensex exchanges which are lower at this time.  Conversely Europe is trading Lower at this time with the exception of the Dax and Milan exchanges which are Higher.  

Possible Challenges To Traders Today

• 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.

• New Home Sales is out at 10 AM.  This is major.

• Crude Oil Inventories is out at 10:30 AM EST.  This is major.

 Treasuries

We've elected to switch gears a bit and show correlation between the 30 year bond (ZB) and The YM futures contract.  The YM contract is the DJIA and the purpose is to show reverse correlation between the two instruments.  Remember it's liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZB made a major move at around 9 AM EST.  The ZB hit a Low at around that time and the YM hit a High.  If you look at the charts below ZB gave a signal at around 9 AM EST and the YM was moving Lower at the same time. Look at the charts below and you'll see a pattern for both assets. ZB hit a Low at around 9 AM and the YM was moving Lower at the same time.  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 Long opportunity on the 30 year bond, as a trader you could have netted about a dozen ticks per contract on this trade.  Each tick is worth $31.25.  Please note: the front month for both the ZB and YM contract is now September, 2019 and I've changed the format to Renko bars such that it may be more apparent and visible.

Charts Courtesy of MultiCharts built on an AMP platform.

Bias

Yesterday we gave the markets an Upside bias as the Bonds, Gold and Crude were all trading Lower yesterday morning and this usually signals an Upside day.  The markets didn't disappoint as the Dow gained 177 points and the 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

When deciding what to write about we must sometimes allow our mind to deviate as we want to keep it interesting for the reader.  When deciding what to write about today, our first thought was the real estate numbers as both HPI and Existing Home Sales was released yesterday.  The only problem was that neither one of those numbers met or exceeded expectation.  So why did the markets advance yesterday?  We believe it was because of market correlation rules which told us as early as 6 AM that this could happen and did.