Record high then down

USD: Jun '24 is Up at 104.620.

Energies: Jun '24 Crude is Up at 78.78.

Financials: The June '24 30 Year T-Bond is Down 10 ticks and trading at 117.19.

Indices: The Jun '24 S&P 500 emini ES contract is 6 ticks Higher and trading at 5321.75.

Gold: The Jun'24 Gold contract is trading Up at 2323.90  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but the 30 Year T-Bond is trading Lower.  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 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.  All of Asia is trading Higher with the exception of the Aussie and Nikkei exchanges.  Europe is trading mainly Lower with the exception of the Milan exchange. 

Possible challenges to traders

• CB Leading Index m/m is out at 10 AM EST. This is Major.

• FOMC Member Waller Speaks at 10:15 AM EST. This is Major.

• FOMC Member Daly Speaks at 12:15 PM EST. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 2 year (ZT) 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 Treasury notes (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 9:15 AM EST as the S&P hit a Low at around that time and the ZN migrated Lower.  If you look at the charts below the ZN gave a signal at around 9:15 AM and started its Downward slide.  Look at the charts below and you'll see a pattern for both assets. S&P moving Higher at around 9:15 AM and the ZN moving Lower at around 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 Short opportunity on the 10-year note, as a trader you could have netted about a dozen ticks per contract on this trade.   Each tick is worth $15.625.  Please note: the front month for both the ZN and the S&P are now Jun '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 -Jun 2024 - 05/16/24

S&P - Jun 2024 - 05/16/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we saw no evidence of Market Correlation Wednesday morning.  The markets migrated to the Downside as the Dow closed 39 points Higher and the other indices closed Lower 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

Yesterday morning we saw no evidence of Market Correlation thus the Neutral or Mixed bias which means the markets could go anywhere.  We did however have a news tsunami as there was 12 economic reports, all of which were major.  The Dow hit the 40,000 mark for the first time ever but couldn't hold onto it.  Will it hold onto it and exceed it today?  Only time will tell...  Today we are light on economic news as we have the CB Leading Indicators and a couple of FOMC members speaking.