Market Tea Leaves https://markettealeaves.com Leading The Way In Market Correlation Wed, 11 Sep 2024 11:41:27 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 Mixed Bias = A Mixed Day https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-845/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-845/#respond Wed, 11 Sep 2024 11:41:27 +0000 https://markettealeaves.com/?p=140958 Read More]]> USD: Sept '24 is Down at 101.350. Energies: Oct '24 Crude is Up at 67.26. Financials: The Dec '24 30 Year T-Bond is Up 8 ticks and trading at 127.05. Indices: The Sept '24 S&P 500 emini ES contract is 56 ticks Lower and trading at 5489.75. Gold: The Dec'24 Gold contract is trading Up at 2550.60.  

Initial Conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is 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 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 all of Asia is trading Lower with the exception of the Singapore exchange which is fractionally Higher.  Conversely All of Europe is trading Higher. . .

Possible Challenges to Traders:

  • Core CPI m/m is out at 8:30 AM EST.  This is Major.
  • CPI m/m is out at 8:30 AM EST.  This is Major.
  • CPI y/y is out at 8:30 AM.  This is Major.
  • Crude Oil Inventories is out at 10:30 AM EST.  This is Major.
  • 10-y Bond Auction starts 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 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. Yesterday the ZT migrated Higher at around 8 AM EST with no real economic news to speak of and began its Upward climb.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8 AM and the ZT moved Higher at around the same time.  These charts represent the newest version of Bar Charts, 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 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/10/24
Dow - Sept 2024- 09/10/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we saw no real evidence of Market Correlation Tuesday morning.  The markets didn't disappoint as the Dow dropped 93 points on the session but the other indices showed gains.  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 we saw no real evidence of Market Correlation and as such claimed a Neutral or Mixed bias for the day.  The markets traded accordingly and the Dow dropped 93 points but the other indices did manage to gain on the session.  Today we have the all important CPI numbers for the month and the year and can bet that the Federal Reserve will be watching numbers carefully as they do meet next week.  Do we think that they will reduce interest rates?  There's a very strong case for them doing so but these CPI numbers will no doubt weight into that decision.  As in all things, only time will tell.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is to the Downside.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Lower. This is normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $65.27 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10:30 AM EST when the crude oil inventories are released and the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Lower. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-845/feed/ 0 What Goes Down, Must Come Up https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-844/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-844/#respond Tue, 10 Sep 2024 11:37:05 +0000 https://markettealeaves.com/?p=140949 Read More]]> USD: Sept '24 is Up at 101.565. Energies: Oct '24 Crude is Down at 68.00. Financials: The Dec '24 30 Year T-Bond is Down 12 ticks and trading at 125.25. Indices: The Sept '24 S&P 500 emini ES contract is 12 ticks Lower and trading at 5477.00. Gold: The Dec'24 Gold contract is trading Up at 2533.90.  

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 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 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 is trading Mixed.  All of Europe is trading Mixed as well. . .

Possible Challenges to Traders:

  • NFIB Small Business Index is out at 6 AM EST.  This is Major.
  • FOMC Member Barr Speaks at 10 AM EST.  This is Major.
  • FOMC Member Bowman Speaks at 12:15 PM.  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. Yesterday the ZT migrated Higher at around 8 AM EST with no real economic news to speak of and began its Upward climb.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8 AM and the ZT moved Higher at around the same time.  These charts represent the newest version of Bar Charts, 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 20 plus 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/09/24
Dow - Sept 2024- 09/09/24

Bias

Yesterday we gave the markets an Upside bias as the indices were Up and the Bonds were down which represented an Upside bias.  The markets didn't disappoint as the Dow gained 484 points on the session and the other indices showed gains as well.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed. Could this change? Of Course.  Remember anything can happen in a volatile market. 

Commentary

Well they say that "what goes up must come down" so conversely "what goes down must come up."  Such was the case yesterday as the markets wanted to regain some of what was lost Friday.  This plays into the notion of one day up, next down and vice versa and yes that may work for a while, until it doesn't work.  We gave the markets an Upward bias because we saw the bonds down and the indices up.  As such we always give a reason for our suggestions.  Today the only real economic news is two FOMC members speaking.  What they will say we cannot know for certain but we will always give a reason for our predictions.  Are they right 100% of the time?  Nothing is right 100% of the time and should you hear that, best to put on your track shoes and run.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Lower, and the S&P is Lower. This is not normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $67.31 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Lower

Crude oil is trading Lower, and the S&P is Lower. This is not normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-844/feed/ 0 Job Numbers Don’t Help https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-843/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-843/#respond Mon, 09 Sep 2024 11:33:23 +0000 https://markettealeaves.com/?p=140941 Read More]]> USD: Sept '24 is Up at 101.600. Energies: Oct '24 Crude is Up at 68.28. Financials: The Dec '24 30 Year T-Bond is Down 20 ticks and trading at 125.08. Indices: The Sept '24 S&P 500 emini ES contract is 164 ticks Higher and trading at 5460.50. Gold: The Dec'24 Gold contract is trading Down at 2524.30.  

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 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. Currently  Asia is trading Lower with the exception of the Indian Sensex and the Singapore exchanges.  Currently all of Europe is trading Higher. . .

Possible Challenges to Traders:

  • Final Wholesale Inventories m/m is out at 10 AM EST.  This is Major.
  • Consumer Credit m/m is out at 3 PM EST.  This is Major.
  • Lack of Major Economic News.
  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. On Friday the ZT migrated Lower at around 8:30 AM EST after the Job numbers came out 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 Bar Charts, 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 50 plus 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/06/24
Dow - Sept 2024- 09/06/24

Bias

On Friday we gave the markets a Neutral or Mixed bias as it was Jobs Friday and we always maintain a Neutral or Mixed bias on that day.  The Dow dropped 410 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

Well another Jobs Friday and despite the fact that the US economy created 142,000 net new jobs, it did not meet the expectation of 164,000 expected.  As a result the markets lost ground fast with major indices dropping.  The Dow dropped 410 points but the S&P lost 95 and the Nasdaq dropped 436 points.  This is the problem when the markets are priced for perfection, the expectation is that all economic reports will be perfect but that is not reality.  The issue is perfection becomes reality but that is a mirage and not realistic.  The good news was the unemployment rate dropped a tick to 4.2% versus 4.3 that is was prior.  The other good news came from FOMC Member Goolsbee who predicts that when the Fed starts to cut rates they will do so in half point increments or 50 basis points.  From our perspective the more the merrier as cutting interest rates is a good assurance for continued economic activity.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Higher. This is not normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. On Friday Oct crude dropped to a low of $67.17 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Higher. This is not normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-843/feed/ 0 Jobs Friday https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-842/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-842/#respond Fri, 06 Sep 2024 11:41:46 +0000 https://markettealeaves.com/?p=140934 Read More]]> USD: Sept '24 is Down at 100.985. Energies: Oct '24 Crude is Up at 69.43. Financials: The Dec '24 30 Year T-Bond is Down 132 ticks and trading at 126.05. Indices: The Sept '24 S&P 500 emini ES contract is 12 ticks Higher and trading at 5480.00. Gold: The Dec'24 Gold contract is trading Up at 2549.80.  

Initial Conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, and 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 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 Lower.  All of Europe is trading Lower as well. . .

Possible Challenges to Traders:

  • Average Hourly Earnings m/m is out at 8:30 AM EST.  This is Major.
  • Non-Farm Employment Change is out at 8:30 AM EST.  This is Major.
  • Unemployment Rate is out at 8:30 AM EST.  This is Major.
  • FOMC Member Williams Speaks at 8:45 AM EST.  This is not Major.
  • FOMC Member Waller Speaks at 11 AM EST.  This is not 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. Yesterday the ZT migrated Lower at around 8:30 AM EST after Unemployment Claims was 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 Bar Charts, 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 plus 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/05/24
Dow - Sept 2024- 09/05/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we didn't see much in the way of correlation Thursday morning.  The markets closed Mixed with the Nasdaq Higher but the other indices Lower.  Given that today is Jobs Friday our bias is Neutral or Mixed. Could this change? Of Course.  Remember anything can happen in a volatile market. 

Commentary

Yesterday we didn't see much in the way of correlation and gave the markets a Neutral or Mixed bias.  The markets didn't disappoint as only the Nasdaq rose and all others didn't.  Today given that it is Jobs Friday we will maintain a Neutral or Mixed bias.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Lower. This is normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $69.16 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Lower. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-842/feed/ 0 Downside Bias = Mixed Market https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-841/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-841/#respond Thu, 05 Sep 2024 11:14:08 +0000 https://markettealeaves.com/?p=140924 Read More]]> USD: Sept '24 is Down at 101.135. Energies: Oct '24 Crude is Up at 69.40. Financials: The Dec '24 30 Year T-Bond is Down 3 ticks and trading at 125.03. Indices: The Sept '24 S&P 500 emini ES contract is 12 ticks Higher and trading at 5533.00. Gold: The Dec'24 Gold contract is trading Up at 2545.30.  

Initial Conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, and 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 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 Mixed.  All of Europe is trading Mixed as well. . .

Possible Challenges to Traders:

  • Challenger Job Cuts y/y is out at 7:30 AM EST.  This is Major.
  • ADP Non-Farm Employment Change is out at 8:15 AM EST.  This is Major.
  • Unemployment Claims is out at 8:30 AM EST.  This is Major.
  • Revised Nonfarm Productivity q/q is out at 8:30 AM EST.  This is not Major.
  • Revised Unit Labor Costs q/q is out at 8:30 AM EST.  This is not Major.
  • Final Services PMI is out at 9:45 AM EST.  This is Major.
  • ISM Services PMI is out at 10 AM EST.  This is Major.
  • Natural Gas Storage is out at 10:30 AM EST.  This is Major.
  • Crude Oil Inventories is out at 11 AM 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 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. Yesterday the ZT migrated Lower at around 8:30 AM EST with no real news in sight 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 20 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/04/24
Dow - Sept 2024- 09/04/24

Bias

Yesterday we gave the markets a Downside bias as both the Bonds and Crude were Higher Wednesday morning and that usually represents a Down Day.  The markets traded mainly Lower as both the S&P and Nasdaq closed Lower while the Dow gained 38 points on the session.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed. Could this change? Of Course.  Remember anything can happen in a volatile market. 

Commentary

Yesterday we gave the markets a Downside bias as both the Bonds and Crude were trading Higher and for the most part we were correct.  The only holdout being the Dow with a gain of 38 points.  Much speculation has been made regarding Kamala Harris's plan to tax unearned assets.  This is driving much doubt as no one knows how this will work in the real world.  Ordinarily no asset is taxed until the sale of that asset is made and all parties know exactly how much was made and what the profit (is any ) was accrued.  Taxing something before a sale made is high speculative as what is the value of that asset changes yet it wasn't sold yet so the owner of that asset hasn't realized any profit as yet.  More thought needs to go into this.  But then again, the people who devised this know next to nothing about assets or trading in the real world.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Higher. This is not normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $68.82 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 11 AM EST when the crude inventory are released and the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Higher. This is not normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-841/feed/ 0 Taking Money Off the Table https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-840/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-840/#respond Wed, 04 Sep 2024 11:45:17 +0000 https://markettealeaves.com/?p=140912 Read More]]> USD: Sept '24 is Down at 101.600. Energies: Oct '24 Crude is Up at 70.90. Financials: The Dec '24 30 Year T-Bond is Up 14 ticks and trading at 124.19. Indices: The Sept '24 S&P 500 emini ES contract is 91 ticks Lower and trading at 5520.00. Gold: The Dec'24 Gold contract is trading Down at 2520.60.  

Initial Conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, but the 30 Year T-Bond is trading Up.  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 Higher which is correlated. Gold is trading Lower which is not 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  all of Asia is trading Lower.  All of Europe is trading Lower as well. . .

Possible Challenges to Traders:

  • Trade Balance is out at 8:30 AM EST.  This is Major.
  • JOLTS Job Openings is out at 10 AM EST.  This is Major.
  • Factory Orders m/m is out at 10 AM EST.  This is Major.
  • Wards Total Vehicle Sales - All Day by Brand.  This is Major.
  • Beige Book is out at 2 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 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. Yesterday the ZT migrated Lower at around 8:15 AM EST with no news in sight and began its Upward climb.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8:15 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 20 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 09/03/24
Dow - Sept 2024- 09/03/24

Bias

Yesterday we gave the markets a Downside bias as both the USD and Gold were Higher Tuesday morning and that usually represents a Down Day.  The markets didn't disappoint as the Down fell by 626 points and the other indices lost 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

Yesterday being the first trading day after a major holiday we awoke to see the markets falling.  Why did that happen?  Was there some earth shattering news event that occurred?  No.  This was nothing more than traders taking money off the table after a runup in prices prior to the Labor Day holiday.  Is this usual and customary?  No.  Usually the first day after a major holiday is when prices rise due to pent up demand due to lack of trading activity.  We didn't see that this time around but another aspect could be talk of US Steel being sold to a Japanese concern.  Both Trump and Harris want to keep US Steel as an American company and who could blame them?  United States Steel was the first billion dollar corporation when it was founded in 1900.  I believe Andrew Carnegie became (for a period of time) the world's richest man, too bad he didn't do much for his workers even though in their mind by offering a job they were being benevolent.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is to the Downside.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Lower. This is normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $70.10 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No NATO country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a NATO nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all NATO nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Lower. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-840/feed/ 0 Markets Up Despite Interview https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-839/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-839/#respond Tue, 03 Sep 2024 11:33:43 +0000 https://markettealeaves.com/?p=140902 Read More]]> 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 Click on an image to enlarge it.  
 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.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is to the Downside.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Lower, and the S&P is Lower. This is not normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Last Friday Oct crude dropped to a low of $73.36 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No Nato country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a Nato nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all Nato nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

View Article

Crude Oil Is Trading Lower

Crude oil is trading Lower, and the S&P is Lower. This is not normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-839/feed/ 0 Happy Labor Day https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-838/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-838/#respond Fri, 30 Aug 2024 11:59:18 +0000 https://markettealeaves.com/?p=140894 Read More]]> USD: Sept '24 is Up at 101.305. Energies: Oct '24 Crude is Down at 75.67. Financials: The Dec '24 30 Year T-Bond is Up 9 ticks and trading at 124.02. Indices: The Sept '24 S&P 500 emini ES contract is 96 ticks Higher and trading at 5634.00. Gold: The Dec'24 Gold contract is trading Down at 2554.20.  

Initial Conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30 Year T-Bond is trading Up.  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. Currently all of Asia and Europe are trading Higher. . .

Possible Challenges to Traders:

  • Core PCE Price Index m/m is out at 8:30 AM EST.  This is Major.
  • Personal Income m/m is out at 8:30 AM EST.  This is Major.
  • Personal Spending m/m is out at 8:30 AM EST.  This is Major.
  • Chicago PMI is out at 9:45 AM EST.  This is Major.
  • Revised UOM Consumer Sentiment is out at 10 AM EST.  This is not Major.
  • Revised UOM Inflation Expectations is out at 10 AM 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 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. Yesterday the ZT migrated Lower at around 8:30 AM EST after the GDP 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 08/29/24
Dow - Sept 2024- 08/29/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we saw no correlation at all Thursday morning.  The markets traded Mixed as the Dow gained 244 points but the other indices lost ground and closed Lower.  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

So yesterday we saw the same situation as we did earlier in the week where every instrument we use for Market Correlation purposes traded Higher Thursday morning.  This was a classic case of all boats rising.  As such we gave the markets a Neutral or Mixed bias.  The markets gained ground after the GDP numbers were released and they beat expectation.  However by the end of the session it was as predicted and closed Mixed.  Today is the last trading day for August, 2024 and Monday is the Labor Day Holiday.  We wish all of you a very happy Labor Day, we'll be back on Tuesday, September 3rd.

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Lower, and the S&P is Higher. This is normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $74.05 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No Nato country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a Nato nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all Nato nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

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Crude Oil Is Trading Lower

Crude oil is trading Lower, and the S&P is Higher. This is normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-838/feed/ 0 Markets Say No to the Upside https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-837/ https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-837/#respond Thu, 29 Aug 2024 12:21:50 +0000 https://markettealeaves.com/?p=140885 Read More]]> USD: Sept '24 is Up at 101.145. Energies: Oct '24 Crude is Up at 74.95. Financials: The Dec '24 30 Year T-Bond is Up 7 ticks and trading at 124.12. Indices: The Sept '24 S&P 500 emini ES contract is 51 ticks Lower and trading at 5623.00. Gold: The Dec'24 Gold contract is trading Up at 2551.10.  

Initial Conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, and the 30 Year T-Bond is trading Up.  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.  Asia trading mainly Mixed with half the exchanges Higher and the other half Lower.  All of Europe is trading Higher. . .

Possible Challenges to Traders:

  • Prelim GDP q/q is out at 8:30 AM EST.  This is Major.
  • Prelim GDP Price Index q/q is out at 8:30 AM EST.  This is Major.
  • Unemployment Claims are out at 8:30 AM EST.  This is Major.
  • Goods Trade Balance is out at 8:30 AM EST.  This is Major.
  • Prelim Wholesale Inventories m/m is out at 8:30 AM EST.  This is Major.
  • Pending Home Sales m/m is out at 10 AM EST.  This is Major.
  • Natural Gas Storage is out at 10:30 AM EST.  This is Major.
  • FOMC Member Bostic Speaks at 3:30 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 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. Yesterday the ZT migrated Lower at around 8:15 AM EST.  If you look at the charts below the ZT gave a signal at around 8:15 AM with no real news and started its Downward slide.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:15 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 Long opportunity on the 2-year note, as a trader you could have netted about a dozen 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 Click on an image to enlarge it.  
 ZT -Dec 2024 - 08/28/24
Dow - Sept 2024- 08/28/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we saw no correlation at all Wednesday morning.  The markets veered to the Downside as the Dow rose 9 points but the S&P and Nasdaq fell by hundreds.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed. Could this change? Of Course.  Remember anything can happen in a volatile market. 

Commentary

So yesterday we gave the markets a Mixed or Neutral bias and the markets didn't disappoint as the Dow closed 9 points Higher but the other indices fell.  The Nasdaq alone fell by over 200 points.  This kind of thing can happen when we aren't dealing with a correlated market.  Today we have about 8 or 9 different economic reports, all of which are Major.  We have GDP numbers out at 8:30 AM EST as well as Unemployment Claims at the same time.  Will this propel the markets in an Upward direction?  Only time will tell...

On Thursday April 5 (2018) we had the honor and privilege to be interviewed by David Lincoln on his You Tube channel.  David is a floor trader for the options markets.  If you listen to this interview, you will enjoy it.  To view the interview, go to: https://youtu.be/U7gh9oanjIE Just so you understand, Market Correlation is Market Direction.  It attempts to determine the market direction for that day, and it does so by using a unique set of tools.  In fact, TradersLog  published an article on this subject that can be viewed at: http://www.traderslog.com/market-correlation-is-market-direction/ Many of my readers have been asking me to spell out the rules of Market Correlation. Futures Magazine has elected to print a story on the subject matter, and I must say I'm proud of the fact that they did as I'm Author of that article. I encourage all viewers to read that piece as it spells out the rules of market correlation and provides charts that show how it works in action. The article is entitled "How to Exploit and Profit from Market Correlation" and can be viewed at: View article on Futures Mag As a follow up to the first article on Market Correlation, I've produced a second segment on this subject matter and Futures Magazine has elected to publish it. It can be viewed at: View article on Futures Mag Many subscribers have asked what is the best time of day to trade?  A recent article published by Futures Magazine may shed some light on the subject: http://www.futuresmag.com/2015/01/15/making-the-case-for-early-morning-trading As readers are probably aware I don't trade equities. While we're on this discussion, let's define what is meant by a good earnings report. A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance. Any falloff between earning per share or forward guidance will not bode well for the company's shares. This is one of the reasons I don't trade equities but prefer futures. There are no earnings reports with futures, and we don't have to be concerned about lawsuits, scandals, malfeasance, etc. Anytime the market isn't correlated it's giving you a clue that something isn't right, and you should proceed with caution. Today our bias is Neutral or Mixed.  Could this change? Of course. In a volatile market anything can happen. We'll have to monitor and see. As I write this the crude markets are Higher, and the S&P is Higher. This is not normal.  Crude and the markets are now reverse correlated such that when the markets are rising, crude drops and vice-versa. Yesterday Oct crude dropped to a low of $74.22 a barrel.  Will it remain below $100 a barrel?  Only time will tell.  Crude still hasn't returned to a sense of normalcy therefore we can't quote support and resistance numbers.  Remember that crude is the only commodity that is reflected immediately at the gas pump.  Please note that the front month for crude is now Oct '24. If trading crude today, consider doing so after 10 AM EST when the markets give us better direction.

Future Challenges

The challenges have shifted from a domestic, pandemic crisis to an international one regarding Russia and the Ukraine.  It is clear that Russia isn't giving up on the Ukraine any time soon and may very well take over that nation.  No Nato country has done anything substantial to Russia with the exception of economic sanctions.  Western Europe needs to be very concerned regarding Russia's next move.  Putin stated that the reason he wants to annex the Ukraine back to Mother Russia is because he doesn't want a Nato nation next door.  Well should Russia overtake the Ukraine he will be right next door to Poland, Hungary, Romania all Nato nations.  What will he do then?    President Biden and his Vice President need to be very concerned about the next moves that Russia may take as Article 5 of the NATO Treaty says an attack on one is an attack on all.  Besides all of this we have a war in the Mideast between Israel and Hamas.  Now Iran has attacked Israel in retaliation of Israel's bombing of Iranian officials months ago.  

Forex Crunch

Forex Crunch, a friend of Market Tea Leaves just published an article regarding the GOP Healthcare Plan.   This article can be viewed at:https://www.forexcrunch.com/gop-healthcare-plan-wont-work/

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Crude Oil Is Trading Higher

Crude oil is trading Higher, and the S&P is Higher. This is not normal. Crude typically makes 3 major moves (long or short) during the course of any trading day: around 9 AM EST, 11 AM EST and 2 PM EST when the crude market closes. If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right. As always watch and monitor your order flow as anything can happen in this market. This is why monitoring order flow in today's market is crucial. We as traders are faced with numerous challenges that we didn't have a few short years ago. High Frequency Trading is one of them. I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading. Remember that without knowledge of order flow we as traders are risking our hard-earned capital and the Smart Money will have no issue taking it from us. Regardless of whatever platform you use for trading purposes you need to make sure it's monitoring order flow.  To fully capitalize on this newsletter, it is important that the reader understand how the various markets correlate. More on this in subsequent editions.   ]]> https://markettealeaves.com/russia-ruins-markets-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-2-2-2-837/feed/ 0