Pre-Market Global Review - 12/31/13 - Happy New Year

Good Morning Traders,
 
As of this writing 5:05 AM EST, here’s what we see:
 
US Dollar –Up at 80.235, the US Dollar is up 113 ticks and is trading at 80.235.                       
Energies – February Oil is down at 98.95.       
Financials – The March 30 year bond is down 3 ticks and trading at 128.22.      
Indices – The March S&P 500 emini ES contract is up 4 ticks and trading at 1835.75. 
Gold – The February gold contract is trading down at 1200.70 and is down 31 ticks from its close.   
           
 
Initial Conclusion: This is not a correlated market.  The dollar is up+ and oil is down- which is  normal but the 30 year bond is trading lower.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa.  The indices are higher and the US dollar is trading up 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. 
               
Asia traded mainly higher with 4 of the 6 exchanges trading higher.  As of this writing Europe is trading lower. 
 
  Possible challenges to traders today is the following:
                                                
1.  S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is major.    
2.  Chicago PMI is out at 9:45 AM EST.  This is major.
3.  CB Consumer Confidence is out at 10 AM EST.  This is major.                                 
   
      Currencies       
Yesterday the Swiss Franc made it's move at around 10:20 AM EST after the Pending Home Sales numbers were released.  Look at the charts below and you'll see a pattern for both assets.  The USD fell at around that time and the Swiss Franc rose.  This was a long opportunity on the Swiss Franc.  The key to capitalizing on these trades is to watch the USD movement.  The USD rise only lent confirmation to the move.  As a trader you could have netted 20-30 ticks on this trade.  Notice that even without a tsunami of economic reports, the rules of market correlation still hold true.
 
 
 Charts Courtesy of Trend Following Trades

Swiss Franc - 3/14 - 12/30/13

USD - 3/14 - 12/30/14

 
Bias


Yesterday we said our bias was neutral as the futures didn't give any sign as to direction.  A neutral bias means the markets could go in any direction.  Today our bias is neutral.  The Dow closed 26 points higher but the indices gained no ground.   Could this change?  Of Course.  Remember anything can happen in a volatile market.
 
It would appear as though the market wants to keep its upward momentum, at least for the present time.  The market wants to hang on to its gains but the question is will this upward bias and momentum continue into 2014?  Many pundits and analysts are predicting a correction.  They could be right as this has happened many times before.  My take is that Earnings Season will tell the tale.  We'll know in January as to the effects on consumer spending as Retail Sales will inform as to what kind of holiday season we had.  We used to have the January Effect whereby a sell off was expected but over the last couple of years this has not been the case.  Time will tell if this is the case but in the meantime Happy New Year!!!!

Each day in this newsletter we provide viewers a snapshot of the Swiss Franc versus the US dollar as a way and means of capitalizing on the inverse relationship between these two assets.  Futures Magazine recognized this correlation as well.  So much so that they printed a story on it in their December issue.  That story can be viewed at:

http://www.futuresmag.com/2013/11/25/correlated-opportunities-in-the-swiss-franc?ref=hp


Many of my readers have been asking me to spell out the rules of Market Correlation.  Recently 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:


http://www.futuresmag.com/2013/08/01/how-to-exploit-and-profit-from-market-correlation

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:

http://www.futuresmag.com/2013/08/16/how-to-exploit-and-profit-from-market-correlation?ref=hp


 
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 is 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.  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 trading lower and the US Dollar is higher.  This is normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice-versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. On Friday January crude dropped to a low of 99.13 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at $99 a barrel and resistance at $101  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel.  We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 

Future Challenges:
- Budget Battle - Senate passes budget deal, now it's up to Obama to sign.

Crude oil is trading lower and the US Dollar is advancing.  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.  If you feel compelled to trade consider doing so after 10 AM when the markets give us better direction.  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.

Recently Published Articles:  
http://www.barchart.com/headlines/story/12650453/are-the-markets-rewarding-poor-performance


http://www.traderplanet.com/commentaries/view/164874-trader-tips-the-case-for-fundamental-analysis/



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.  Sceeto does an excellent job at this.  To fully capitalize on this newsletter it is important that the reader understand how the various market correlate.  More on this in subsequent editions.
 






Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.

Pre-Market Global Review - 12/30/13 - Even Keeled Day

Good Morning Traders,
 
As of this writing 5:10 AM EST, here’s what we see:
 
US Dollar –Down at 80.445, the US Dollar is down 93 ticks and is trading at 80.445.                     
Energies – February Oil is down at 100.24.       
Financials – The March 30 year bond is up 2 ticks and trading at 128.11.      
Indices – The March S&P 500 emini ES contract is down 2 ticks and trading at 1836.00. 
Gold – The February gold contract is trading down at 1203.80 and is down 102 ticks from its close.   
           
 
Initial Conclusion: This is not a correlated market.  The dollar is down- and oil is down- which is not normal but the 30 year bond is trading higher.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa.  The indices are lower and the US dollar is trading lower which is not 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. 
               
Asia traded mainly higher with 4 of the 6 exchanges trading higher.  As of this writing Europe is trading lower. 
 
  Possible challenges to traders today is the following:
                                                
1.  Pending Home Sales is out at 10 AM EST. This is major.  
2.  Lack of other major economic news.                                 
   
      Currencies       
On Friday the Swiss Franc made it's move at around 9:30 AM EST with no major economic news to speak of.  Look at the charts below and you'll see a pattern for both assets.  The USD rose at around that time and the Swiss Franc fell.  This was a shorting opportunity on the Swiss Franc.  The key to capitalizing on these trades is to watch the USD movement.  The USD rise only lent confirmation to the move.  As a trader you could have netted 20-30 ticks on this trade.  Notice that even without a tsunami of economic reports, the rules of market correlation still hold true.
 
 
 Charts Courtesy of Trend Following Trades

Swiss Franc - 03/14 - 12/27/13

USD - 3/14 - 12/27/13

 
Bias


On Friday we said our bias was to the upside as the financials were correlated.  However the markets closed fractionally lower as the Dow dropped 2 points.  Today we aren't dealing with a correlated market and our bias is neutral.  A neutral bias means the markets could go in any direction today.  The telltale sign could be Pending Home Sales out at 10 AM as this is a proven market mover and the only major economic report we have today.   Could this change?  Of Course.  Remember anything can happen in a volatile market.
 
On Friday we said our bias was to the upside as the financials were correlated to the upside, Asia closed higher and Europe was trading higher.  As expected the markets did open higher and stayed there until around 10 AM but then proceeded to drop.  The rest of the day the markets traded in and out of positive territory.  What do I think about that?  From my point of view it was an even keeled day as the markets didn't drop off the side of a cliff but closed fractionally lower.  This is normal as Friday was the last trading day of a holiday week and we can expect more this week as well with New Year approaching.  Today we have Pending Home Sales which is major and could potentially be a market mover.  Time will tell if this is the case.

Each day in this newsletter we provide viewers a snapshot of the Swiss Franc versus the US dollar as a way and means of capitalizing on the inverse relationship between these two assets.  Futures Magazine recognized this correlation as well.  So much so that they printed a story on it in their December issue.  That story can be viewed at:

http://www.futuresmag.com/2013/11/25/correlated-opportunities-in-the-swiss-franc?ref=hp


Many of my readers have been asking me to spell out the rules of Market Correlation.  Recently 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:


http://www.futuresmag.com/2013/08/01/how-to-exploit-and-profit-from-market-correlation

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:

http://www.futuresmag.com/2013/08/16/how-to-exploit-and-profit-from-market-correlation?ref=hp


 
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 is 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.  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 trading higher and the US Dollar is higher.  This is not normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice-versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. On Friday January crude dropped to a low of 99.37 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at $98.75 a barrel and resistance at 101.53.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel.  We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 

Future Challenges:
- Budget Battle - Senate passes budget deal, now it's up to Obama to sign.

Crude oil is trading higher and the US Dollar 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.  If you feel compelled to trade consider doing so after 10 AM when the markets give us better direction.  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.

Recently Published Articles:  
http://www.barchart.com/headlines/story/12650453/are-the-markets-rewarding-poor-performance


http://www.traderplanet.com/commentaries/view/164874-trader-tips-the-case-for-fundamental-analysis/



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.  Sceeto does an excellent job at this.  To fully capitalize on this newsletter it is important that the reader understand how the various market correlate.  More on this in subsequent editions.
 






Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.

Pre-Market Global Review - 12/27/13 - Christmas Crescendo Continues

Good Morning Traders,
 
As of this writing 5:00 AM EST, here’s what we see:
 
US Dollar –Down at 80.180, the US Dollar is down 473 ticks and is trading at 80.180.                     Energies – February Oil is up at 99.56.       
Financials – The March 30 year bond is down 5 ticks and trading at 128.11.      
Indices – The March S&P 500 emini ES contract is down 4 ticks and trading at 1835.00. 
Gold – The February gold contract is trading down at 1210.80 and is down 15 ticks from its close.   
           
 
Initial Conclusion: This is not a correlated market.  The dollar is down- and oil is up+ which is normal and the 30 year bond is trading lower.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa.  The indices are lower and the US dollar is trading lower which is not 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. 
               
All of Asia traded higher.  As of this writing Europe is trading higher. 
 
  Possible challenges to traders today is the following:
                                                
1.  Natural Gas Storage is out at 10:30 AM EST. This could move the Nat Gas market
2.  Crude Oil Inventories are out at 11 AM EST.  This could move the crude market.                                 
   
      Currencies       
Yesterday the Swiss Franc made it's move at around 9 AM EST after the Unemployment Claims numbers were released.  Look at the charts below and you'll see a pattern for both assets.  The USD fell at around that time and the Swiss Franc rose.  This was a long opportunity on the Swiss Franc.  The key to capitalizing on these trades is to watch the USD movement.  The USD fall only lent confirmation to the move.  As a trader you could have netted 20-30 ticks on this trade.  Notice that even without a tsunami of economic reports, the rules of market correlation still hold true.
 
 
 Charts Courtesy of Trend Following Trades

Swiss Franc - 3/14 - 12/26/13

USD - 3/14 - 12/26/13

 
Bias


Yesterday we said our bias was to the upside as the Bonds were trading lower and Gold was trading higher.  As expected the markets opened higher and the Dow closed 122 points higher.  The other indices gained ground as well.  Today we are not dealing with a correlated market however our bias is to the upside.  Why?  The financials are correlated, Asia traded higher and Europe is currently trading higher.      Could this change?  Of Course.  Remember anything can happen in a volatile market.

Historically speaking the day after Christmas Day is a good day to trade as folks are euphoric after a holiday.  But I must say that yesterday was especially upbeat and we only had one economic report and that was unemployment claims which turned out to be positive.  Today we have Natural Gas Storage and Crude Oil Inventories.  This was changed from Wednesday to Friday due to the Christmas Holiday.  The question is can the markets continue its upward momentum? 

Each day in this newsletter we provide viewers a snapshot of the Swiss Franc versus the US dollar as a way and means of capitalizing on the inverse relationship between these two assets.  Futures Magazine recognized this correlation as well.  So much so that they printed a story on it in their December issue.  That story can be viewed at:

http://www.futuresmag.com/2013/11/25/correlated-opportunities-in-the-swiss-franc?ref=hp


Many of my readers have been asking me to spell out the rules of Market Correlation.  Recently 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:


http://www.futuresmag.com/2013/08/01/how-to-exploit-and-profit-from-market-correlation

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:

http://www.futuresmag.com/2013/08/16/how-to-exploit-and-profit-from-market-correlation?ref=hp


 
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 is 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 upside.  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 trading higher and the US Dollar is higher.  This is not normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. On Tuesday January crude dropped to a low of 99.05 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at $99.16 a barrel and resistance at 99.76.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel.  We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 

Future Challenges:
- Budget Battle - Senate passes budget deal, now it's up to Obama to sign.

Crude oil is trading higher and the US Dollar 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.  If you feel compelled to trade consider doing so after 11 AM when the inventory numbers are released and the markets give us better direction.  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.

Recently Published Articles:  
http://www.barchart.com/headlines/story/12650453/are-the-markets-rewarding-poor-performance


http://www.traderplanet.com/commentaries/view/164874-trader-tips-the-case-for-fundamental-analysis/



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.  Sceeto does an excellent job at this.  To fully capitalize on this newsletter it is important that the reader understand how the various market correlate.  More on this in subsequent editions.
 






Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.

Pre-Market Global Review - 12/26/13 - Shortened Session Surprise

Good Morning Traders,
 
As of this writing 5:00 AM EST, here’s what we see:
 
US Dollar –Up at 80.674, the US Dollar is up 57 ticks and is trading at 80.674.                    
Energies – February Oil is up at 99.31.       
Financials – The March 30 year bond is down 24 ticks and trading at 128.22.      
Indices – The March S&P 500 emini ES contract is up 25 ticks and trading at 1829.00. 
Gold – The February gold contract is trading up at 1205.60 and is up 23 ticks from its close.   
           
 
Initial Conclusion: This is not a correlated market.  The dollar is up+ and oil is up+ which is not normal but the 30 year bond is trading lower.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa.  The indices are higher and the US dollar 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 traded mainly higher with the exception of the Shanghai exchange which traded lower.  As of this writing Europe is trading higher. 
 
  Possible challenges to traders today is the following:
                                                
1.  Unemployment Claims are out at 8:30 AM EST. This is major.                                 
   
      Currencies       
On Tuesday the Swiss Franc made it's move at around 8:30 AM EST after the economic news was released.  Look at the charts below and you'll see a pattern for both assets.  The USD rose at around that time and the Swiss Franc fell.  This was a shorting opportunity on the Swiss Franc.  The key to capitalizing on these trades is to watch the USD movement.  The USD fall only lent confirmation to the move.  As a trader you could have netted 20-30 ticks on this trade.  Notice that even in a shortened session, the rules of Market Correlation still hold true.
 
 
 Charts Courtesy of Trend Following Trades

Swiss France - 3/14 - 12/24/13

USD - 3/14 - 12/24/13

 
Bias


On Tuesday we said our bias was to the upside as the Bonds were trading lower.  As expected the markets opened higher and the Dow closed 63 points higher.  The other indices gained ground as well.  Today we are not dealing with a correlated market however our bias is to the upside.  Why?  The Bonds are trading lower, Gold is trading higher and Europe is higher.      Could this change?  Of Course.  Remember anything can happen in a volatile market.

Well Christmas has come and gone and on Tuesday I must admit I was pleasantly surprised to see the markets rise as much as it did.  I expected an up session as our bias was to the upside but I didn't expected 63 points higher on the Dow.  My original thought was even if we went a few points, that would suffice as typically abbreviated sessions generally have low volume associated with them.  The economic news came out (all positive) and the rest was history, as they say.  The question then is can the market maintain its upside momentum?  Today we have Unemployment Claims out at 8:30 AM EST and it is the only economic news for the US markets.  As it is major, it could potentially be a market mover.


Each day in this newsletter we provide viewers a snapshot of the Swiss Franc versus the US dollar as a way and means of capitalizing on the inverse relationship between these two assets.  Futures Magazine recognized this correlation as well.  So much so that they printed a story on it in their December issue.  That story can be viewed at:

http://www.futuresmag.com/2013/11/25/correlated-opportunities-in-the-swiss-franc?ref=hp


Many of my readers have been asking me to spell out the rules of Market Correlation.  Recently 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:


http://www.futuresmag.com/2013/08/01/how-to-exploit-and-profit-from-market-correlation

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:

http://www.futuresmag.com/2013/08/16/how-to-exploit-and-profit-from-market-correlation?ref=hp


 
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 is 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 upside.  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 trading higher and the US Dollar is higher.  This is not normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. On Tuesday January crude dropped to a low of 98.65 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at $99.01 a barrel and resistance at 99.76.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel.  We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 

Future Challenges:
- Budget Battle - Senate passes budget deal, now it's up to Obama to sign.

Crude oil is trading higher and the US Dollar 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.  If you feel compelled to trade consider doing so after 10 AM when the markets give us better direction.  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.

Recently Published Articles:  
http://www.barchart.com/headlines/story/12650453/are-the-markets-rewarding-poor-performance


http://www.traderplanet.com/commentaries/view/164874-trader-tips-the-case-for-fundamental-analysis/



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.  Sceeto does an excellent job at this.  To fully capitalize on this newsletter it is important that the reader understand how the various market correlate.  More on this in subsequent editions.
 






Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.

Pre-Market Global Review - 12/24/13 - Santa Claus Came Back to Town

Good Morning Traders,
 
As of this writing 5:00 AM EST, here’s what we see:
 
US Dollar –Up at 80.705, the US Dollar is up 88 ticks and is trading at 80.705.                  
Energies – February Oil is down at 98.88.       
Financials – The March 30 year bond is down 3 ticks and trading at 129.11.      
Indices – The March S&P 500 emini ES contract is up 3 ticks and trading at 1824.25. 
Gold – The February gold contract is trading up at 1199.50 and is up 25 ticks from its close.   
           
 
Initial Conclusion: This is not a correlated market.  The dollar is up+ and oil is down- which is  normal but the 30 year bond is trading lower.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa.  The indices are higher and the US dollar 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 traded mainly higher with the exception of the Indian Sensex exchange which traded lower.  As of this writing Europe is trading higher. 
 
  Possible challenges to traders today is the following:
                                                
1.  Core Durable Goods Orders m/m is out at 8:30 AM EST.  This is major.                                   2.  Durable Goods Orders m/m are are out at 8:30 AM EST.  This is major.          
3.  HPI m/m is out at 9 AM EST.  This is major.
4.  New Home Sales are out at 10 AM EST.  This is major.
5.  Richmond Manufacturing Index is out at 10 AM EST.  This is major.
   
      Currencies       
Yesterday the Swiss Franc made it's move at around 9:20 AM EST after the economic news was released.  Look at the charts below and you'll see a pattern for both assets.  The USD fell at around that time and the Swiss Franc rose.  This was a long opportunity on the Swiss Franc.  The key to capitalizing on these trades is to watch the USD movement.  The USD fall only lent confirmation to the move.  As a trader you could have netted 20-30 ticks on this trade.  Please note that the front month for both contracts is March, 2014.
 
 
 Charts Courtesy of Trend Following Trades

Swiss Franc - 3/14 - 12/23/13

USD - 3/14 - 12/23/13

 
Bias


Yesterday we  said our bias was to the upside as the USD was lower.  As expected the markets opened higher and the Dow closed 74 points higher.  The other indices gained ground as well.  Today we aren't dealing with a correlated market however our bias is to the upside.  Why?  The Bonds are trading lower and Gold is trading higher.      Could this change?  Of Course.  Remember anything can happen in a volatile market.


Given that this is Christmas Eve, it's safe to assume that Santa came back to town yesterday as the Dow gained 74 points and teh other indices gained as well.  The economic news came in as expected and we predicted an upside day.  Today we have Core Durable Goods Orders, Home Price Index and New Home Sales, all of which are major.  The question is can the markets continue its upward momentum?  Only time will tell.  Pleased be advised that the markets will have an abbreviated session today with the stock indices closing at 1 PM EST.  As such I would expect a light volume day.  And just so you know, Happy Holidays to all......

Each day in this newsletter we provide viewers a snapshot of the Swiss Franc versus the US dollar as a way and means of capitalizing on the inverse relationship between these two assets.  Futures Magazine recognized this correlation as well.  So much so that they printed a story on it in their December issue.  That story can be viewed at:

http://www.futuresmag.com/2013/11/25/correlated-opportunities-in-the-swiss-franc?ref=hp


Many of my readers have been asking me to spell out the rules of Market Correlation.  Recently 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:


http://www.futuresmag.com/2013/08/01/how-to-exploit-and-profit-from-market-correlation

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:

http://www.futuresmag.com/2013/08/16/how-to-exploit-and-profit-from-market-correlation?ref=hp


 
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 is 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 upside.  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 trading lower and the US Dollar is higher.  This is normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. Yesterday January crude dropped to a low of 98.64 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at $98.60 a barrel and resistance at 99.30.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel.  We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 

Future Challenges:
- Budget Battle - Senate passes budget deal, now it's up to Obama to sign.

Crude oil is trading lower and the US Dollar 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.  If you feel compelled to trade consider doing so after 10 AM when the markets give us better direction.  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.

Recently Published Articles:  
http://www.barchart.com/headlines/story/12650453/are-the-markets-rewarding-poor-performance


http://www.traderplanet.com/commentaries/view/164874-trader-tips-the-case-for-fundamental-analysis/



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.  Sceeto does an excellent job at this.  To fully capitalize on this newsletter it is important that the reader understand how the various market correlate.  More on this in subsequent editions.
 






Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.