Monday, April 29, 2013

Pre-Market Global Review - 4/29/13 - Who's Sequester is This?



Good Morning Traders,
 
As of this writing 6:00 AM EST, here’s what we see:
 
US Dollar –Down at 82.245 the US Dollar is Down 326 ticks and is trading at 82.245.           
 
Energies – June Oil is up at 93.32.        
Financials – The June 30 year bond is down 1 tick and is trading at 148.27      
Indices – The June S&P 500 emini ES contract is up at 1580.50 and is up 16 ticks.  
Gold – The June gold contract is trading up at 1469.90 and is up 163 ticks from its close.
 
Initial Conclusion: This is a correlated market and it is correlated to the upside.  The dollar is down- and oil is up+ which is normal and 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 up and the US dollar is trading lower 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. 
Whereas Japan and China were closed for a bank holiday, the rest of Asia closed higher.  As of this writing all of Europe is trading higher with the exception of the London Exchange.
 
 
Possible challenges to traders today is the following            
1.  Core PCE Price Index is out at 8:30 AM EST.  This is not major.         
2.  Personal Spending is out at 8:30 AM EST.  This is not major.       
3.  Personal Income is out at 8:30 AM EST.  This is not major.
4.  Pending Home Sales is out at 10 AM EST.  This is major.



On Friday we said our bias was to the downside as the markets were correlated as such.  The net result?  The Dow closed 12 points higher.  So what happened?  Advance GDP was reported and even though it did not meet expectation (2.5% vs 3.1% expected), the headlines read "US Economy Grows by 2.5%" and that's all anyone saw.  Today we have Pending Home Sales out at 10 AM EST and this will be the market mover today.  Today our bias is to the upside as the markets are correlated as suchCould this change? Of Course.  Remember anything can happen in a volatile market.

On Friday, Advance GDP was reported and it came in at 2.5% vs 3.1% expected.  Later on in the day we learned that the House of Representatives approved a bill ending furloughs for Air Traffic Controllers.  Why, you ask?  Because business travelers are complaining to their elected officials regarding flight delays and the inconvenience thereof.  President Obama is expected to sign the bill, without getting anything in return for it.  Again he is offering an olive branch to the GOP.  He has got to be the worst negotiator I've ever seen.  If my opposition wanted me to do something I would sit down, bargain and negotiate.  This is what happens in the business world every day, but then again this "CEO" doesn't have a business background and despite the fact that he's held office for over 1 term now, still hasn't figured out the politics of DC.  Of course, this move does nothing for the Head Start program or Medicare patients who are suffering from catastrophic illnesses and had their benefits cut.  If he's so concerned over the plight of business travelers why could he not at the very least negotiate aid for Medicare patients?   By the same token, we are now hearing that staff members of Congress (you know, the Bozo's you see on Veep) won't be subject to the Affordable Care Act such that they won't be subject to the Health Exchange rules of their state of domicile.  So the rules that apply for all of us don't apply for the folks in DC.  Tell me this isn't a lack of leadership because as far as I can see, it is.


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.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:







 

Please note the video is about a half hour in length and we plan on producing more in the near future.  Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading higher and the US Dollar is declining.  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 June crude dropped to a low of 92.14 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 89.00 a barrel and resistance at 95.  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 - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is declining.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 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.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/

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 blogs.



To view previous issues of Market Tea Leaves visit our archive.

Friday, April 26, 2013

Pre-Market Global Review - 4/26/13 - Advance GDP Reported Today



Good Morning Traders,
 
As of this writing 6:15 AM EST, here’s what we see:
 
US Dollar –Down at 82.760 the US Dollar is Down 80 ticks and is trading at 82.760.           
 
Energies – June Oil is down at 93.05.        
Financials – The June 30 year bond is up 10 ticks and is trading at 148.08      
Indices – The June S&P 500 emini ES contract is down at 1577.00 and is down 15 ticks.  
Gold – The June gold contract is trading down at 1461.90 and is down 1 tick from its close.
 
Initial Conclusion: This is not a correlated market.  The dollar is down- and oil is down- which is not normal and 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 up and the US dollar is trading lower 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. 
Asia closed mixed with about half of the exchanges closing higher and the other half lower.  As of this writing all of Europe is trading lower.
 
 
Possible challenges to traders today is the following          
 
1.  Advance GDP q/q is out at 8:30 AM EST.  This is major.         
2.  Advance GDP Price Index q/q is out at 8:30 AM EST.  This is major.       
3.  Revised UOM Consumer Sentiment is out at 9:55 AM EST.  This is major.
4.  Revised UOM Inflation Expectations is out at 9:55 AM EST.  This is not considered major.


Yesterday we said our bias was to the upside as the markets were correlated as such.  The net result?  The Dow closed 25 points higher.  As we said yesterday the Unemployment Claims number will drive the market.  It came in better than expected.  Today are bias is to the downside but we have Advanced GDP which will be the market mover.     Could this change? Of Course.  Remember anything can happen in a volatile market.

 
Yesterday the Unemployment Claims came in less than expected at 339,000 vs 352,000 expected.  If you read some of the headlines after this report, you would swear the US no longer has an employment problem.  One headline I read said "Lowest Claims in 6 Years".  What the report doesn't say is how many people are still unemployed nor does it state how many people exhausted their benefits.  You see in the US when someone is collecting unemployment insurance and no longer qualifies (exhausted benefits) the Labor Dept assumes they are working.  One official that I spoke with once told me "well they must be doing something, right?  So they're working."  Really?  Tell that to the millions who are still looking.  Today we have Advanced GDP for the 1st calendar quarter of 2013 so it'll be interesting to see what that number is.  I don't think it will be too much of a falloff as the sequester didn't start until March and it's effects haven't been fully felt yet.  Remember that it is a lagging number.  I suspect that if the number isn't too bad the pundits will say "see, we have no problem."  Of course not taking into account that it is a lagging number.  One thing is certain, this report is the market mover today.
 
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 downside.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      
My interview with Carl can be viewed at:






 


Please note the video is about a half hour in length and we plan on producing more in the near future.  Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading lower and the US Dollar is declining.  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. Yesterday June crude dropped to a low of 91.08 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 89.00 a barrel and resistance at 95.  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 - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading lower and the US Dollar is declining.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 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.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/

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 blogs.



To view previous issues of Market Tea Leaves visit our archive.

Thursday, April 25, 2013

Pre-Market Global Review - 4/25/13 - Is it Me?



Good Morning Traders,
 
As of this writing 4:30 AM EST, here’s what we see:
 
US Dollar –Down at 82.885 the US Dollar is Down 141 ticks and is trading at 82.885.           

Energies – June Oil is up at 91.44.      
Financials – The June 30 year bond is down 3 ticks and is trading at 148.03      
Indices – The June S&P 500 emini ES contract is up at 1574.75 and is up 3 ticks.  
Gold – The June gold contract is trading up at 1443.80 and is up 201 ticks from its close.
 
Initial Conclusion: This is a correlated market to the upside.  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 up and the US dollar is trading lower 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. 
With the exception of the Shanghai exchange, all of Asia closed higher.  As of this writing all of Europe is trading lower.
 
 
Possible challenges to traders today is the following        
 
1.  Unemployment Claims are out at 8:30 AM EST.  This is major.       
2.  Treasury Secretary Lew speaks at 10 AM EST.  This is major.     
3.  Natural Gas Storage is out at 10:30 AM EST.  This will move the Nat Gas market. 

Yesterday we said our bias was to the upside as the markets were correlated as such.  However we also stated on both this newsletter and our Market Bias video that this could change.  So what happened?  Core Durable Goods and Durable Goods came in lower than expected and this was enough to drive the markets lower.  Besides that the markets weren't too thrilled with the Apple report that came out Tuesday evening, despite the fact that they raised dividends by 15 percent.  This served to drive the Dow down 43 points.  Today our bias is to the upside because the markets are correlated as such.    Could this change? Of Course.  Remember anything can happen in a volatile market.


Is it me?  We're about 8 weeks into the sequester and the only thing I'm seeing is not too stellar economic reports.  I recently wrote an article concerning this subject that's listed below.  This is a follow-up to that article.  This week we had:
Tuesday - 4/23 - Flash Manufacturing Index - Down 52.0 vs 53.8 expected
                        - Richmond MFG Index       - Down -6 vs +3  expected
Weds     - 4/24- Core Durable Goods          - Down -1.4% vs +0.5 expected
                       - Durable Goods Orders       - Down -5.7% vs -2.9% expected
The only bright spot this week was New Home Sales which came in better than expected but sales of new homes are lagging indicators, meaning that those numbers were baked in before the sequester started.  It seems to me that since this sequester started in the beginning of March we haven't had good economic reports.  Want proof?  We create 88,000 net new jobs yet more than double that is expected.  I've been saying for awhile that this sequester business will have an adverse effect on the US economy but that will be slow in coming.  We'll have to monitor the Unemployment Claims as they come in and also the monthly Jobs Report due Friday, May 3rd.

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.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:





Please note the video is about a half hour in length and we plan on producing more in the near future.  Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading higher and the US Dollar is declining.  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 June crude dropped to a low of 89.35 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 86.00 a barrel and resistance at 92.  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 - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is declining.  This is normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 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.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/

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 blogs.



To view previous issues of Market Tea Leaves visit our archive.

Wednesday, April 24, 2013

Pre-Market Global Review - 4/24/13 - Another Flash Crash?



Good Morning Traders,
 
As of this writing 5:50 AM EST, here’s what we see:
 
US DollarDown at 83.065 the US Dollar is Down 121 ticks and is trading at 83.065.           

Energies – June Oil is up at 89.88.    
Financials – The June 30 year bond is down 13 ticks and is trading at 147.22    
Indices – The June S&P 500 emini ES contract is up at 1577.25 and is up 15 ticks.  
Gold – The June gold contract is trading up at 1420.40 and is up 119 ticks from its close.
 
Initial Conclusion: This is a correlated market to the upside.  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 up and the US dollar is trading lower 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. 
All of Asia closed higher.  As of this writing all of Europe is trading higher.  

 
 
Possible challenges to traders today is the following      
 
1.  Core Durable Goods Orders are out at 8:30 AM EST.  This is major.     
2.  Durable Goods Orders are out at 8:30 AM EST.  This is major.   
3.  Treasury Secretary Lew speaks at 9 AM EST.  This is major.  
4.  Crude Oil Inventories are out at 10:30 AM EST.  This will move the crude market.        

Yesterday we said our bias was to the downside as the markets were correlated as such.  However we also stated on both this newsletter and our Market Bias video that this could change.  So what happened?  New Home Sales came in slightly higher than expected and this was enough to drive the markets higher.  Besides that the markets liked the Netflix earnings report on Monday night.  This served to drive the Dow up 152 points.  Today our bias is to the upside because the markets are correlated as such.    Could this change? Of Course.  Remember anything can happen in a volatile market.

 
 
Yesterday at around 1 PM EST, a very strange phenommena occured.  The markets were moving along and suddenly dropped like a rock. Momentarily the Dow not only lost all of it's gains for the day but dropped 12 points below its close from Monday night.  A news report came out that stated someone hacked an AP (Associated Press) Twitter account and claimed that a bomb went off in the White House which caused a hugh drop.  I cannot help to think back to 2010 when we had the flash crash and the market dived almost 1,000 points.  If this story is true I can't help but to think how fragile we are that one simple tweet could cause such a drop.  I also think it could be an algo gone wild.  Algo's are in essence programs and anything can happen with them.  They are not infallible and anyone who's ever had a computer crash on them knows this.  There is no such reality as error free programming.  In other events, Apple reported last night and apparently missed their target but the market appears to be forgiving.  Of course, it doesn't hurt when you raise dividends by 15 percent.  We'll have to monitor and see how Apple does today in teh US markets.

 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.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/    
 

My interview with Carl can be viewed at:





Please note the video is about a half hour in length and we plan on producing more in the near future.  Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading higher and the US Dollar is decliniing.  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 June crude dropped to a low of 87.97 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 85.00 a barrel and resistance at 92.  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 - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is declining.  This is normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 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 10:30 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.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.investing.com/analysis/us-economy:-why-we%27re-here,-how-did-this-happen%20-163629
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/


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 blogs.



To view previous issues of Market Tea Leaves visit our archive.

Tuesday, April 23, 2013

Pre-Market Global Review - 4/23/13 - Apple Reports Tonite





Good Morning Traders,
 
As of this writing 5:40 AM EST, here’s what we see:
 
US Dollar –Up at 83.125 the US Dollar is up 301 ticks and is trading at 83.125.         
 
Energies – June Oil is down at 88.26.    
Financials – The June 30 year bond is up 25 ticks and is trading at 148.30    
Indices – The June S&P 500 emini ES contract is down at 1554.50 and is down 6 ticks.  
Gold – The June gold contract is trading down at 1415.80 and is down 56 ticks from its close.
 
Initial Conclusion: This is a correlated market, unfortunately it is correlated to the downside.  The dollar is up+ and oil is down- which is normal and 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 down and the US dollar is trading higher 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. 
All of Asia closed lower with the exception of the Indian Sensex.  As of this writing all of Europe is trading higher. 

 
Possible challenges to traders today is the following    
 
1.  Flash Manufacturing PMI is out at 9 AM EST.  This is major.   
2.  HPI m/m is out at 9 AM EST.  This is major. 
3.  New Home Sales are out at 10 AM EST.  This is major.
4.  Richmond Manufacturing Index is out at 10 AM EST.  This is major.        

Yesterday we said our bias was to the upside as with both Asia closing higher and Europe trading higher, we felt it was a good recipe for the upside.  Whereas the Dow did close higher by 19 points, it was a bumpy ride.  Today the markets (as of this writing) are correlated however it is correlated to the downside.  As such our bias is to the downside today.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 

Yesterday we said our bias was to the upside and the markets closed higher but it did not start out that way.  Caterpillar Tractor reduced their 2013  outlook and reported earnings that were less than stellar pre-market.  This set the tone for the trading day and most of the session traded to the downside.  However rules of market correlation prevailed and the Dow closed 19 points higher.  Today we have Apple reporting after hours which will set the tone for the overnight trading session and tomorrow for the US markets.  We'll have to see what they say and what they report.  Apple has been taking a beating lately as some have claimed they problems with some of their suppliers.  Recently Apple is trading around the $400.00 a share mark, which the lowest since December, 2011.  I tend to take a different view.  My view is that Apple has been trading higher for sometime now.  What goes up will eventually come down.  Nothing stays up forever.  Want a lesson on how this works?  I remember when the Nasdaq was trading at the 5000 level and every idiot pundit thought it was going to go higher.  It didn't.  Don't buy the hot air you'll get from the analysts and pundits that are paid by teh Smart Money.  They want you to keep your money in the market so they can easily use that capital to manipulate the market. Our goal is simple: to help you keep your hard earned trading capital.



 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 downside.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/    
My interview with Carl can be viewed at:





                       






Please note the video is about a half hour in length and we plan on producing more in the near future.  Also note that in the near future we will have other videos where we will interview various trading leaders.

As I write this the crude markets are trading lower and the US Dollar is advancing.  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 June crude dropped to a low of 87.69 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 85.00 a barrel and resistance at 92.  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 - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


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 7 AM EST, 9 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.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.investing.com/analysis/us-economy:-why-we%27re-here,-how-did-this-happen%20-163629

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 blogs.



To view previous issues of Market Tea Leaves visit our archive.