Pre-Market Global Review - 4/16/13 - China Catches Cold - World takes aspirin

Good Morning Traders,
 
As of this writing 5:30 AM EST, here’s what we see:
 
US Dollar –Up at 82.525 the US Dollar is up 18 ticks and is trading at 82.525.       
Energies – May Oil is down at 87.95.
Financials – The June 30 year bond is down 3 ticks and is trading at 147.27. 
Indices – The June S&P 500 emini ES contract is up at 1550.00 and is up 26 ticks.
Gold – The June gold contract is trading up at 1376.30 and is up 152 ticks from its close.

Quick Note: Unless otherwise shown the above contract months are now June.   

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 up 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 closed mixed with the Shanghai, Sensex and Singapore higher and the rest of Asia closed lower.  As of this writing all of Europe is trading lower.
 
Possible challenges to traders today is the following
1.  FOMC Member Dudley speaks at 8 AM EST.  This is not major.
2.  Core CPI is out at 8:30 AM EST.  This is major.       
3.  CPI is out at 8:30 AM EST.  This is major 
4.  Building Permits are out at 8:30 AM EST.  This is major.
5.  Housing Starts are out at 8:30 AM EST.  This is major.
6.  ECB President Mario Draghi speaks at 9 AM EST.
7.  Capacity Utilization Rate is out at 9:15 AM EST.  This is not major.
8.  Industrial Production is out at 9:15 AM EST.  This is not major.
9.  Treasury Secretary Lew speaks at 10 AM EST.
10.  FOMC Member Duke speak st 12 Noon.
11.  FOMC Member Yellen speaks at 3 PM EST.
12.  Treasury Secretary Lew speaks at 3 PM EST...again         
 
 Yesterday we said our bias was neutral because the markets weren't correlated and we felt the markets could go in any direction.  We also advised readers to avoid trading if you didn't have an open position.  The net result?  The Dow dropped 266 points and logged the worse performance in 5 months.  Today the markets aren't correlated but our bias is to the upside.  Why?  We feel that after yesterday's sell off, the markets are due for a rebound.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
It is amazing to me that China, who little more than a decade ago was not considered a world economic power could post a GDP number within 3 tenths of a point off could such a calamity worldwide.  It could only mean that the rest of the world must owe China money.  In the United States this kind of news wouldn't be considered welcome news either but I don't think it would set off a worldwide event which is exactly what happened yesterday.  Gold fell, oil fell and the markets weren't correlated.  Oil fell with the expectation that if things weren't great in China then there wouldn't be as much demand worldwide.  This is to be expected.  What I think really shocked everyone was gold.   We haven't seen gold drop this much in one day since the 1980's.  Gold is starting to rebound now but only time will tell if it can recapture its luster.  Along with Gold the futures are starting to rebound as well but as in all things we'll have to monitor and see.
 
 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 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 crude dropped to a low of 86.06 a barrel in the overnight session and as of this writing is starting to rebound.  We'll have to monitor and see if crude either goes lower or holds at the present level.   We'll have to see where crude falls to before we can establish a support and resistance level.  At this time crude can fall further.  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/battle-of-the-budgets-dead-ahead/

http://www.barchart.com/headlines/story/9204041/the-debt-ceiling-and-its-impact-on-the-global-economy    
http://www.forexcrunch.com/effects-of-sequestrationthus-far/


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.

Pre-Market Global Review - 4/15/13 - China Fallout and Tax Day

Good Morning Traders,
 
As of this writing 4:40 AM EST, here’s what we see:
 
US Dollar –Up at 82.485 the US Dollar is up 79 ticks and is trading at 82.485.       Energies – May Oil is down at 89.03.
Financials – The June 30 year bond is down 5 ticks and is trading at 147.12. 
Indices – The June S&P 500 emini ES contract is down at 1573.50 and is down 34 ticks.
Gold – The June gold contract is trading down at 1436.50 and is down 648 ticks from its close.

Quick Note: Unless otherwise shown the above contract months are now June.   

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 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. 

Asia with the exception of the Indian Sensex closed lower.  As of this writing all of Europe is trading lower.
 
Possible challenges to traders today is the following
1.  Empire State Manufacturing Index is out at 8:30 AM EST.  This is major.
2.  TIC Long Term Purchases are out at 9 AM EST.  This is major.      3.  NAHB Housing Market Index is out at 10 AM EST.  This is major.   
 
On Friday we said our bias was to the downside because the markets were correlated as such.  The net Result?  After having spent most of the day to the downside the Dow closed flat with 0 point gain.  Today the market aren't correlated and as such our bias is neutral, meaning it could go in any direction today.  If teh Bonds were trading higher I would say we have a completely correlated market to the downside.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Overnight on Sunday China posted its GDP for the 1st calendar quarter and that number came in at 7.7% versus 8% expected.  That set off a chain of events whereby most of Asia closed lower and as of this writing Europe is trading lower.  Can that drive the US markets lower?  Absolutely.  Anything can happen in a volatile market.  Today marks Tax Day in the United States and what we usually see is a slow, low volume day.  If the people who work for the Smart Money haven't done so already, they'll probably be waiting in line at the US Post Office to get their returns postmarked by today, or else they're waiting in line at Starbucks to get a free cup of coffee.  That's a usual Tax Day.  This day, I suspect won't be usual due to the fallout from China.  Oil is below $90 a barrel and falling.  Gold has dropped 64 full points or over 640 ticks from Friday's close.  Clearly the China fallout will have an impact on the US markets.  I would advise anyone who doesn't  have an open position in the market, to consider keeping your powder dry as anything can happen in type of market.  Our objective is make sure you keep your hard earned trading capital because as we know it's not easy to replace.
 
 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.  

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. On Friday crude dropped to a low of 90.27 a barrel and as of this WRITING IS FALLING FURTHER.  We'll have to monitor and see if crude either goes lower or holds at the present level.   We'll have to see where crude falls to before we can establish a support and resistance level.  At this time crude can fall further.  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/battle-of-the-budgets-dead-ahead/

http://www.barchart.com/headlines/story/9204041/the-debt-ceiling-and-its-impact-on-the-global-economy    
http://www.insidefutures.com/article/877278/The%20USD%20-%20Why%20is%20it%20so%20High?.html      
http://www.insidefutures.com/article/876937/The%20Sequester%20and%20its%20Impact%20on%20the%20US%20Economy.html



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.

Pre-Market Global Review - 4/12/13 - Bank Day Starts Today

Good Morning Traders,
 
As of this writing 5:10 AM EST, here’s what we see:
 
US Dollar –Up at 82.445 the US Dollar is up 120 ticks and is trading at 82.445.      
Energies – May Oil is down at 92.76.
Financials – The June 30 year bond is up 17 ticks and is trading at 146.24. 
Indices – The June S&P 500 emini ES contract is down at 1585.25 and is down 10 ticks.
Gold – The June gold contract is trading down at 1555.70 and is down 92 ticks from its close.

Quick Note: Unless otherwise shown the above contract months are now June.   

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.  As of this writing all of Europe is trading lower.
 
Possible challenges to traders today is the following
1.  Core Retail Sales is out at 8:30 AM EST.  This is major.
2.  Retail sales are out at 8:30 AM EST.  This is major.     
3.  PPI is out at 8:30 AM EST.  This is major.   
4.  Core PPI is out at 8:30 AM EST.  This is major.  
5.  FOMC Member Rosengren speaks at 8:45 AM EST.  This is not major.
6.  Preliminary UOM Consumer Sentiment is out at 9:55 AM EST.  This is major.
7.  Preliminary UOM Inflation Expectations are out at 9:55 AM EST.  This is major.
8.  Business Inventories are out at 10 AM EST.  This is not major.
9.  Bernanke speaks at 12:30 PM EST.  This is major.    
 
Yesterday we said our bias was neutral because the markets weren't correlated and we felt could be driven in any direction.  Clearly the Unemployment numbers helped the market as they were less than expected  The net result?  The Dow closed 63 points higher.  Today we have a correlated market but it is correlated to the downside, therefore our bias is to the downside.  We have several economic reports today, most of which are major.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Today marks the beginning of Bank Day meaning that the financial institutions will start to report their quarterly earnings.  JP Morgan and Wells Fargo reports today, prior to market open.  Citibank reports on the 15th, Goldman reports on the 16th, Bank of America reports the 17th and Morgan Stanley reports on the 18th.  It shouldn't be any surprise to any reader of Market Tea Leaves that one of the key fundamentals of market correlation are the financials.  You hear each day talk about correlation in our Market Bias video.  If anything, you should realize that financials are a key cornerstone of what we do.  If these numbers are positive, it means that going forward we should have a decent quarter.  But as in all things we'll have to monitor and see.
    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.  

Last Friday 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 crude dropped to a low of 93.06 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It seems that at the present time crude's support is at 92.00 with resistance at 98.00 a barrel.  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 May 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.  Additionally watch out for Ben Bernanke at 12:30 PM EST.  He generally has a way of moving the markets.   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/battle-of-the-budgets-dead-ahead/

http://www.barchart.com/headlines/story/9204041/the-debt-ceiling-and-its-impact-on-the-global-economy    

http://www.insidefutures.com/article/877278/The%20USD%20-%20Why%20is%20it%20so%20High?.html      
http://www.insidefutures.com/article/876937/The%20Sequester%20and%20its%20Impact%20on%20the%20US%20Economy.html

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.

Pre-Market Global Review - 4/11/13 - Interview with Algo Futures' Carl Weiss

Good Morning Traders,
 
As of this writing 5:15 AM EST, here’s what we see:
 
US Dollar –Down at 82.450 the US Dollar is down 184 ticks and is trading at 82.450.      
Energies – May Oil is down at 94.49.
Financials – The June 30 year bond is up 2 ticks and is trading at 146.00. 
Indices – The June S&P 500 emini ES contract is up at 1585.25 and is up 11 ticks.
Gold – The June gold contract is trading down at 1554.50 and is down 43 ticks from its close.

Quick Note: Unless otherwise shown the above contract months are now June.   

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 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 with the exception of the Shanghai exchange closed higher.  As of this writing all of 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.
2.  Import Prices are out at 8:30 AM EST.  This is not considered major.     
3.  FOMC Member Bullard speaks at 8:30 AM EST.  
4.  Natural Gas Storage is out at 10:30 AM EST.  This will move the Nat Gas market.
5.  30 Year Bond Auction starts at 1 PM EST.    
 
Yesterday we said our bias was to the upside because the Bonds were correlated with the indices.  The net result?  The Dow closed 129 points higher.  Today we do not have a correlated market and our bias is neutral.  Unemployment Claims are out at 8:30 AM EST and this is the major report of the day.  This could serve to drive the market in any direction today.  Could this change? Of Course.  Remember anything can happen in a volatile market.
  
On the political front, Obama released his budget yesterday as scheduled.  If you believe some of the headlines that were out yesterday, you would think that sequestration was replaced by this budget.  Let me make this clear.  Nothing has been approved yet and nothing has been "replaced".  Any budget must pass both houses (House of Representatives and the Senate) and then gets sent to the President for signature.  Enough said.
   
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.  

Last Friday 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 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 crude dropped to a low of 93.40 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It seems that at the present time crude's support is at 92.00 with resistance at 98.00 a barrel.  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 to Start April 10th.
- Debt Ceiling in the May 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/battle-of-the-budgets-dead-ahead/

http://www.barchart.com/headlines/story/9204041/the-debt-ceiling-and-its-impact-on-the-global-economy    

http://www.investing.com/analysis/usd:-why-is-it-so-high%20-159009        
http://www.investing.com/analysis/the-sequester-and-its-impact-on-the-us-economy-158526

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.

Pre-Market Global Review - 4/10/13 - Obama Budget Due...

Good Morning Traders,
 
As of this writing 5:30 AM EST, here’s what we see:
 
US Dollar –Up at 82.425 the US Dollar is up 11 ticks and is trading at 82.425.      
Energies – May Oil is down at 94.04.
Financials – The June 30 year bond is down 10 ticks and is trading at 146.22. 
Indices – The June S&P 500 emini ES contract is up at 1567.40 and is up 17 ticks.
Gold – The June gold contract is trading down at 1580.70 and is down 60 ticks from its close.

Quick Note: Unless otherwise shown the above contract months are now June.   

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 up and the US dollar 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. 

Asia with the exception of the Singapore exchange closed higher.  As of this writing all of Europe is trading higher.
 
Possible challenges to traders today is the following
1.  Crude Oil Inventory is out at 10:30 AM EST.  This will move the oil market.
2.  10 Year Bond Auction starts at 1 PM EST.    
3.  FOMC Meeting Minutes are out at 2 PM EST.  This is major.
4.  Federal Budget Balance is out at 2 PM EST.  This is not considered major.    
 
Yesterday we said our bias was to the upside because the markets were completely correlated.  The net result?  The Dow closed 60 points higher.  Today we do not have a correlated market but our bias is to the upside.  Why?  The Bonds are trading lower and the indices are higher.  Additionally with the exception of the FOMC minutes due out at 2 PM EST there is no major economic news that could potentially drive the markets lower.  Could this change? Of Course.  Remember anything can happen in a volatile market.
  On Monday we wrote about the proposed budget coming out of President Obama office.  It is due today so we'll soon find out which programs he'll cut.  I suspect he's doing this to offer a "dove" to the GOP but I also think he's going to be in for a surprise because if this budget has any stench of "revenue generation" they won't go for it.  So once again, the middle class has to bear the brunt of DC's folly.  I'm wondering when Obama is going to wake up and realize that the GOP are not his friends.  The only thing they wish to do is obstruct and make him look foolish.  They want history to note him as the President who couldn't get anything done and his Presidency as one of gridlock.  If anyone thinks that the GOP is done with obstructing, what do you think will happen when other bills are brought before Congress?  Gun Control?  Immigrant Reform?  Forget it.  Fourteen GOP Senators have already claimed no vote on Gun Control and more than 90% of Americans want it.  
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.  For awhile now we've promised a video on how a trader can use Market Correlation in tandem with their daily trading.  A good friend of Market Tea Leaves: Carl Weiss of Sceeto and I produced a video on December 22nd that shows this.  Here it is:

http://youtu.be/tUZEZNKnGrY

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 crude dropped to a low of 92.86 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It seems that at the present time crude's support is at 92.00 with resistance at 98.00 a barrel.  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 to Start April 10th.
- Debt Ceiling in the May 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 10:30 AM when the inventory numbers are released and the markets give us better direction.  Also be mindful that today the FOMC Minutes are out at 2 PM.  This is always a market mover.  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/battle-of-the-budgets-dead-ahead/

http://www.barchart.com/headlines/story/9204041/the-debt-ceiling-and-its-impact-on-the-global-economy    

http://www.investing.com/analysis/usd:-why-is-it-so-high%20-159009        
http://www.investing.com/analysis/the-sequester-and-its-impact-on-the-us-economy-158526

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.