Good Morning Traders,
As
of this writing 4:55 AM EST, here’s what we see:
US Dollar –Down at 81.655, the Sept US Dollar is down 109 ticks and is trading at 81.665.
Energies – September Oil is down at 104.12.
Financials – The September 30 year bond is up 3 ticks and is trading at 134.26.
Indices – The September S&P
500 emini ES contract is down at 1682.25 and is down 17 ticks.
Gold – The August
gold contract is trading up at 1325.70 and is up 42 ticks 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 down and the US dollar
is trading lower which is not correlated. Gold is trading higher which is correlated with the
US
dollar trading down. I tend to believe
that Gold has an inverse
relationship with the US Dollar as when the US Dollar is down, Gold
tends to rise in value and vice-versa. Think of it as a seesaw, when one
is up the other should be down. I point this out to you to make you
aware that when we don't have a correlated market, it means something is
wrong. As traders you need to be aware of this and proceed with your
eyes wide open.
All of Asia closed lower. As
of this
writing Europe is trading higher.
Possible challenges to
traders today is the following
1. Pending Home Sales are out at 10 AM EST. This is major.
2. Lack of any other economic reports.
Currencies
We've elected to include currencies in our coverage as it's universal and quite frankly market correlation can't exist without a discussion this topic. It goes without saying that the USD is the world's reserve currency and has been since 1944. Prior to that time the position was held by the British Pound, however due to the wartime effects of fighting Nazi Germany during WWII Britain could no longer maintain that standard. The rule in this regard is quite simple, when the USD advances other currencies go down. There is an ongoing currency war in the worldwide markets. As an example Japan recently and deliberately undermined the Yen with the intent of keeping its currency lower so as to prop up exports to other countries. This is the basis of "Abenomics" named after their Prime Minister Abe. Today I'd like to speak about the Aussie Dollar as it is one of the world's leading currencies and quite strong. The AUD seems to follow the rule quite nicely and typically makes a major move (either up or down) at around 10 AM EST. This is for a "normal" trading day. What is considered normal? A normal trading day is one in which there are no major economic reports at 10 AM. If there are then typically the AUD will make a move prior to 10 AM EST. Given that today we have Pending Home Sales at 10 AM, we believe the AUD will make a move (either long or short) prior to that time; probably around 9 AM EST. Time will tell if we are correct in this regard and as usual we'll have to monitor and see.
On Friday we said our bias was to
the upside as the USD was trading lower and Gold (at the time) was trading higher. After a seesaw session whereby the markets moved in and out of positive territory all day, the rules of market did prevail and the Dow, Nasdaq and S&P closed higher although fractionally. Today we are not dealing with a correlated market however our bias is to the upside. Why? The USD is trading lower and Gold is trading higher. Europe is currently trading higher and we think there may be follow thru for the US session. Could
this change? Of Course. Remember anything can happen in a volatile market.
Many of my readers have been asking me to spell out the rules of Market Correlation. Today 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
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.
In
May, I spoke with John Karnas, CEO of Trend Following Trades. John has
an interesting background as he was a trader for a number of years
prior to buying Trend Following Trades. John is a believer in Trading
Plans and has a very precise method of developing aspiring traders. To
download the article I've written, go to:
https://markettealeaves.sharefile.com/d/sdf8f77f6e2c4347a
My discussion with John can be viewed at:
http://youtu.be/uVwHpMq1604
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. On Friday September crude dropped to a low of 103.90 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 $104 a barrel and resistance
at 108. 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.
- Asian Contagion - 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.barchart.com/headlines/story/10598425/when-perception-becomes-reality
http://www.forexcrunch.com/the-taper-caper/
http://www.traderslog.com/john-karnas/
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.
Good Morning Traders,
As
of this writing 4:40 AM EST, here’s what we see:
US Dollar –Down at 81.730, the Sept US Dollar is down 328 ticks and is trading at 81.730.
Energies – September Oil is down at 104.74.
Financials – The September 30 year bond is up 17 ticks and is trading at 134.17.
Indices – The September S&P
500 emini ES contract is down at 1683.75 and is down 1 tick.
Gold – The August
gold contract is trading up at 1330.60 and is up 17 ticks 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 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.
Asia closed mainly lower with the exception of the Hang Seng which closed higher. As
of this
writing Europe is trading higher.
Possible challenges to
traders today is the following
1. Revised UOM Consumer Sentiment is out at 9:55 AM EST. This is not major.
2. Revised UOM Inflation Expectation is out at 9:55 AM EST. This is not major.
3. Lack of major economic reports.
Yesterday we said our bias was to
the downside as the markets were correlated as such. Then President Obama spoke at 2 PM EST regarding the economy and the upcoming budget battle in DC after which the markets changed direction and went higher. The Dow closed 14 points higher as did the other indices. Today we are not dealing with a correlated market however our bias is to the upside. Why? The USD is trading lower, Gold is trading higher and Europe is trading higher as well. Could
this change? Of Course. Remember anything can happen in a volatile market.
Yesterday our bias was to the downside. Core Durable Goods came in absolutely flat and Unemployment Claims jumped by 7K so the stage was set for a lower close. Then Obama decided to speak at around 2 PM, what did he say? Basically what he said was a follow thru from yesterday's "A Better Bargain" speech. He spoke about the 7.8 million new jobs created in the last 40 months and the fact that America could start to export energy overseas. What he forgot to mention BTW is the jobs created are menial at best, don't carry either a living wage or benefits and the Nat Gas exports comes with fracking that is guaranteed to turn America into "Gasland". Now I have to give the President credit where it's due. No one gives a better speech. This speech promises to be the opening salvo in the impending and upcoming Budget Battle looming in Congress. This shouldn't be any surprise to my subscribers as for months we've been predicting that this will happen and apparently it's starting. Obama talked about the GOP and DC and how politicians have it all wrong and why we need a forward thinking mentality for America. On all these points I agree, Mr. President. I just don't happen to think you're the guy to pull it off. This President likes to talk the talk and because he is an excellent speech giver, he'll have you convinced that he's right and that YOU should take action. Write your Congressman/woman and badger your Senator and have them deliver Me a bill that I can sign. With the exception of ObamaCare when has this President ever submitted a bill to Congress for passage? Democratic Senator Max Baucus has already called ObamaCare a "train wreck". This President talks the talk but when it comes down to it, he'll compromise and cave in to the demands of the GOP just to get something passed. Need proof? In 2011 he signed a bill that guaranteed a sequester in 2013 and what do we now have? A sequester. Some economists have suggested that ending the sequester will probably add one million new jobs and I agree, it probably would. Is he doing anything about it? Nope. He was adamant at the beginning of the year to have increased gun control. Did he do anything about it? Nope. Now you might be asking "well what could he do"? He could have issued an Executive Order and yes it will lead to nothing but at least the American people would know how strongly he supports the issue. So much for "A Better Bargain"...
On Friday, June 7th I had the
opportunity to interview Mr. Sal Spedele regarding ObamaCare. Sal is a
20 year veteran of the Insurance Industry and we spoke at length
regarding the ramifications of the Patient Protection and Affordable
Care Act aka ObamaCare. If you are at all concerned about the future of
Health Insurance in the United States, then you need to listen to this
interview and act on it. Sal and his team is offering complimentary
advisory services to inform you of your rights and ramifications of this
Act.
As an update on this issue, last week
the White House extended the employer's mandate to 2015 versus 2014 and
currently the house will vote on a similar measure for individuals. The
question is can you trust the folks in DC to implement anything?
To download the article on ObamaCare, go to:
https://markettealeaves.sharefile.com/d/s978a806ae2e41569
To view my discussion with Sal:
http://youtu.be/sR_ine0b5Ro
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.
In
May, I spoke with John Karnas, CEO of Trend Following Trades. John has
an interesting background as he was a trader for a number of years
prior to buying Trend Following Trades. John is a believer in Trading
Plans and has a very precise method of developing aspiring traders. To
download the article I've written, go to:
https://markettealeaves.sharefile.com/d/sdf8f77f6e2c4347a
My discussion with John can be viewed at:
http://youtu.be/uVwHpMq1604
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 September crude dropped to a low of 104.08 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 $104 a barrel and resistance
at 108. 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.
- Asian Contagion - 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.barchart.com/headlines/story/10598425/when-perception-becomes-reality
http://www.forexcrunch.com/the-taper-caper/
http://www.traderslog.com/john-karnas/
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.
Good Morning Traders,
As
of this writing 5:10 AM EST, here’s what we see:
US Dollar –Up at 82.410, the Sept US Dollar is up 10 ticks and is trading at 82.410.
Energies – September Oil is down at 104.88.
Financials – The September 30 year bond is up 2 ticks and is trading at 134.05.
Indices – The September S&P
500 emini ES contract is down at 1675.75 and is down 32 ticks.
Gold – The August
gold contract is trading down at 1318.40 and is down 11 ticks from its close.
Initial Conclusion: Finally 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 some exchanges trading lower to the tune of triple digits . As
of this
writing Europe is trading lower.
Possible challenges to
traders today is the following
1. Unemployment Claims are out at 8:30 AM EST. This is not major.
2. Core Durable Goods are out at 8:30 AM. This is major.
3. Durable Goods are out at 8:30 AM EST. This is major.
4. Natural Gas Supply 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 Bonds were trading lower and Gold was trading higher. Apparently the Smart Money thought otherwise and decided to take capital off the table after 2 days of gains. The Dow dropped by 26 points and the S&P fell as well. Today we are dealing with a correlated market, however it is correlated to the downside therefore our bias is to the downside. Could
this change? Of Course. Remember anything can happen in a volatile market.
Yesterday our bias was to the upside and despite the fact that we had good economic reports the markets dropped. New Home Sales came in better than expected as well as Manufacturing PMI yet the markets dropped. I can only suspect that the Smart Money decided it was time to take capital off the table. In other news President Obama decided to have a talk regarding a "Better Bargain". Don't worry folks he's been saying the same thing for the last 5 years and guess what? Nothing's changed. In fact they're getting progressively worse. Let me give you a case-in-point; my wife was let go on her job after 15 years of meritorious service and has attempted to apply for work in other companies in the same industry. They told her they would no longer accept in-person applications and was told to apply on the Internet. No problem there, right? Except that for her type of work they do not post job openings on the Internet. Employers are making it more difficult for job seekers to apply for work and they say that people aren't looking for work or have giving up looking. If you buy that I have a good bridge to sell you. This President talks the talk, but does not walk the walk. His policies will virtually guarantee that the top 1 percent will grow even further. He claims that he wants to put more people in the middle class as opposed to protecting the already shrinking middle class. His biggest mistake was to concern himself with medical benefits as opposed to growing the economy. Now they're popping the champagne cork in DC thinking "unemployment problem?" "there's no unemployment problem, look at all the jobs we created in the last 20 months". But what they fail to say is that the jobs created are menial at best, don't carry a living wage and don't have benefits associated with them. So much for A Better Bargain....
On Friday, June 7th I had the
opportunity to interview Mr. Sal Spedele regarding ObamaCare. Sal is a
20 year veteran of the Insurance Industry and we spoke at length
regarding the ramifications of the Patient Protection and Affordable
Care Act aka ObamaCare. If you are at all concerned about the future of
Health Insurance in the United States, then you need to listen to this
interview and act on it. Sal and his team is offering complimentary
advisory services to inform you of your rights and ramifications of this
Act.
As an update on this issue, last week
the White House extended the employer's mandate to 2015 versus 2014 and
currently the house will vote on a similar measure for individuals. The
question is can you trust the folks in DC to implement anything?
To download the article on ObamaCare, go to:
https://markettealeaves.sharefile.com/d/s978a806ae2e41569
To view my discussion with Sal:
http://youtu.be/sR_ine0b5Ro
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.
In
May, I spoke with John Karnas, CEO of Trend Following Trades. John has
an interesting background as he was a trader for a number of years
prior to buying Trend Following Trades. John is a believer in Trading
Plans and has a very precise method of developing aspiring traders. To
download the article I've written, go to:
https://markettealeaves.sharefile.com/d/sdf8f77f6e2c4347a
My discussion with John can be viewed at:
http://youtu.be/uVwHpMq1604
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 September crude dropped to a low of 104.79 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 $104 a barrel and resistance
at 108. 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.
- Asian Contagion - 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.barchart.com/headlines/story/10598425/when-perception-becomes-reality
http://www.forexcrunch.com/the-taper-caper/
http://www.traderslog.com/john-karnas/
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.
