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.

Pre-Market Global Review - 4/9/13 - Battle of the Budgets...dead ahead

Good Morning Traders,
 
As of this writing 5:40 AM EST, here’s what we see:
 
US Dollar –Down at 82.630 the US Dollar is down 239 ticks and is trading at 82.630.      
Energies – May Oil is up at 93.57.
Financials – The June 30 year bond is down 12 ticks and is trading at 146.30. 
Indices – The June S&P 500 emini ES contract is up at 1562.00 and is up 11 ticks.
Gold – The June gold contract is trading up at 1572.70 and is up 2 ticks from its close.

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

Initial Conclusion: Finally 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. 

Asia with the exception of the Nikkei and Sensex exchange closed higher.  As of this writing all of Europe is trading higher.
 
Possible challenges to traders today is the following
1.  No Major economic news..
2.  Lack of economic news.  
3.  Wholesale Inventories are out at 10 AM EST.  This is not considered major.    
 
Yesterday we said our bias was to the upside because the markets were nearly correlated.  The net result?  The Dow closed 48 points higher.  Today we have a correlated market and as such our bias is to the upside today.   Of course it didn't hurt that Alcoa beat expectations.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 

Last night Alcoa reported earnings that beat estimates and the company reaffirmed 2013 revenues.  Obviously this helped the overnight session and we expect that to spillover in today's trading.  On the political front, there's a battle looming in DC and that battle is who's budget will be chosen?  President Obama will release his version of a budget tomorrow and whereas he's offering the GOP a dove in the form of Medicare cuts and Social Security benefits, he also proposes a 28% limit on tax deductions for the wealthiest Americans.   I suspect that this will not do for the GOP.  They will hear nothing of increased revenue.  Their attitude is "you've already gotten your revenue increase in January, no more."  Yesterday the President made an emotional plea in Conn. to the victims of Sandy Hook and the GOP has threaten a no vote in the Senate.  If Congress can't come to terms on background checks on guns, what would lead anyone to think that they'll agree on the budget?  What will we wind up with?  More gridlock.  You might be asking what does this have to do with the markets?  In a word: everything.  The markets do not like uncertainty when it comes to financial issues and anything that reeks of uncertainty is not viewed in a positive light.  Time will tell which budget (if any) gets chosen.  But one thing is certain there will be a fierce battle in DC in the near future.

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 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 crude dropped to a low of 92.46 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 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/ramifications-of-a-brics-world-bank/  
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 - 4/8/13 - Earnings Season Starts

Good Morning Traders,
 
As of this writing 5:30 AM EST, here’s what we see:
 
US Dollar –Up at 82.800 the US Dollar is up 197 ticks and is trading at 82.800.    
Energies – May Oil is up at 93.44.
Financials – The June 30 year bond is down 3 ticks and is trading at 147.29. 
Indices – The June S&P 500 emini ES contract is up at 1549.25 and is 13 ticks.
Gold – The June gold contract is trading up at 1577.80 and is up 19 ticks from its close.

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

Initial Conclusion: This is a nearly correlated market.  The dollar is up+ and oil is up+ which is not normal but the 30 year bond is trading lower.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa.  The indices are 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 with the exception of the Nikkei and Aussie exchange closed lower.  As of this writing all of Europe is trading higher.
 
Possible challenges to traders today is the following
1.  No Major economic news..
2.  Lack of economic news.      
 
On Friday we said our bias was neutral because the markets weren't correlated.  As such we felt that the markets could be driven in any given direction.  Unfortunately the all important Jobs Report did not meet expectations and came in with a net increase of 88,000 versus 198,000 expected.  The Dow dropped 41 points on Friday.  Today we have a nearly correlated market with the missing ingredient being the USD.  If the USD were trading lower I would say we have a correlated market to the upside today.  This being said our bias is to the upside today.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Today starts earnings season with the traditional report commencing with Alcoa after the market close.  Some pundits are already trying to size up this quarter with some saying it's doomsday and the other half saying how great it will be. I don't trade equities and therefore I don't have that issue.  As a futures trader I concern myself with what's happening on that particular day.  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 higher and the US Dollar is advancing.  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 91.91 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 higher 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/ramifications-of-a-brics-world-bank/
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 - 4/5/13 - Jobs Friday

Good Morning Traders,
 
As of this writing 5:30 AM EST, here’s what we see:
 
US Dollar –Up at 82.845 the US Dollar is up 50 ticks and is trading at 82.845   
Energies – May Oil is down at 93.16.
Financials – The June 30 year bond is down 4 ticks and is trading at 146.07. 
Indices – The June S&P 500 emini ES contract is down at 1551.50 and is down 12 ticks.
Gold – The June gold contract is trading up at 1555.30 and is up 29 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 with the exception of the Nikkei closed lower.  As of this writing all of Europe is trading lower.
 
Possible challenges to traders today is the following

1.  Non-Farm Employment Change is out at 8:30 AM EST.  This is major.
2.  Unemployment Rate is out at 8:30 AM EST.  This is major.      
3.  Trade Balance is out at 8:30 AM EST.  This is major.  
4.  Average Hourly Earnings are out at 8:30 AM EST.  This is major.  
5.  Consumer Credit is out at 3 PM EST.  This is not major.

Yesterday we said our bias was neutral because the markets weren't correlated.  We also pointed out that the Challenger-Gray report at 7:30 AM EST and Unemployment Claims would set the tone for the trading day.  Unfortunately neither was not a stellar report and as such the zig zagged between positive and negative territory all day to close 56 points higher.  Today the markets aren't correlated to either direction therefore our bias is neutral which means it can be driven in any direction today.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 

Today is Jobs Friday and for those of you who've been with us awhile know, I don't trade Jobs Friday as the markets historically speaking have never shown any sense of normalcy on this day.  What I'm curious to see is if whether or not the sequester cuts will have any impact on the jobs report and therefore the trading day ahead.  Last month it had no impact as the sequester had just been signed into law.  Economists are expecting a net gain of 198,000 new jobs.  Anything below this figure will not be viewed in a positive light.  The Unemployment Rate should hold at 7.7 percent but we'll have to monitor and see.  Yesterday, the Unemployment Claims came in 32,000 more than expected which doesn't bode well for a stellar report today, but we'll have to monitor and see.  What is known is that come next week a fierce budget battle will ensue in DC as Obama's budget will be released.
 
 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.  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 92.18 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


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/ramifications-of-a-brics-world-bank/
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 - 4/4/13 - ADP Report Derails Rally

Good Morning Traders,
 
As of this writing 5:35 AM EST, here’s what we see:
 
US Dollar –Up at 83.430 the US Dollar is up 569 ticks and is trading at 83.430  
Energies – May Oil is down at 94.41.
Financials – The June 30 year bond is up 1 ticks and is trading at 145.10. 
Indices – The June S&P 500 emini ES contract is up at 1556.50 and is up 32 ticks.
Gold – The June gold contract is trading down at 1546.20 and is down 72 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 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 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 Nikkei closed lower.  As of this writing Europe with the exception of London is trading higher.
 
Possible challenges to traders today is the following

1.  Challenger Gray Job Cuts are out at 7:30 AM EST.  This is major.
2.  ECB Minimum Bid Rate is out at 7:45 AM EST.  This is major.    
3.  ECB Press Conference starts at 8:30 AM EST.  This is major.
4.  Unemployment Claims are out at 8:30 AM EST.  This is major.
5.  FOMC Member George speaks at 8:45 AM EST.  This is not major.
6.  FOMC Chairman Bernanke speaks at 10:30 AM EST.  This is major.
7.  Natural Gas Inventory is out at 10:30 AM EST.  This will move the Nat Gas market.        

Yesterday we said our bias was neutral because the markets weren't correlated.  We also pointed out that the ADP report at 8:15 AM EST would set the tone for the trading day.  Unfortunately this was not a stellar report an as such the Dow dropped 112 points.  This is what can happen when rules of market correlation are ignored.  Our goal and objective is to keep you safe such that as a trader you keep more of your hard earned capital.   Today the markets aren't correlated to either direction therefore our bias is neutral which means it can be driven in any direction today.  We have numerous reports out today as well as Ben Bernanke speaking which can drive the markets in either direction.   Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Yesterday we said our bias was neutral and  the Dow closed down 112 points.  So what happened?  The ADP Jobs report came out and set the tone for the trading day.  Today we have the ECB Minimum Bid Rate and if you recall last month Mario Draghi held a press conference that took everyone by surprise.  The USD shot up, the Euro went down and the US markets took a beating.  Today we have that concern plus Unemployment Claims and Ben Bernanke speaking at 10:30 AM EST.  This lends itself to a volatile session.  As a trader I would wait until the news was reported and allow the market to give us a sense of direction.
 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.  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 94.18 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 93.00 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:
- Sequester spending cuts to commence March 1st.
- Debt Ceiling in the May time frame.   
-  European Contraction


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 Ben Bernanke finishes speaking and the markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:    
http://www.forexcrunch.com/ramifications-of-a-brics-world-bank/
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.