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.

Pre-Market Global Review - 4/3/13 - Motor Vehicles Move Markets

Good Morning Traders,
 
As of this writing 5:15 AM EST, here’s what we see:
 
US Dollar –Down at 83.055 the US Dollar is down 37 ticks and is trading at 83.055 
Energies – May Oil is down at 96.84.
Financials – The June 30 year bond is up 2 ticks and is trading at 144.16. 
Indices – The June S&P 500 emini ES contract is up at 1567.25 and is up 11 ticks.
Gold – The June gold contract is trading down at 1569.30 and is down 64 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 and the 30 year bond is trading higher.  The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa.  The indices are up and the US dollar is trading lower which is correlated.  Gold is trading lower which is not correlated with the US dollar trading down.   I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down.   I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong.  As traders you need to be aware of this and proceed with your eyes wide open. 

Asia with the exception of the Nikkei and Singapore closed lower.  As of this writing all of Europe is trading lower.
 
Possible challenges to traders today is the following

1.  ADP Non-Farm Payroll is out at 8:15 AM EST.  This is major.
2.  ISM Non-Manufacturing PMI is out at 10 AM EST.  This is major.    
3.  Crude Oil Inventories are out at 10:30 AM EST.  This will move the crude markets.     

Yesterday we said our bias was to the upside because the markets were nearly correlated and Europe was back after a 4 day weekend.  The net result being that the Dow closed 89 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.  We have the ADP Non-Farm Payroll report out at 8:15 AM EST and this alone can set the tone for the trading day.   Could this change? Of Course.  Remember anything can happen in a volatile market.
Yesterday we said our bias was to the long side and the Dow closed up 89 points.  So what happened?  Vehicle sales came in better than expected.  Ford came in up 5.7% in March over the same period last year, Chrysler came in 5.0% higher and GM came in 6.4% higher.  Mind you that this was with a payroll tax increase that started in January.  To lend credence to this Japan's Nikkei index closed 359 points higher.  Today we have the ADP Non-Farm payroll report and this is sure to be a market mover.  I believe that it will set the tone for the trading session today.  As a trader I would be mindful of this report and watch the indices carefully.

 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 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 95.91 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 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 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 10:30 AM when the crude inventories are released and the markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:  
http://www.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 - 4/2/13 - Easter Monday Mauls Markets

Good Morning Traders,
 
As of this writing 5:50 AM EST, here’s what we see:
 
US Dollar –Down at 82.8800 the US Dollar is down 19 ticks and is trading at 82.880
Energies – May Oil is up at 97.08.
Financials – The June 30 year bond is down 2 ticks and is trading at 144.26. 
Indices – The June S&P 500 emini ES contract is up at 1562.00 and is up 24 ticks.
Gold – The April gold contract is trading down at 1597.70 and is down 23 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 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 down and the US dollar is trading lower which is not correlated.  Gold is trading lower which is not correlated with the US dollar trading down.   I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down.   I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong.  As traders you need to be aware of this and proceed with your eyes wide open. 

Asia with the exception of the Nikkei and Shanghai closed higher.  As of this writing all of Europe is trading higher.
 
Possible challenges to traders today is the following

1.  Factory Orders are out at 10 AM EST.  This is major.
2.  IBD/TIPP Economic Optimism is out at 10 AM EST.  This is not major.   3.  Total Vehicle Sales are out all day.  This is major.     

Yesterday we said our bias was to the upside because historically speaking, the US markets tend to gravitate to the high side after a holiday.  Whereas the markets did open higher and were on a path to the high side, the Dow down 6 points.  Today we are dealing with a nearly correlated market and the only missing ingredient is Gold.  If Gold were trading higher I would say it completely correlated.  Our bias today is to the high side as Europe is now open after a 4 day weekend and all of Europe is trading higher.  Could this change? Of Course.  Remember anything can happen in a volatile market.

Yesterday we said our bias was to the long side yet the Dow closed down 6 points.  So what happened?  ISM Manufacturing numbers came in lower than expected and immediately thereafter the markets went down and did not advance.  This plus the fact that volume was down due to Easter Monday and the European exchanges weren't open didn't help matters much.  Today we do expect the markets to advance as Europe is now open and trading higher plus market correlation is calling for a higher open.  We do have economic reports that can move the markets but the major news will be vehicle sales.  We expect vehicle sales to be higher but we'll have to monitor and see.  Remember anything can happen in a volatile market.
  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 95.92 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 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 - 4/1/13 - Easter Monday

Good Morning Traders,
 
As of this writing 5:20 AM EST, here’s what we see:
 
US Dollar – Down at 83.085 the US Dollar is down 90 ticks and is trading at 83.085.  
Energies – May Oil is down at 96.74.
Financials – The June 30 year bond is down 3 ticks and is trading at 144.12. 
Indices – The June S&P 500 emini ES contract is down at 1560.00 and is down 11 ticks.
Gold – The April gold contract is trading up at 1592.20 and is up 24 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 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 down and the US dollar is trading lower 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 Indian Sensex closed lower.  Europe is closed for the Easter Monday Bank Holiday. 
 
 
Possible challenges to traders today is the following

1.  Final Manufacturing PMI is out at 9 AM EST.  This is major.
2.  ISM Manufacturing PMI is out at 10 AM EST.  This is major.  
3.  Construction Spending is out at 10 AM EST.  This is major.  
4.  ISM Manufacturing Prices are out at 10 AM EST.  This is major. 

 
On Thursday we said our bias was neutral because the markets weren't correlated yet we had major economic news that could drive the markets in any direction.  Today we aren't dealing with a correlated market but do have economic news that can set the direction.  Historically speaking the US markets tend to advance after a 3 day holiday, hence our bias is to the long side side today.  Could this change? Of Course.  Remember anything can happen in a volatile market.

Today is Easter Monday in Europe and hence the markets are closed.  In the US we do have major economic news so the focus will be on that news as no European market to piggy back off of.  The US markets historically tend to advance after a holiday as there is pent-up demand in the markets due to that holiday.  The United States is behind the rest of the world when it comes to holidays and granting employees paid time off.  Today it takes an act of Congress to create a holiday there are no laws that mandate how much vacation time is allowed.  Typically employers in the US provide two weeks as usual and customary but there is no law that the employees must be paid for it.  I know employers that only grant 1 week of paid time off after a year.  In pre-20th Century America the idea was that in order for the US to maintain it's competitive edge in the world markets, US factories and stores would be open on what is considered a traditional holiday.  What would anyone say about that "competitive edge" today?  I once worked for a German owned software company that provided 6 weeks of vacation and about a month of paid holidays.  Shocking here but who can dispute Germany's productivity?
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 because of a holiday.  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 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 96.26 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 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/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.