Pre-Market Global Review - 5/8/13 - Interview with Markus Heitkoetter

Good Morning Traders,
 
As of this writing 5:05 AM EST, here’s what we see:
 
US Dollar –Down at 82.155 the US Dollar is down 180 ticks and is trading at 82.375.             
Energies – June Oil is up at 95.71.        
Financials – The June 30 year bond is up 2 ticks and is trading at 146.10.      
Indices – The June S&P 500 emini ES contract is down at 1620.00 and is down 2 ticks.  
Gold – The June gold contract is trading up at 1454.40 and is up 56 ticks from its close.
 
Initial Conclusion: This is not a correlated market.  The dollar is down- and oil is up+ which is  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 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 higher.  As of this writing Europe is trading higher.
 
  Possible challenges to traders today is the following            
1.  FOMC Member Stein speaks at 8:30 AM EST.  This is not major.        
2.  Crude Oil Inventories are out at 10:30 AM EST.  This will move the crude markets.      
3.  10 Year Bond Auction to start at 1 PM EST.
 
Yesterday we said our bias was to the upside because the USD was down and Asia/Europe closed to the upside.  Yesterday we also discussed the Dow regaining the 15,000 mark and it did so by closing 87 points higher to 15,056.  If the rule of 3 has any bearing we should know by the end of today or tomorrow if the rally is real.  Today the markets aren't correlated however our bias is to the upside.  Why?  The USD is trading lower which is bullish for the markets.   Asia closed higher and currently Europe is trading higher.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 

Today's edition is titled Interview with Markus Heitkoetter.  Now many of you may be asking who is Markus Heitkoetter?  Markus is the CEO of Rockwell Trading and been an advocate of trader education, coaching and mentoring.  Markus is not a native born American but was raised in Germany (believe me you'll tell when he speaks) and liken to myself came from the Technology Arena.  Markus does not use any exotic indicators but rather likes to keep it simple.  He advocates indicators that can be used on any trading platform.  We spoke for some time on Wednesday May 1st and I've included that video as part of Market Tea Leaves.  Markus is living proof that anyone with the right mindset, desire and tenacity can be a successful trader.  He offers a 296 page eBook that can be viewed on the Rockwell Trading website.  It's entitled "The Complete Guide to Day Trading"  I recall when Markus started Rockwell years ago and was always impressed with the focus on coaching and paying attention to detail.  Once again our friends at TradersLog have agreed to publish the article and it can be viewed at:

http://www.traderslog.com/interview-with-markus-heitkoetter/

The video can be viewed at:

http://youtu.be/i-mIumI6ptU

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 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.  
 


As I write this the crude markets are trading higher and the US Dollar is declining.  This is normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. On Friday June crude dropped to a low of 94.94 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 92.00 a barrel and resistance at 98.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump.


Future Challenges:
- Budget Battle - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is declining.  This is normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes.  If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right.  If you feel compelled to trade consider doing so after 10:30 AM when the inventory numbers 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/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us
http://www.forexcrunch.com/jobs-report/

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.

For previous issues feel free to visit our archives. 

Pre-Market Global Review - 5/7/13 - Will the Dow Retain 15,000?

Good Morning Traders,
 
As of this writing 6:00 AM EST, here’s what we see:
 
US Dollar –Down at 82.375 the US Dollar is down 3 ticks and is trading at 82.375.             
Energies – June Oil is down at 95.56.        
Financials – The June 30 year bond is up 4 ticks and is trading at 146.20.      
Indices – The June S&P 500 emini ES contract is up at 1614.50 and is up 4 ticks.  
Gold – The June gold contract is trading down at 1461.40 and is down 66 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 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. 
All of Asia closed higher.  As of this writing Europe is trading higher.
 
  Possible challenges to traders today is the following            
1.  IBD/TIPP Economic Optimism is out at 10 AM EST.  This is not major.        
2.  Consumer Credit is out at 3 PM EST.  This is not major.      
3.  Treasury Secretary Lew speaks at 4 PM.  After-market.

 
Yesterday we said our bias was to the upside because with the exception of the USD the markets were correlated as such.  Whereas the Dow closed 5 points lower the NASDAQ and the S&P gained.  Today the markets aren't correlated however our bias is to the upside.  Why?  The USD is trading lower which is bullish for the markets.   Asia closed higher and currently Europe is trading higher.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 

The question that comes to mind is will the Dow retain/regain the 15,000 level?  Will it exceed it?  This is difficult to say as the Smart Money will have you believe that markets can go up indefinitely with no end in sight.  This is completely unrealistic and the "stuff" the Smart Money fed us during the dot-com boom of the late 1990's.  Back then it seemed as if there was no end in sight.  As a trader you should ask yourself a question.  When you see resistance at a certain level and the market tries 3 three times to exceed that level, but doesn't, what happens?  You guessed it.  The market retreats.  The rule of thumb used to be that in order to be called a rally the market had to advance 3 days in a row.  The term used to be does the market have legs?  Today one day is considered a rally.  My take is if the market wanted to retreat, it would have done so yesterday.  So we're not at the point of tossing the towel in, so to speak.  Time will tell if 15,000 represents the new resistance point for the Dow.  As always, we'll have to monitor and see.

 As readers are probably aware I don't trade equities.   While we're on this discussion, let's define what is meant by a good earnings report.  A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance.  Any falloff between earning per share or forward guidance will not bode well for the company's shares.  This is one of the reasons I don't trade equities but prefer futures.  There is no earnings reports with futures and we don't have to be concerned about lawsuits, scandals, malfeasance, etc.
 
Anytime the market isn't correlated it's giving you a clue that something isn't right and you should proceed with caution. Today our bias is to the upside.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:

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

As I write this the crude markets are trading lower and the US Dollar is 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 June crude dropped to a low of 94.88 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 92.00 a barrel and resistance at 98.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 



Future Challenges:
- Budget Battle - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading lower and the US Dollar is declining.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes.  If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right.  If you feel compelled to trade consider doing so after 10 AM when the  markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:      
http://www.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/
http://www.investing.com/analysis/tech-bellwethers:-less-than-stellar-earnings-164880

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.

Pre-Market Global Review - 5/6/13 - Jobs Report?

Good Morning Traders,
 
As of this writing 5:30 AM EST, here’s what we see:
 
US Dollar –Up at 82.240 the US Dollar is up 45 ticks and is trading at 82.240.             
Energies – June Oil is up at 96.32.        
Financials – The June 30 year bond is down 2 ticks and is trading at 147.00.      
Indices – The June S&P 500 emini ES contract is up at 1609.50 and is up 4 ticks.  
Gold – The June gold contract is trading up at 1473.00 and is up 88 ticks from its close.
 
Initial Conclusion: This is not a correlated market.  The dollar is up+ and oil is up+ 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 higher which is not correlated with the US dollar trading down.   I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down.   I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong.  As traders you need to be aware of this and proceed with your eyes wide open. 
Asia closed up with the exception of the Nikkei which was closed for a bank holiday.  As of this writing half of Europe is trading lower with the exception of London which again is closed for a bank holiday.
 
  Possible challenges to traders today is the following            
1.  No major economic news.         
2.  Lack of economic news.      
3.  Loan Officer Survey.  This is not major news.
On Friday we said our bias is neutral which means the markets can go in any direction. The net result?  The Dow closed up 142 points and hit an all time high exceeding 15000.  Today the markets aren't correlated however our bias is to the upside.  Why?  The Bonds are trading lower which is bullish for the markets, Gold is trading higher and Crude is trading higher.  Asia closed higher and currently Europe is trading lower.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Jobs Friday came and went, apparently the US economy created 165,000 net new jobs versus 146,000 expected.  Whereas this is good news as I look behind the report it leads me to wonder.  At the same time Wall Street was popping the champagne cork over this report, Non-Manufacturing PMI came in at 53.1 versus 54.1 expected.  Factory Orders dropped to -4% versus -2.8% expected.  So I have to wonder where all these jobs came from given the fact that the American worker lost 2 percent as the payroll tax holiday is over.  Weekly income rose 4 cents an hour and in the past 12 months has only risen 1.9%, this is not enough to even keep up with inflation.  Another aspect of this report is the long term unemployed are not being counted.  When you factor that in the real unemployment rate is 13.9% versus the official rate of 7.5%.  In order to achieve true prosperity in the United States we need to create 250,000 net new jobs a month for an extended period of time.  I just wish the folks in DC spent more time concerning themselves with economic growth versus the social issues they keep on debating about.

As readers are probably aware I don't trade equities.   While we're on this discussion, let's define what is meant by a good earnings report.  A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance.  Any falloff between earning per share or forward guidance will not bode well for the company's shares.  This is one of the reasons I don't trade equities but prefer futures.  There is no earnings reports with futures and we don't have to be concerned about lawsuits, scandals, malfeasance, etc.
 
Anytime the market isn't correlated it's giving you a clue that something isn't right and you should proceed with caution. Today our bias is to the upside.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:

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

As I write this the crude markets are trading higher and the US Dollar is 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. On Friday June crude dropped to a low of 93.59 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 92.00 a barrel and resistance at 98.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 



Future Challenges:
- Budget Battle - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is advancing.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes.  If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right.  If you feel compelled to trade consider doing so after 10 AM when the  markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:      
http://www.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/
http://www.investing.com/analysis/tech-bellwethers:-less-than-stellar-earnings-164880

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.

Pre-Market Global Review - 5/3/13 - Jobs Friday

Good Morning Traders,
 
As of this writing 5:20 AM EST, here’s what we see:
 
US Dollar –Down at 82.030 the US Dollar is down 252 ticks and is trading at 82.030.             
Energies – June Oil is down at 93.70.        
Financials – The June 30 year bond is down 4 ticks and is trading at 149.02      
Indices – The June S&P 500 emini ES contract is down at 1589.75 and is down 10 ticks.  
Gold – The June gold contract is trading up at 1475.90 and is up 83 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 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 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 mixed with half the exchanges closing higher and the other half lower.  As of this writing half of Europe is trading higher and the other half 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.  Average Hourly Earnings are out at 8:30 AM EST. This is major.
4.  ISM Non-Manufacturing PMI is out at 10 AM EST.  This is major.   5.  Factory Orders are out at 10 AM EST.  This is major.   6.  FOMC Member Tarullo speaks at 12:30 PM EST. 

Yesterday we said our bias is neutral which means the markets can go in any direction. The net result?  The Dow closed up 131 points.  What I see is a market that cannot make up it's mind in terms of direction.  Asia closed mixed and currently Europe is doing the same.  We have the monthly Jobs Report that can serve to drive the markets in any direction today.  Hence our bias is neutral, as the markets today can go anywhere.  Could this change? Of Course.  Remember anything can happen in a volatile market.
 
Today we have the all important Jobs Report which will show if the US economy is gaining traction or becoming stale.  Yesterday we had a slew of economic reports that were good.  Challenger Job Cuts came in much less than expected, Unemployment Claims came in 324K vs 346 expected, Non-Farm Productivity was up and even the ECB reduced the minimum bid rate by 25 points.  Hence the Dow regained 131 points which made up for Wednesday's loss.  Now the call for today's job's numbers is a gain of 146,000 with the unemployment rate remaining at 7.6%.  Of course, if this number remains the same the pundits and analysts will say "see, there's nothing wrong with the economy" or "people have given up searching for work."  These are the most ridiculous things I've ever heard of.  No one is unemployed because they want to be.  Case-in-point right next door to me are two youngsters; one is 25 and the other 23.  They both have 4 year degrees and one is pursuing a Masters.  Neither one of these people are unemployed because they want to be.  Both graduated college with the intent of finding work, yet neither one of them has ever held a job.  Why?  Because they've given up looking?  No.  They have no practical experience.  I'm sure you all know people like this or have heard similar stories.  One thing is for certain, this Jobs Report will bear testament to the sequester being a DC folly.  We will know if the sequester will serve to slow down economic growth in the US. 

As readers are probably aware I don't trade equities.   While we're on this discussion, let's define what is meant by a good earnings report.  A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance.  Any falloff between earning per share or forward guidance will not bode well for the company's shares.  This is one of the reasons I don't trade equities but prefer futures.  There is no earnings reports with futures and we don't have to be concerned about lawsuits, scandals, malfeasance, etc.
 
Anytime the market isn't correlated it's giving you a clue that something isn't right and you should proceed with caution. Today our bias is neutral.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:

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

As I write this the crude markets are trading lower and the US Dollar is declining.  This is not normal.  Think of it this way.  If the stock market is trading lower, it's safe to assume that the crude market will follow suit and vice versa.  Crude trades with the expectation that business activity is expanding.  The barometer of which is the equities or stock market.  If you view both the crude and index futures side by side you will notice this. Yesterday June crude dropped to a low of 90.25 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 90.00 a barrel and resistance at 95.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 



Future Challenges:
- Budget Battle - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading lower and the US Dollar is declining.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes.  If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right.  If you feel compelled to trade consider doing so after 10 AM when the  markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:      
http://www.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/
http://www.investing.com/analysis/tech-bellwethers:-less-than-stellar-earnings-164880

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.

Pre-Market Global Review - 5/2/13 - Will ECB Torpedo US Markets?

Good Morning Traders,
 
As of this writing 4:50 AM EST, here’s what we see:
 
US Dollar –Up at 81.720 the US Dollar is up 198 ticks and is trading at 81.720.             
Energies – June Oil is up at 91.02.        
Financials – The June 30 year bond is down 2 ticks and is trading at 149.02      
Indices – The June S&P 500 emini ES contract is up at 1581.25 and is up 16 ticks.  
Gold – The June gold contract is trading up at 1454.5 and is up 83 ticks from its close.
 
Initial Conclusion: This is not a correlated market.  The dollar is up+ and oil is up+ 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 up and the US dollar is trading higher which is not correlated.  Gold is trading higher which is not correlated with the US dollar trading up.   I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down.   I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong.  As traders you need to be aware of this and proceed with your eyes wide open. 
Asia closed mixed with half the exchanges closing higher and the other half lower.  As of this writing half of Europe is trading higher and the other half lower.
 
  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 to start at 8:30 AM EST. This is major.
4.  Unemployment Claims are out at 8:30 AM EST.  This is major.  
5.  Trade Balance is out at 8:30 AM EST.  This is major.  
6.  Preliminary Non Farm Productivity is out at 8:30 AM EST.  This is not major.  
7.  Preliminary Labor Costs are out at 8:30 AM EST.  This is not major.  
8.  Natural Gas Supplies are out at 10:30 AM EST.  This will move the nat gas market.

Yesterday we said our bias is neutral which means the markets can go in any direction. The net result?  The Dow closed down 139 points.  What I see is a market that cannot make up it's mind in terms of direction.  Asia closed mixed and currently Europe is doing the same.  We have an extraordinary number of reports that can serve to drive the markets in any direction today.  Hence our bias is neutral, as the markets today can go anywhere.  Could this change? Of Course.  Remember anything can happen in a volatile market.

Well the FOMC meeting came and went and as we suspected the Fed did not raise the FFR.  Today the ECB will decide on their Minimum Bid Rate, which is the equivalent of our FFR.  The question isn't whether or not the ECB will raise that rate, as we suspect they won't but rather what will they say at the press conference that follows.  Some of you may recall that a couple of months ago the ECB held a press conference and based upon what was said the USD reversed course went up dramatically in a very short period of time.  When that happened it drove the US markets down.  This is market correlation in action as when the dollar goes higher the markets are sure to go lower and they did.  So we need to be mindful on what Mario Draghi will say at this conference.  The ECB will report the Minimum Bid Rate at 7:45 AM EST and the press conference will start at 8:30 AM EST.

As readers are probably aware I don't trade equities.   While we're on this discussion, let's define what is meant by a good earnings report.  A company must exceed their prior quarter's earnings per share and must provide excellent forward guidance.  Any falloff between earning per share or forward guidance will not bode well for the company's shares.  This is one of the reasons I don't trade equities but prefer futures.  There is no earnings reports with futures and we don't have to be concerned about lawsuits, scandals, malfeasance, etc.
 
Anytime the market isn't correlated it's giving you a clue that something isn't right and you should proceed with caution. Today our bias is neutral.  Could this change?  Of course.  In a volatile market anything can happen.  We'll have to monitor and see.  
 
On Friday, April 5th I had the opportunity to interview Carl Weiss from Algo Futures.  We talked at length about his thoughts on the future of the markets and new and upcoming endeavors.  Ultimately this is the story of an American entrepreneur and what he had to go thru to create a solution that can be used by any trader.  If any reader wants to know and is curious about what it takes to be self-made in America, then you need to listen to this.  Additionally our friends at TradersLog.com have graciously published my article on this subject.  It can be viewed at:
 http://www.traderslog.com/interview-with-carl-weiss/      

My interview with Carl can be viewed at:

 

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

As I write this the crude markets are trading 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 June crude dropped to a low of 90.65 a barrel and held.  We'll have to monitor and see if crude either goes lower or holds at the present level.   It would appear at the present time that crude has support at 89.00 a barrel and resistance at 95.  This could change.  All we need do is look at what happened last fall when crude was trading over $100.00 a barrel. We'll have to monitor and see.  Remember that crude is the only commodity that is reflected immediately at the gas pump. 



Future Challenges:
- Budget Battle - ongoing.
- Debt Ceiling in the August time frame.      
- European Contraction - happening now 


Crude oil is trading higher and the US Dollar is advancing.  This is not normal.  Crude typically makes 3 major moves (long or short) during the course of any trading day: around 7 AM EST, 9 AM EST and 2 PM EST when the crude market closes.  If crude makes major moves around those time frames, then this would suggest normal trending, if not it would suggest that something is not quite right.  If you feel compelled to trade consider doing so after 10 AM when the  markets give us better direction.  As always watch and monitor your order flow as anything can happen in this market.  This is why monitoring order flow in today's market is crucial.  We as traders are faced with numerous challenges that we didn't have a few short years ago.  High Frequency Trading is one of them.   I'm not an advocate of scalping however in a market as volatile as this scalping is an alternative to trend trading.

Recently Published Articles:      
http://www.forexcrunch.com/effects-of-sequestrationthus-far/
http://www.forexcrunch.com/obamacare-and-its-impact-on-the-us/
http://www.investing.com/analysis/tech-bellwethers:-less-than-stellar-earnings-164880

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.



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