Looks like quite a number of posts over the weekend which had nothing to do with trading. It amazes me as to how people get upset with each other without even knowing each other. Well discretionary traders are a passionate bunch and stuff like this happens here and there. James posted his charts. Bill apparently was talking about something else but it looked like he was making fun of James charts and confusion follows. The same thing happens in trading. Trading is all about looking at a given set of information/data and then acting upon on it..

Now back to trading. The sole purpose of this thread and futures.io (formerly BMT) in general.

#1) Short at NY open.

#2) Had to reverse and go long. Unfortunately $ strength forced me to cut down long position size.

Chart update from last week, same exact price zones as prior charts. The 50.70 level is still an active area of interest.

Trades for this morning: Long on the 30 minute BB breakout up, Short on reversal down off 50.70 . Currently flat.

CORRELATIONS.

mfbreakout 

CORRELATIONS.

What are you correlating?
Prices? Prices Changes? or Log Price Changes?

SMCJB 

What are you correlating? Prices? Prices Changes? or Log Price Changes?

Rocking Returns is the title of the correlations chart.

Inverse correlations between commodity markets and USD remains surreal. Going back to when #Deflation’s Dominoes started to become readily apparent (let’s use 180-days ago) here are 4 big correlations to keep in mind:



USD vs CRB Commodities Index -0.98
USD vs WTI Oil -0.96
USD vs. Gold -0.55
USD vs SP500 +0.69

In other words, #StrongDollar has perpetuated both Oil and Commodity #Deflation. And now the US stock market is looking for some love from the bond market (or the lack thereof), because both USD + #RatesRising would force funds out of Treasuries.

As far as I can see, crude also well correlated (inversely) to USA and TYA.

Nonetheless, in short term gas and disty are better correlated to Brent than WTI.

Alphachase 

Nonetheless, in short term gas and disty are better correlated to Brent than WTI.

That makes sense since RB and HO are contracts that are based upon NYH, and as such represent North Atlantic pricing rather than MidWest pricing. If we had an LLS (Louisiana Light Sweet) Contract it would also probably correlate higher with Brent than WTI.

mfbreakout 

because both USD + #RatesRising would force funds out of Treasuries.

Sorry, but I disagree slightly. Higher yields always mean higher returns. And treasuries have also another upside - they can be held as collateral almost everywhere. Depends on global economy situation (and US inflation rates), treasuries may be in high demand for a very long time regardless of how strong the dollar is (unless interest rates jump significantly).

SMCJB 

That makes sense since RB and HO are contracts that are based upon NYH, and as such represent North Atlantic pricing rather than MidWest pricing. If we had an LLS (Louisiana Light Sweet) Contract it would also probably correlate higher with Brent than WTI.

Exactly. Product exports also add to that. I always try to keep an eye on vessel map. And LLS always correlates higher to Brent. Even Argus thinks so

CME Group :- Oil Collapse: Winners and Losers
9 Mar 2015
By Erik Norland

The Geopolitical and Economic Consequences of Lower Oil Prices
Since June 30, 2014, crude oil prices have been nearly halved (Figure 1). Still, the direction of oil prices is uncertain and there is a very real possibility that they may remain low for several years. Despite advances in alternative fuels and efforts at conservation, oil remains the life blood of the world economy and essentially the only meaningful transportation fuel. As such, lower oil prices will have enormous economic and political consequences that will be felt globally in a variety of ways...

https://www.cmegroup.com/education/featured-reports/oil-collapse-winners-and-losers.html