Correlation Trades Correlating, Kind of; Jobs Data Up Next

Remember those correlation trades that were discussed at length yesterday and how they weren't exactly correlating?

Well, today, they worked a little better, though they are still skewed against their traditional trading bias.

The Euro was flattened today, hitting a new 12-month low against the US Dollar, and, for a while, that seemed to be working as US stocks were down heavily in morning trading, but, as soon as Europe's equity markets closed at 11:30 am ET, stocks began drifting upwards, and the momentum stocks on the NASDAQ actually finished with healthy gains while the S&P and Dow (which had been down as much as 134 points earlier) finished basically flat.

With the Euro hitting below 1.28 to the dollar, the Dollar Index responded with a one percent gain (80.949, +0.818), reaching a one-year high. That sent oil prices lower, as it should, despite the continuing wagging of tongues by both the Iranians and the leaders of the EU. While the EU's move to embargo all shipments of oil from Iran to Europe, is a bit of a dodgy move (Iran's exports to Europe only account for 20% of their oil exports), so too is Iran's statement that they can and will shut down the shipping lanes through the Strait of Hormuz.

It looks like the classic Mexican standoff, with the US pointing its guns directly at the Iranians. The Europeans will likely go through with their threatened sanctions, but the Iranians will probably not want to evoke the ire of the United States, because that would produce something along the lines of World War III, even though that may be what Iran wants and the rest of the (un)civilized world needs.

Europe's woes continue non-stop, with the ultimate Ponzi scheme of the banks buying sovereign debt, and the ECB financing the banks. It's the most disingenuous way of dealing with a solvency crisis - by adding layers and layers of liquidity - and it eventually will either spark runaway inflation, riots, government overthrow or the breakup of the European Union, and it's possible that all of the above could occur.

As for gold and silver, they were back in tandem, though with the higher dollar, they both should have been lower, instead of up, which they were, supposedly on global tensions and safe-haven status.

The other news of the day involved US employment figures from ADP, which reported a gain of 325,000 private sector jobs in the US, seasonally adjusted. The number was so large, and so far removed from official predictions (guesses), that traders generally ignored them, opting to wait for the equally-well-massaged non-farm payroll report from the BLS tomorrow.

That report, which will be issued at 8:30 am ET, should be a market mover, especially if it aligns well with the ADP number, but skeptics abound, and the estimates are for the US to have added somewhere between 120-175,000 new jobs, which would indicate exactly what? The BLS numbers are guestimates at best, but traders will likely take their cue from whatever blather comes from the Labor Department.

Stay tuned. It's going to get more bizarre as the year progresses.

Dow 12,415.70, -2.72 (0.02%)
NASDAQ 2,669.86, +21.50 (0.81%)
S&P 500 1,281.06, +3.76 (0.29%)
NYSE Composite 7,599.97, -12.18 (0.16%)
NASDAQ Volume 1,859,210,875
NYSE Volume 4,264,649,000
Combined NYSE & NASDAQ Advance - Decline: 3391-2193
Combined NYSE & NASDAQ New highs - New lows: 140-37
WTI crude oil: 101.81, -1.41
Gold: 1,620.10, +7.40
Silver: 29.30, +0.20