There’s something about my process you might not expect. I wouldn’t call myself a commodities trader, a bond trader, or a futures trader.
But every morning, without fail, I review a full list of commodities and futures before I do anything else.
The interesting part? I rarely trade them.
This step isn’t about execution – it’s about perspective. It’s how I gauge the broader market environment before making any decisions in equities.
Today, I want to share my list.
These are the first things I take a look at in the market when I wake up to see what I missed while I was sleeping.
First, it’s the stock market futures. They trade all night, and markets all over the world have been open, and by 5:30 am to 6 am ET, some have already closed.
Remember, the United States is the last market to open and the last to close, every day and every week.
I’m looking at where the S&P 500 Futures (ES), the Nasdaq Futures (NQ), the Dow Futures (YM), and the Russell 2000 Futures (RTY) are.
I also include in my quick peak at the equity market the German DAX (DAX), the Japanese Nikkei (NIKK), and China’s Shanghai Composite (SSEC) for global perspective.
Remember, it’s a stock market, not just a United States stock market.
You can probably include the Bitcoin (BTC) and Ethereum (ETH) as part of my “equities” catch-up, even though they’re cryptocurrencies. And, usually, I’ll include one or two more coins in my morning check-in, depending on my exposure at the time.
At that point, I move on to intermarket analysis. This is where I scroll down to see what Gold (GC) and Silver (SI) and Crude Oil (CL) and Copper (HG) futures are up to.
Then I get to forex markets, the biggest of them all. The liquidity in these markets is a major contributing factor to changes in stock prices over time.
Included in my currency catch-up are U.S. Dollar Index Futures (DX), of course, but also the Euro (EUR), the Yen (JPY), the Aussie (AUD), and, usually, the Mexican Peso (MXN), one of the bellwethers of the emerging market currency complex.
For bonds, I like to keep it simple. I’m mostly interested in 10-year U.S. Treasury Note (ZN) and 30-year Treasury Bond (ZB) futures. That’s enough for this particular part of my process. I have to know what interest rates are doing. A quick peek at the bond futures lets me know right away.
Finally, I like to take a look at Cboe Volatility Index (VIX) futures, just to see what the market is pricing in for volatility so far that morning.
Usually by the time I get to this part of the order, I can probably already tell you where the VIX is based on what all those other assets are doing at the time.
But it’s on the list and definitely gets a look.
Depending on what’s got my attention at the time, on occasion I’ll add another asset or two.
That could be things like Platinum (PL) or Natural Gas (NG), for example, or perhaps it could be another currency like the Canadian Dollar (CAD) or the Brazilian Real (BRL).
It could be another cryptocurrency, like Solana (SOL) or Ripple (XRP), maybe even CryptoPunk floor prices. “Punks” are one of the non-fungible token (NFT) projects I trade, as well as an extension of the Ethereum market.
Now I’m caught up. It’s time to make breakfast for the kids, go for a run, or get to work.
This list varies from here to there, but the majors have been the same for a long time. And they’re not going to leave the list anytime soon, probably ever.
So it’s fixed, but it’s also evolving. Natural Gas, for context, used to be on the list a lot more in my younger days. And Bitcoin wasn’t on it until more recent years.
I encourage you to make your own list. Maybe you might include shorter-duration bonds, if that’s something that interests you.
Maybe you’re in the midwest and are more interested in what Corn or Soybeans are doing, and that’s how you feel caught up.
There’s no right or wrong way to do this.
It’s all about catching up and answering the age-old question, “What did I miss?”
This Week in Everybody’s Wrong
On Monday, we returned to one of the most important stock market lessons I’ve ever learned.
Shout-out to my friend and mentor Ralph Acampora.
And don’t fight Papa Dow, ever…
On Tuesday, we talked about Gold and how to trade it without turning it into some kind of icon.
It’s cool, I used to be a “gold bug” back in the day.
But the yellow metal is a trade, not a religion.
On Wednesday, we took a little detour and rode some waves.
Elliott Waves, that is, and spending that time led me to old friends, fresh insight, and a new trade idea.
This is what I mean when I say “good process is the key to long-term success in the market”…
On Thursday, we learned about “margin debt.”
Everybody’s upset because margin debt just crossed the $1 trillion mark for the first time in history.
Guess what: Everybody’s wrong about what it means…
On Friday, we toured Europe and its financial institutions.
Did you know Deutsche Bank is up more than 100% year to date?
Wouldn’t you know it, economists are having a hard time coping with markets – again.
On Saturday, we welcomed back Sam Gatlin for a look at the PNW and Vegas as well as airline and sports-betting stocks.
A little bit of natural beauty, a little bit of human frailty, and some trend-following…
Here’s Sam with a solid reflection on positioning and price action.
Have a great Sunday.
We’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs