A down day
|USD: Sept '25 is Up at 97.550.
Energies: Aug '25 Crude is Up at 69.40.
Financials: The Sep '25 30 Year T-Bond is Lower by 1 tick and trading at 112.28.
Indices: The Jun '25 S&P 500 emini ES contract is 77 ticks Lower and trading at 6280.75.
Gold: The Aug'25 Gold contract is trading Up at 3383.00.
Initial conclusion
This is not a correlated market. The USD is Up and Crude is Up which is not normal, and the 30 Year T-Bond is trading Lower. The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa. The S&P is Lower and Crude is trading Higher which is 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 is Higher except the Nikkei and Sensex exchanges. All of Europe is trading Lower.
Possible challenges to traders
- No Major economic news to speak of.
- Lack of major economic news.
Traders, please note that we've changed the Bond instrument from the 10 Year (ZN) to the 2 Year (ZT). They work exactly the same.
We've elected to switch gears a bit and show correlation between the 2-year Treasury notes (ZT) and the S&P futures contract. The YM contract is the Dow Jones Industrial Average, and the purpose is to show reverse correlation between the two instruments. Remember it's likened to a seesaw, when up goes up the other should go down and vice versa.
On Friday the ZT dived Lower at around 9 AM EST with no eco news pending. The Dow leapt Higher at the same time. Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at 9 AM EST and the ZT dived Lower at around the same time. These charts represent the newest version of Bar Charts, and I've changed the timeframe to a 15-minute chart to display better. This represented a Short opportunity on the 2-year note, as a trader you could have netted about a 12 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for ZT is now Sep '25 and the Dow is now Sep '25. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.
Charts courtesy of barcharts
ZT -Sep 25 - 7/11/25
Dow - Sep 2025- 7/10/25
Bias
On Friday we gave the markets a Downside bias and the markets didn't disappoint. The Dow closed Lower by 279 points and the other indices closed Lower as well. Today our bias is to the Downside.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
On Friday the markets were correlated to the Downside hence the Downside bias. The Dow closed Lower by 279 points and the other indices closed Lower as well.
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