Markets veer to the upside
|USD: Mar '26 is Down at 97.130.
Energies: Mar '26 Crude is Up at 63.81.
Financials: The Mar '26 30 Year T-Bond is Lower by 10 ticks and trading at 115.06.
Indices: The Mar '26 S&P 500 emini ES contract is 160 ticks Lower and trading at 6333.00
Gold: The Feb'26 Gold contract is trading Up at 5031.20
Initial conclusion
This is not a correlated market. The USD is Down and Crude is Up which is 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 Higher and Crude is trading Lower which is 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 traded Higher. Currently all of Europe is trading Higher except the London exchange.
Possible challenges to traders
- FOMC Member Waller Speaks at 1:30 PM EST. This is Major.
- FOMC Member Bostic Speaks at 3:15 PM EST. This is Major.
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 climbed Higher at around 8:30 AM EST with Unemployment Claims pending. The Dow dived Lower at around the same time. Look at the charts below and you'll see a pattern for both assets. The ZT dived Lower at around 8:30 AM EST and the Dow climbed Higher 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 Long opportunity on the 2-year note, as a trader you could have netted about a dozen plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT and YM are both Mar '26. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.
Charts courtesy of BarCharts
ZT -Mar 26 - 2/06/26
Dow - Mar 2026- 2/06/26
Bias
On Friday we gave the markets a Neutral or Mixed bias, but the markets veered to the Upside with all indices closing Higher. Today we aren't dealing with a correlated market and our bias will remain Neutral or Mixed.
Could this change? Of Course. Remember anything can happen in a volatile market.
Commentary
On Friday the markets veered Higher with the Dow closing 1,207 points Higher and the other indices closed Lower as well. Want to learn Market Correlation and determine market direction hours before the Opening Bell?
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