2025 ends down

USD: Mar '26 is Up at 98.160.  

Energies: Feb '26 Crude is Down at 57.16.

Financials: The Mar '26 30 Year T-Bond is Lower by 7 ticks and trading at 115.12.

Indices: The Mar '26 S&P 500 emini ES contract is 150 ticks Higher and trading at 6930.00

Gold: The Feb'26 Gold contract is trading Up at 4407.30.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30 Year T-Bond is trading Higher.  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 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 traded Mixed.  Currently all of Europe is trading Higher.

Possible challenges to traders                                              

• Final MFG PMI is out at 9:45 AM EST. This is Major.
• FOMC Member Paulson Speaks at 10:15 AM EST. This is Major.
• FOMC Member Paulson Speaks at 2:30 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 Wednesday the ZT dived Lower at around 8:30 AM EST with no real news items pending at that time. The Dow Climbed Higher 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 Short 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

Bias

On Wednesday we gave the markets a Downside bias and the markets didn't disappoint. The indices veered to the Downside and The Dow closed Lower by 304 points. The other indices closed Lower as well. Today we aren't dealing with a correlated market, and our bias is to the Upside.

Could this change? Of Course.  Remember anything can happen in a volatile market.

Commentary

The markets dived Lower on Wednesday despite no early close. It was only to be expected as the markets were tired and needed a rest. Let us hope that 2026 will be a better year for all of us.