A lower market

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is Up at 101.560.

Energies: Dec '26 Crude is Up at 101.10.

Financials: The Dec '26 30 Year T-Bond is Lower by 1 tick and trading at 107.23.

Indices: The Sep '26 S&P 500 emini ES contract is 74 ticks Lower and trading at 7686.00.

Gold: The Dec'26 Gold contract is trading Down at 4039.20.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Up which is not normal, but 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 Down which is 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 goes Up the other goes Down. Asia traded Mixed. Europe is trading Mixed as well.

Possible challenges to traders

Flash Mfg. PMI is out at 9:45 AM EST. Major.
Flash Services PMI is out at 9:45 AM EST. Major.
Revised UoM Consumer Sentiment is out at 10 AM EST. Major.
Revised UoM Inflation Expectations is out at 10 AM EST. Major.

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.

Yesterday the two year dived Lower at around 7:30 AM EST with no major news pending. 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 7:30 AM EST and the Dow climbed Higher 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 is now Dec '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

Yesterday the markets dived Lower. The Dow dropped 112points, and the other indices gained ground as well. Today our bias is to the Downside.

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

Commentary

Yesterday crude oil inventories came in Higher than expected. The markets as a result rose. I suppose with all the talk of depleting crude oil inventory this was received as positive news for the markets.

Author

Nick Mastrandrea

Market Tea Leaves

Nick Mastrandrea over 20 years experience in trading and formerly held a NASD Series 7. He currently holds a NJ Life, Health and Variable Authority. Nick is a published writer and his work has appeared in Futures Magazine, TraderPlanet and others.

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