A mixed day

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is Down at 102.155.

Energies: Nov '26 Crude is Down at 91.80.

Financials: The Dec '26 30 Year T-Bond is Higher by 24 ticks and trading at 103.29.

Indices: The Sep '26 S&P 500 emini ES contract is 20 ticks Higher and trading at 7863.00.

Gold: The Dec'26 Gold contract is trading Up at 4210.90.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Down which is not normal, but 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 Up 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 goes Up the other goes Down. Asia traded Lower. All of Europe is trading Higher at the present time.

Possible challenges to traders

NFIB Small Business Index is out at 6 AM EST. Major.
ADP Weekly Employment Change is out at 8:15 AM EST. Major.
Existing Home Sales is out at 10 AM EST. Major.
FOMC Member Barkin Speaks at 1 PM 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 climbed Higher at around 8:30 AM EST with no real news 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 climbed Higher at around 8:30 EST and the Dow dived Lower 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 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 our bias was Neutral or Mixed and the markets didn't disappoint. The Dow closed Higher on the session by 166 points but the other indices dived Lower. Today our bias is to the Upside.

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

Commentary

Yesterday was Columbus Day in the United States with the Bond market closed, today it is open.

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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