A nearly down day

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 100.835.

Energies: Oct '26 Crude is Down at 92.88.

Financials: The Dec '26 30 Year T-Bond is Lower by 6 ticks and trading at 104.29.

Indices: The Sep '26 S&P 500 emini ES contract is 76 ticks Higher and trading at 7786.00.

Gold: The Dec'26 Gold contract is trading Up at 4330.80.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Down 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 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 goes Up the other goes Down. All of Asia traded Mixed. All of Europe is trading Lower.

Possible challenges to traders

Durable Goods Orders m/m is out at 8:30 AM EST. Major.
Core Durable Goods is out at 8:30 AM EST. Major.
FOMC Member Schmid Speaks at 9:20 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.
FOMC Member Hammack Speaks at 2 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 ZT dived Lower at around 8 AM EST with Unemployment Claims 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 8 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 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 to the Downside and the markets traded mainly Lower in that the Dow and S&P both traded Lower yesterday. Only the Nasdaq gained ground. Today our bias is to the Upside.

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

Commentary

As the saying goes "what comes up must come down" and the markets almost achieved that yesterday. The Dow fell by 352 points, the S&P by 59 but the Nasdaq ecked out a gain of 3.

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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