Another dead cat bounce

USD: Jun '25 is Up at 98.960.  

Energies: Jun '25 Crude is Up at 64.21.

Financials: The Jun '25 30 Year T-Bond is Higher by over 50 ticks and trading at 115.08.

Indices: The Jun '25 S&P 500 emini ES contract is 532 ticks Higher and trading at 5447.00.

Gold: The Jun'25 Gold contract is trading Down at 3346.20

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not 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 Higher which is not correlated. Gold is trading Lower 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 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 Higher with the exception of the Nikkei and Aussie exchanges.  All of Europe is trading Lower with the exception of the London exchange which is fractionally Higher.

Possible challenges to traders

• FOMC Member Goolsbee Speaks at 9 AM EST.  This is Major.

• FOMC Member Waller at 9:35 AM EST.  This is Major.

• Flash Manufacturing PMI is out at 9:45 AM EST.  This is Major.

• Flash Services PMI is out at 9:45 AM EST.  This is Major.

• New Home Sales is out at 10 AM EST.  This is Major.

• Crude Oil Inventories is out at 10:30 AM EST.  This is Major.

• Beige Book is out at 2 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.

Yesterday the ZT climbed Higher at around 7 AM EST with no news pending.  The Dow slid Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 7 AM EST and the ZT moved 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 20 plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of BarCharts

ZT -Jun 2025 - 4/22/25

Dow - Mar 2025- 4/22/25

Bias

Yesterday we gave the markets a Neutral bias, but the markets veered to the Upside from the Opening Bell onwards.  The Dow gained 1,057 points, and the other indices gained ground 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

So, yesterday the Dow gained over 1,000 points and some traders are thinking "we're saved, this is the turnaround."  Well, not so fast.  Yesterday was One Day Down, Next Day Up and yesterday was the "UP".  Unfortunately, this may very well be a one-day scenario as the markets have been acting that way presently.  Trump is still critizing Fed Chair Powell, but Powell (rightly) will not budge.  He will lower rates when the time is right to do so and not a moment more.    Want to learn Market Correlation and determine market direction hours before the Opening Bell?