As predicted an upside day

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is up at 102.100.

Energies: Dec '26 Crude is up at 102.31.

Financials: The Dec '26 30 Year T-Bond is Lower by 2 ticks and trading at 107.14

Indices: The Sep '26 S&P 500 Emini ES contract is 14 ticks Lower and trading at 7711.00.

Gold: The Dec'26 Gold contract is trading down at 4007.20.

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 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. All of Europe is currently Lower.

Possible challenges to traders

ADP Weekly Employment Change is out at 8:15 AM EST. Major.
Core Durable Goods Orders are out at 8:30 AM EST. Major.
Durable Goods Orders m/m is out at 8:30 AM EST. Major.
HPI m/m is out at 9 AM EST. Major.
S&P/CS Composite-20 HPI y/y is out at 9 AM EST. Major.
CB Consumer Confidence is out at 10 AM EST. Major.
New Home Sales is out at 10 AM EST. Major.
Richmond Manufacturing Index 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 climbed higher at around 8 AM EST with no major 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 AM 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 as predicted the markets climbed Higher. The Dow gained 146 points, and the other indices gained ground as well. Today our bias is Mixed or Neutral.

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

Commentary

Yesterday we suggested an Up day for the markets and the markets didn't disappoint. All we did was to use our rules of Market Correlation to make that determination.

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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