As suggested: A mixed market

USD: Mar '25 is Up at 106.800.  

Energies: Mar '25 Crude is Up at 71.26.

Financials: The Mar '25 30 Year T-Bond is Lower by 19 ticks and trading at 114.30.

Indices: The Mar '25 S&P 500 emini ES contract is 85 ticks Higher and trading at 6153.25.

Gold: The Feb'25 Gold contract is trading Up at 2926.40.

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 Higher and Crude is trading Higher which is not correlated. Gold is trading Higher which is not 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 mainly Higher with the exception of the Shanghai and Sensex exchanges.  Europe traded mainly Higher with the exception of the German Dax exchange which is Lower. 

Possible challenges to traders

• Empire State Mfg Index is out at 8:30 AM EST. This is Major.

• NAHB Housing Market Index is out at 10 AM EST. This is Major.

• FOMC Member Daly Speaks at 10:20 AM EST. This is Major.

• FOMC Member Barr Speaks at 1 PM EST. This is Major.

• President Trump Speaks tentative. This is Major.

• TIC Long Term Purchases is out at 4 PM EST. This is Major.

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 Higher and Crude is trading Higher which is not correlated. Gold is trading Higher which is not 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 mainly Higher with the exception of the Shanghai and Sensex exchanges.  Europe traded mainly Higher with the exception of the German Dax exchange which is Lower. 

Possible challenges to Traders

• Empire State Mfg Index is out at 8:30 AM EST.  This is Major.

• NAHB Housing Market Index is out at 10 AM EST.  This is Major.

• FOMC Member Daly Speaks at 10:20 AM EST.  This is Major.

• FOMC Member Barr Speaks at 1 PM EST.  This is Major.

• President Trump Speaks tentative.  This is Major.

• TIC Long Term Purchases is out at 4 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.

Last Friday the ZT Migrated Lower at around 8:30 AM EST after the Retail Sales numbers was released. The Dow moved Higher at the same time. Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM EST and the ZT moved Lower 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 Short opportunity on the 2-year note, as a trader you could have netted about 20 ticks per contract on this trade. Each tick is worth $7.625. Please note: the front month for ZT is now Mar '25 and the Dow is now Mar '25. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of BarCharts

ZT -Mar 2025 - 2/14/25

Dow - Mar 2025- 2/14/25

Bias

Last Friday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint. The Dow closed Lower by 155 points, the S&P dropped fractionally, and the Nasdaq closed Higher by 81 points. All in all, a Neutral or Mixed day as suggested. 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

Last Friday the Retail Sales data was released at 8:30 AM EST and unfortunately, they dropped. Both Retails Sales and Core Retail Sales declined which led us to give the markets a Neutral or Mixed bias meaning the markets could go anywhere and often does. Want to learn Market Correlation and determine market direction hours before the Opening Bell?