Day after Xmas has no relevance

USD: Mar '26 is Up at 97.825.  

Energies: Feb '26 Crude is Up at 57.98.

Financials: The Mar '26 30 Year T-Bond is Higher by 15 ticks and trading at 116.00.

Indices: The Mar '26 S&P 500 emini ES contract is 74 ticks Lower and trading at 6961.00

Gold: The Feb'26 Gold contract is trading Down at 4486.60.

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 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 Lower and Crude is trading Higher which is 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 except the Sensex and Singapore exchanges.  Currently Europe is trading Higher except the German Dax and Milan exchanges.

Possible challenges to traders                                              

• Pending Home Sales is out at 10 AM EST.               This is Major.
• Crude Oil Inventories is out at 10:30 AM EST.                      This is Major.
• Natural Gas Storage is out at 12 noon 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 Thursday the ZT dived Lower at around 8:30 AM EST with many news items pending at that time.   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 8:30 AM EST and the Dow climbed 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 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 and YM are both Mar '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

Last Thursday we gave the markets a Neutral or Mixed bias as we had a news tsunami the day before and felt this would make the markets more erratic.  The indices veered to the Downside and The Dow closed Lower by 20 points.  The other indices closed Lower as well.  Today we aren't dealing with a correlated market and our bias is to the Downside.

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