Downside bias – A down day

USD: Mar '26 is Up at 97.735.  

Energies: Feb '26 Crude is Up at 58.37.

Financials: The Mar '26 30 Year T-Bond is Higher by 1 tick and trading at 115.29.

Indices: The Mar '26 S&P 500 emini ES contract is 4 ticks Lower and trading at 6954.00

Gold: The Feb'26 Gold contract is trading Up at 4399.30.

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 Lower and Crude is trading Higher which is 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 Lower except the Aussie and Shanghai exchanges.  Currently all of Europe is trading Higher.

Possible challenges to traders                                              

• HPI is out at 9 AM EST. This is Major.
• S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is Major.
• Chicago PMI is out at 9:45 AM EST. This is Major.
• FOMC Meeting Minutes 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 8 AM EST with no real news items pending at that time.   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 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 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

Yesterday we gave the markets a Downside bias and the markets didn't disappoint.  The indices veered to the Downside and The Dow closed Lower by 209 points.  The other indices closed Lower as well.  Today we aren't dealing with a correlated market, and our bias is Neutral or Mixed.

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

Commentary

Today the news was filled with a look backwards on 2025 but didn't really project the future or anything relevant to the future.