Downside day was here to stay

USD: Jun '25 is Up at 99.100.  

Energies: Jun '25 Crude is Down at 61.28.

Financials: The Jun '25 30 Year T-Bond is Lower by 5 ticks and trading at 116.07.

Indices: The Jun '25 S&P 500 emini ES contract is 52 ticks Higher and trading at 5566.00.

Gold: The Jun'25 Gold contract is trading Down at 3317.20.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is 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 Lower 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 Mixed.  All of Europe is trading Higher.

Possible challenges to traders

• Goods Trade Balance is out at 8:30 AM EST.  This is Major.
• Prelim Wholesale Inventories m/m is out at 8:30 AM EST.  This is Major.
• S&P/CS Composite-20 HPI y/y is out at 9 AM EST.  This is Major.
• HPI m/m is out at 9 AM EST.  This is Major.
• JOLTS Job Openings is out at 10 AM EST.  This is Major.
• CB Consumer Confidence is out at 10 AM 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.

On Friday the ZT leapt Higher at around 7:35 AM EST with no economic news in sight.  The Dow fell Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 7:35 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 30 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 - 4/28/25

Dow - Mar 2025- 4/28/25

Bias

Yesterday we gave the markets a Downside bias and the markets didn't disappoint.  The Dow traded Lower by 129 points and the other indices lost 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 we gave the markets a Downside bias and the markets finally traded Lower.  I say that because last week we suggested a Down day a couple of times, but it didn't happen.  Yesterday it did because Gold, the USD and the Bonds were all trading Higher Monday morning and that is indicative of a Down day.