This is not a correlated market. The USD is Down and Crude is Down 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 Higher and Crude is trading Lower which is correlated. Gold is trading Higher which is correlated with the US dollar trading Down. 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, Europe is trading Higher.

Possible Challenges to Traders

Advanced GDP q/q is out at 8:30 AM EST. Major.
Core PCE Price Index m/m is out at 8:30 AM EST. Major.
Advance GDP Price Index q/q is out at 8:30 AM EST. Major.
Unemployment Claims is out at 8:30 AM EST. Major.
Personal Income m/m is out at 8:30 AM EST. Major.
Personal Spending is out at 8:30 AM EST. Major.
Natural Gas Storage is out at 10:30 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 ZT climbed Higher at around 2:30 PM EST as the Fed announcement was made. 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 2:30 PM 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 30 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Sep '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 Neutral or Mixed bias, as it was FOMC Day. The Dow dropped 1,142 points and the other indices lost ground as well. Today our bias is to the Upside.

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

Commentary

As we suggested yesterday, the Fed did stand pat and keep rates as they are. The markets clearly didn't like this and fell.

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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