Finally, direction

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Up at 100.665.

Energies: Aug '26 Crude is Up at 69.00.

Financials: The Sep '26 30 Year T-Bond is Lower by 4 ticks and trading at 112.08.

Indices: The Jun '26 S&P 500 emini ES contract is 36 ticks Lower and trading at 7573.00.

Gold: The Aug'26 Gold contract is trading Down at 4157.00.

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 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 goes Up the other goes Down. Asia traded Mixed All of Europe is trading Higher.

Possible challenges to traders

FOMC Member Bowman Speaks at 7 AM EST. Major.
ADP Weekly Employment Change is out at 8:15 AM EST. Major.
Trade Balance is out at 8:30 AM EST. 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 dived Lower at around 8 AM EST with no real news items to report. 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 AM EST and the Dow climbed Higher 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 20 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 Mixed or Neutral bias as we didn't see much in the way of correlation yesterday morning. The markets migrated to the Upside as the Dow climbed Higher by 156 points and the other indices rose as well. Today our bias will remain Neutral or Mixed.

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

Commentary

Although we didn't see much in the way of correlation yesterday, it doesn't surprise us that the markets rose as they did. This usually happens arounds a holiday and especially a major one as the Fourth of July is.

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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