This is not a correlated market. The USD is Down and Crude is Up which is 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 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 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. All of Asia traded Lower. Currently all of Europe is trading Lower as well.

Possible challenges to traders

President Trump Speaks at 8:30 AM EST. This is Major.
Pending Home Sales m/m is out at 10 AM EST. This is Major.
Construction Spending m/m 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.

Yesterday the ZT climbed Higher at around 8:30 AM EST with no economic reports released 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 8:30 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 plus 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

ZT -Mar 26 - 1/20/26

Dow - Mar 2026- 1/20/26

Bias

On Friday we gave the markets a Downside bias, and the markets didn't disappoint. The Dow closed Lower by 871 points and 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

Yesterday we made a call for the markets to go Down and down they went. The reason? No one liked the latest talk on Greenland as Trump made it clear that he wants that island as US territory even though Denmark will give massive concessions; but that's not good enough for the president. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD meets resistance near 1.1750, focus remains on Trump

EUR/USD is now giving away part of its earlier uptick, receding toward the 1.1730 zone on the back of a mild recovery attempt in the US Dollar. Indeed, the Greenback attempts a rebound as investors continue to closely follow President Trump’s speech at the WEF in Davos.

GBP/USD struggles for direction near 1.3440

GBP/USD regains some balance and advances toward the 1.3440 zone on Wednesday aftyer bottoming out near the 1.3400 support. Cable’s marginal gains comes on the back of the lacklustre performance of the Greenback amid Trump’s comments in the WEF.

Gold: Bullish stance remains unchanged near $4,900

Gold extended its impressive rally to a fresh all-time high near $4,900 per troy ounce earlier on Wednesday. Risk appetite remains fragile, with investors staying cautious amid President Trump’s speech at Davos, while EU–US tensions continue to simmer over the Greenland issue.

Crypto Today: Bitcoin, Ethereum, XRP stabilize despite weakening institutional, retail demand

Bitcoin holds below $90,000 on Wednesday, weighed down by weakening institutional and retail demand. Ethereum defends $2,900 support amid resumption of spot ETF withdrawals. XRP holds above $1.90 as US-listed spot ETFs record the second outflow since launch.

US President Trump at WEF in Davos: No nation can secure Greenland other than US

US President Donald Trump delivers a keynote speech at the World Economic Forum (WEF) held in Davos. "Certain places in Europe not recognizable any more."

Monero risks extending correction as market structure weakens

Monero (XMR) is extending its downtrend, below the $500 level at the time of writing on Wednesday, as sellers remain dominant during the American session. XMR has declined by approximately 38% from a recent high of $800, reached last Wednesday.