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Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is down at 101.560.

Energies: Dec '26 Crude is up at 103.89.

Financials: The Dec '26 30 Year T-Bond is Higher by 17 ticks and trading at 107.26.

Indices: The Sep '26 S&P 500 E-mini ES contract is 300 ticks Lower and trading at 7679.25.

Gold: The Dec'26 Gold contract is trading down at 4000.00.

Initial conclusion

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 down, which is not 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 Mixed.

Possible challenges to traders

Employment Cost index q/q is out at 8:30 AM EST. Major.
Chicago PMI is out at 9:45 AM EST. Major.
FOMC Member Daly Speaks at 12 Noon. Major.
FOMC Member Musalem Speaks at 12:30 PM 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 two year dived Lower at around 8:30 AM EST with Unemployment Claims pending. 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 8:30 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 about 20 ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Dec '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 Dow dropped 133 points, and the other indices lost ground as well. Today our bias is Neutral or Mixed.

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

Commentary

Yesterday we suggested a Down day and the markets didn't disappoint.

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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