Inauguration day plus one

USD: Mar '25 is Down at 107.725.

Energies: Mar '25 Crude is Up at 76.02.

Financials: The Mar '25 30 Year T-Bond is Down 4 ticks and trading at 113.17.

Indices: The Mar '25 S&P 500 emini ES contract is 116 ticks Higher and trading at 6113.00.

Gold: The Feb'25 Gold contract is trading Up at 2764.70.

Initial conclusion

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

Possible challenges to traders

• CB Leading Index m/m is out at 10 AM EST.  This is Major.

• Lack of Major economic news.

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 migrated Lower at around 8:30 AM EST with no economic news in sight.  The Dow moved Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM EST and the ZT moved 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 Short opportunity on the 2-year note, as a trader you could have netted about a dozen ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is now Mar '25 and the Dow is now Mar '25.  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 2025 - 1/21/25

Dow - Mar 2025- 1/21/25

Bias

Yesterday we gave the markets an Upside bias and the markets didn't disappoint.  The Dow traded Higher by 538 points and the other indices traded Higher as well.  Today we are dealing with a nearly correlated market, and our bias is to the Upside.

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

Commentary

Yesterday was Inauguration Day plus one and apparently the markets are very happy with what they've heard from the new President regarding politics, economics, etc. such that the Dow advanced more than 500 points on the day.  Today we only have Conference Board Leading Index, out at 10 AM EST.  Hopefully the upward trend can continue.