It starts off with a bang, again

USD: Mar '26 is Down at 98.305.  

Energies: Feb '26 Crude is Down at 56.85.

Financials: The Mar '26 30 Year T-Bond is Higher by 18 ticks and trading at 115.23.

Indices: The Mar '26 S&P 500 emini ES contract is 6 ticks Lower and trading at 6982.50

Gold: The Feb'26 Gold contract is trading Down at 4457.50.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not 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 Lower which is not correlated. Gold is trading Lower 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 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 Higher except the Nikkei exchange.  Currently all of Europe is trading Higher.

Possible challenges to traders                                              

• ADP Non-Farm Employment Change is out at 8:15 AM EST. This is Major.
• ISM Services PMI is out at 10 AM EST.  This is Major.
• Jolts Job Openings is out at 10 AM EST. This is Major.
• Factory Orders is out at 10 AM EST. This is Major.
• Crude Oil Inventories is out at 10:30 AM EST  This is Major.
• FOMC Member Bowman Speaks at 1:30 PM 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 AM EST with no real news items pending 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 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 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 - 1/06/26

Dow - Mar 2026- 1/06/26

Bias

Yesterday we gave the markets a Neutral or Mixed bias.  The indices veered to the Upside as the Dow gained 485 points and the other gained ground 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

It appears as though the markets like the Upside as all indices gained ground yesterday.  Apparently, the perception is the US will control all of Venezuela's oil thereby creating a glut for this commodity which will mean lower prices.   Want to learn Market Correlation and determine market direction hours before the Opening Bell?