Jobs Friday

USD: Jun '25 is Down at 99.640.  

Energies: Jun '25 Crude is Down at 58.92.

Financials: The Jun '25 30 Year T-Bond is Higher by 9 ticks and trading at 116.05.

Indices: The Jun '25 S&P 500 emini ES contract is 100 ticks Higher and trading at 5648.00.

Gold: The Jun'25 Gold contract is trading Up at 3268.30.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not normal, and 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 Higher and Crude is trading Lower 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. Asia traded Mixed.  Europe is trading Mixed as well.

Possible challenges to traders

• Average Hourly Earnings m/m is out at 8:30 AM EST.  This is Major.

• Non-Farm Employment Change is out at 8:30 AM EST.  This is Major.

• Unemployment Rate is out at 8:30 AM EST.  This is Major.

• Factory Orders 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 leapt Higher at around 8:30 AM EST with Unemployment Claims pending.  The Dow plunged Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8:30 AM EST and the ZT moved Higher 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 20 plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of BarCharts

ZT -Jun 2025 - 5/01/25

Dow - Mar 2025- 5/01/25

Bias

Yesterday we gave the markets an Upside bias as both Gold and Crude were trading Lower.  The markets didn't disappoint as the Dow climbed Higher by 200 points and the other indices traded Higher.  Given that today is Jobs Friday our bias is Neutral or Mixed.  Why?  Because the markets have never shown any sense of normalcy today.

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

Commentary

So yesterday we gave the markets an Upside bias and the markets didn't disappoint.  The Dow traded Higher by 200 points and the other indices traded Higher as well.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?