Jobs Friday

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is Higher at 101.880.

Energies: Dec '26 Crude is up at 90.83.

Financials: The Dec '26 30 Year T-Bond is Lower by ticks and trading at 108.14.

Indices: The Dec '26 S&P 500 E-mini ES contract is 56 ticks Higher and trading at 7797.00.

Gold: The Dec'26 Gold contract is trading down at 4074.40.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Up 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 higher, which is not correlated. Gold is trading up, which is not correlated with the US dollar trading up. 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 Higher.

Possible challenges to traders

Average Hourly Earnings is out at 8:30 AM EST. Major.
Non-Farm Employment Change is out at 8:30 AM EST. Major.
Unemployment Rate is out at 8:30 AM EST. Major.
FOMC Member Musalem Speaks at 9:10 AM EST. Major.
Prelim Consumer Confidence is out at 10 AM EST. Major.
Prelim UoM inflation expectations is out at 10 AM EST. Major.
FOMC Member Bowman Speaks at 12:15 PM EST. Major.
Consumer Credit is out at 3 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 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 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 a dozen 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 Neutral or Mixed bias however the markets all turned to the Downside. The Dow dropped by 1,833 points and the other indices dropped as well. Given that today is Jobs Friday, we will maintain a Neutral or Mixed bias.

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

Commentary

It seems the honeymoon maybe over for the AI stocks as the looming fear (now that the Dems have a majority in both the House and Senate) is the data centers needed for AI may not be readily available. The push is on for these ultra-rich companies to start paying for their own utilities as opposed to throwing on the backs of the ultimate consumer who right now is dealing with affordability issues.

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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