Jobs propel markets – Somewhat

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is down at 101.710.

Energies: Dec '26 Crude is down at 89.66.

Financials: The Dec '26 30 Year T-Bond is Lower by 2 ticks and trading at 108.13.

Indices: The Dec '26 S&P 500 E-mini ES contract is 145 ticks Higher and trading at 7439.00.

Gold: The Dec'26 Gold contract is trading up at 4105.80.

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 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 lower, which is correlated. Gold is trading up, 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 goes Up the other goes Down. Asia traded Mixed. Europe is trading Higher.

Possible challenges to traders

FOMC Member Bowman Speaks at 8:40 AM EST. Major.
Final Wholesale Inventories is out at 10 AM EST. Major.
FOMC Member Goolsbee Speaks at 10 AM EST. Major.
FOMC Member Barkin Speaks at 12:15 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.

On Friday the two-year climbed Higher at around 8:45 AM EST with the Job numbers released. 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 8:45 AM EST and the Dow dived Lower 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 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

On Friday we gave the markets a Neutral or Mixed bias as it was Jobs Friday. The Dow lost 237 points, but the other indices traded to the Upside. All-in-all a Neutral or Mixed day as expected. Today our bias is to the Upside.

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

Commentary

It appears that the US economy created 165,000 new jobs last month which exceeded the forecast of 65,000. This in turn propelled some of the indices to advance.

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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