Markets do a U-turn

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 99.200.

Energies: Sep '26 Crude is Up at 92.50.

Financials: The Sep '26 30 Year T-Bond is Higher by 4 ticks and trading at 108.13.

Indices: The Sep '26 S&P 500 emini ES contract is 14 ticks Lower and trading at 7673.00.

Gold: The Aug'26 Gold contract is trading Up at 4471.50.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Up which is 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 Higher 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 goes Up the other goes Down. All of Asia traded Mixed. Europe is trading Mixed as well.

Possible challenges to traders

Unemployment Claims are out at 8:30 AM EST. Major.
FOMC Member Waller Speaks at 8:30 AM EST. Major.
Natural Gas Storage is out at 10:30 AM EST. Major.
Revised Nonfarm Productivity is out at 8:30 AM EST. Not Major.
Revised Unit Labor Costa q/q is out at 8:30 AM EST. Not Major.
Trade Balance is out at 8:30 AM EST. Major.
Final Services PMI is out at 9:45 AM EST. Major.
ISM Services PMI is out at 10 AM EST. Major.
FOMC Member Hammack Speaks at 3 PM EST. Major.
FOMC Member Goolsbee Speaks - Tentative.

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 nosedived Lower at around 8:30AM EST with no real news pending. The Dow charged 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 8:30 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 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Sep '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 Downside bias however the markets had other ideas. The Dow gained 192 points and the other indices gained ground as well. Today our bias is Mixed or Neutral.

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

Commentary

Yesterday the markets did an abrupt about face and gained ground for a change. The Dow gained 192 points and the other indices closed Higher as well. Will this continue?

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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