Markets leap higher

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 101.770.

Energies: Nov '26 Crude is Down at 87.68.

Financials: The Dec '26 30 Year T-Bond is Higher by 14 ticks and trading at 102.20.

Indices: The Sep '26 S&P 500 emini ES contract is 68 ticks Higher and trading at 7823.25.

Gold: The Dec'26 Gold contract is trading Up at 4179.60.

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 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. All of Europe is trading Higher.

Possible challenges to traders

Trade Balance is out at 8:30 AM EST. Major.
RCM/TIPP Economic Optimism is tentative. Major.
FOMC Member Bowman Speaks at 10:45 AM EST. Major.
FOMC Member Schmid Speaks at 1:15 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.

Yesterday the two year dived Lower at around 8 AM EST with no economic news to speak of. 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 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 20 plus 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 our bias was to the Downside however the markets had other ideas as the Dow gained ground by 173 points and the other indices gained ground as well. Today our bias is to the Upside.

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

Commentary

Yesterday the markets gained ground for no particular apparent reason but it did gain ground.

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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