Markets like election results

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is higher at 101.440.

Energies: Dec '26 Crude is up at 88.78.

Financials: The Dec '26 30 Year T-Bond is Higher by 11 ticks and trading at 108.17.

Indices: The Dec '26 S&P 500 E-mini ES contract is 48 ticks Higher and trading at 7732.50.

Gold: The Dec'26 Gold contract is trading up at 4145.30.

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

Challenger Job Cuts is out at 5:30 AM EST. Major.
Unemployment Claims is out at 8:30 AM EST. Major.
Prelim Non-Farm Productivity is out at 8:30 AM EST. Major.
Prelim Unit Labor Cost is out at 8:30 AM EST. Major.
FOMC Member Hammack Speaks at 8:50 AM EST. Major.
FOMC Member Barkin Speaks at 9:10 AM EST. Major.
Natural Gas Storage is out at 10:30 AM 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 real economic news 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 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

Yesterday we gave the markets an Upside bias and the markets didn't disappoint as then Dow gained 1,569 points, and the other indices gained on the session. Today wearen't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

James Carville first said it and he was right. Americans vote with their pocketbooks and this year promised to bring a "blue wave" politically. The Democrats have taken the House and Senate and many governor races was won by the Dems.

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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