Markets make a U turn

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Up at 100.600.

Energies: Sep '26 Crude is Down at 81.74.

Financials: The Sep '26 30 Year T-Bond is Lower by 8 ticks and trading at 111.05.

Indices: The Jun '26 S&P 500 emini ES contract is 104 ticks Higher and trading at 7523.00

Gold: The Aug'26 Gold contract is trading Up at 4028.20.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Down which is 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 Higher 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 while all of Europe is trading Lower with the exception of the Paris exchange.

Possible challenges to traders

CB Leading Index m/m is out at 10 AM EST. Major.
Lack of Major economic news.

Traders, please note that we've changed the Bond instrument from the 10 Year (ZN) to the 2 Year (ZT). They work exactly the same.

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 ZT dived Lower at around 8:30 AM EST with no news items 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 climbed Higher at around 8:30 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 20 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

ZT -Sep 26 - 7/17/26

Dow - Jun 2026- 7/17/26

Bias

On Friday we gave the markets a Downside bias and the markets disappoint. The Dow dropped 407 points, and the other indices lost ground as well. Today our bias is to the Upside.

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

Commentary

On Friday the markets dropped as we suggested it would. All indices lost ground. What will we see today? Only time will tell. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

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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