Markets say no to the upside, again

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 99.300.

Energies: Sep '26 Crude is Up at 84.90.

Financials: The Sep '26 30 Year T-Bond is Higher by 3 ticks and trading at 108.24.

Indices: The Jun '26 S&P 500 emini ES contract is 8 ticks Lower and trading at 7712.00.

Gold: The Aug'26 Gold contract is trading Down at 4415.70

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 Lower which is not 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 Higher with the exception of the Indian Sensex exchange. All of Europe is trading Lower except the Milan exchange which is fractionally Higher.

Possible challenges to traders

Crude Oil Inventories is out at 10:30 AM EST. Major.
FOMC Meeting Minutes is out at 2M EST. Major.
Lack of Major economic news.

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 climbed Higher at around 8:35 AM EST with no real news pending. 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 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 Long opportunity on the 2-year note, as a trader you could have netted about a 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

ZT -Sep 26 - 8/18/26

Dow - Sep 2026- 8/18/26

Bias

Yesterday we gave the markets a Mixed or Neutral bias, but the markets had other ideas. The Dow closed Lower by 116 points and the other indices closed Lower as well. Today our bias is Neutral or Mixed.

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

Commentary

Hormuz is closed with no scheduled talks. 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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