Markets say yes to upside

USD: Sept '25 is Down at 97.680.  

Energies: Aug '25 Crude is Down at 65.64.

Financials: The Sep '25 30 Year T-Bond is Higher by 4 ticks and trading at 112.28.

Indices: The Jun '25 S&P 500 emini ES contract is 98 ticks Higher and trading at 6335.50.

Gold: The Aug'25 Gold contract is trading Up at 3367.20.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down 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 Lower 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 is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. Asia traded Mixed.  Europe is trading Mixed as well.

Possible challenges to traders

• Core CPI m/m is out at 8:30 AM EST.  This is Major.
• CPI m/m is out at 8:30 AM EST.  This is Major.
• CPI y/y is out at 8:30 AM EST.  This is Major.
• Empire State MFG Index is out at 8:30 AM EST.  This is Major.
• FOMC Member Bowman Speaks at 9:15 AM EST.  This is Major.
• FOMC Member Barr Speaks at 12:45 PM EST.  This is Major.
• FOMC Member Barkin Speaks at 1 PM EST.  This is Major.
• FOMC Member Collins Speaks at 2:45 PM EST.  This is Major.

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.

Yesterday the ZT dived Lower at around 9 AM EST with no eco news pending.  The Dow leapt Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at 9 AM EST and the ZT dived Lower at 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 ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Sep '25 and the Dow is now Sep '25.  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 25 - 7/14/25

Dow - Sep 2025- 7/14/25

Bias

Yesterday we gave the markets a Downside bias but the markets had other ideas as the Dow closed 88 points Higher and the other indices closed Higher as well. Today we aren'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

Yesterday we were nearly certain that the markets would close Lower but the indices had other ideas.  As we often say "this too can change."