Markets slide to downside

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Up at 99.175.

Energies: Sep '26 Crude is Down at 81.99

Financials: The Sep '26 30 Year T-Bond is Lower by 2 ticks and trading at 109.15.

Indices: The Sep '26 S&P 500 emini ES contract is 144 ticks Higher and trading at 7726.00.

Gold: The Aug'26 Gold contract is trading Down at 4636.10.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Down which is normal, but the 30-Year T-Bond is trading Lower fractionally. 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 Lower which is 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. All of Asia traded Mixed. All of Europe is trading Mixed as well.

Possible challenges to traders

Unemployment Claims are out at 8:30 AM EST. Major.
Goods Trade Balance is out at 8:30 AM EST. Major.
Prelim Wholesale Inventories m/m is out at 8:30 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 ZT dived Lower at around 10:30 AM EST with no real 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 10:30 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 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 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

Bias

Yesterday the markets were all over the map based on the GDP news. The markets closed Lower with the Dow down 114 points and the other indices traded Lower as well. Today our bias is to the Upside.

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

Commentary

As mentioned earlier it appears that we may be heading for the scenario of one day up, next day not. Hormuz is closed with no scheduled talks.

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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