Markets swing to upside

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 99.720.

Energies: Sep '26 Crude is Down at 79.75.

Financials: The Sep '26 30 Year T-Bond is Higher by 22 ticks and trading at 109.00.

Indices: The Jun '26 S&P 500 emini ES contract is 163 ticks Higher and trading at 7560.00.

Gold: The Aug'26 Gold contract is trading Up at 4109.70.

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 goes Up the other goes Down. Asia traded Higher except Singapore which traded Lower. Europe is trading Higher except the London exchanges which is fractionally Lower.

Possible challenges to traders

Final Manufacturing PMI is out at 9:45 AM EST. Major.
ISM Manufacturing PMI is out at 10 AM EST. Major.
ISM Manufacturing Prices is out at 10 AM EST. Major.
Construction Spending is out at 10 AM EST. Major.
Total Vehicle Sales - All Day by Brand. Major.
Loan Officer Survey - tentative. 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.

On Friday the ZT climbed Higher at around 8:30 AM EST as the Fed announcement was made. 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 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 about 20 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

On Friday the markets decided to migrate to the Upside as the Dow moved Higher by 277 points and the other indices gained ground as well. Today our bias is to the Upside.

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

Commentary

It seems as though we may get back to the war with Iran as the Fed has had their say and they aren't lowering rates even though in our opinion they should.

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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