Markets take a dive – Again

USD: Sep '26 is Down at 99.795.  

Energies: Sep '26 Crude is Down at 82.12.

Financials: The Sep '26 30 Year T-Bond is Higher by 6 ticks and trading at 109.07.

Indices: The Jun '26 S&P 500 emini ES contract is 52 ticks Higher and trading at 7783.50.

Gold: The Aug'26 Gold contract is trading Down at 4441.00.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Down which is not 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 Higher and Crude is trading Lower 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 Mixed.   All of Europe is trading Mixed except the London exchange.  

Possible challenges to traders                                                                       

• Core PPI m/m is out at 8:30 AM EST.     Major.
• Core PPI y/y is out at 8:30 AM EST.       Major.
• PPI m/m is out at 8:30 AM EST.      Major.
• FOMC Member Hammack Speaks at 8:15 AM EST.     Major.
• Unemployment Claims is out at 8:30 AM EST.       Major.
• Natural Gas Storage is out at 10:30 AM EST.      Major.
• 30-year Bond Auction Starts at 1 PM 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 climbed Higher at around 8:30 AM EST after the CPI numbers were released.  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 High 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 30 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 we gave the markets an Upside bias however the markets had other ideas as the Dow fell by 136 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

Yesterday the Dow dropped 136 points, and the other indices lost ground as well.