Markets take a U-turn

USD: Sept '25 is Down at 98.125.  

Energies: Oct '25 Crude is Down at 63.65.

Financials: The Sep '25 30 Year T-Bond is Lower by 16 ticks and trading at 114.07.

Indices: The Sep '25 S&P 500 emini ES contract is 22 ticks Lower and trading at 6450.00.

Gold: The Dec'25 Gold contract is trading Up at 3423.20.

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 Lower.  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 Lower which is not 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. All of Asia traded Lower.  Currently Europe is trading Lower as well.

Possible challenges to traders

• Core Durable Goods Orders m/m is out at 8:30 AM EST.  This is Major.
• Durable Goods is out at 8:30 AM EST.  This is Major.
• FOMC Member Barkin Speaks at 8:30 AM EST.  This is Major.
• HPI m/m is out at 9 AM EST.  This is Major.
• S&P/CS Composite-20 HPI y/y is out at 9 AM EST.  This is Major.
• CB Consumer Confidence is out at 10 AM EST.  This is Major.
• Richmond Mfg. Index is out at 10 AM 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 climbed Higher at around 8:30 AM EST with no news pending.  The Dow dived Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow dived Lower at around 8:30 AM EST and the ZT climbed Higher 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 Long 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 - 8/25/25

Dow - Sep 2025- 8/25/25

Bias

Yesterday we gave the markets a Downside bias and the markets didn't disappoint.  The Dow dropped 349 points, and the other indices lost ground 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

As the old saying goes "what comes up, must eventually come down" and yesterday's action was no exception.  This was only to be expected as anytime the market rises by over 800 points, some traders will take money off the table.