Markets veer to the downside

USD: Dec '26 is Down at 101.860.

Energies: Nov '26 Crude is Down at 93.79.

Financials: The Dec '26 30 Year T-Bond is Higher by 42 ticks and trading at 105.18

Indices: The Sep '26 S&P 500 emini ES contract is 88 ticks Lower and trading at 7747.00

Gold: The Dec'26 Gold contract is trading Down at 4180.30.

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 Lower and Crude is trading Lower which is not correlated. Gold is trading Down 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 Lower.    All of Europe is trading Mixed at the present time.  

Possible challenges to traders 

• Core PPI m/m is out at 8:30 AM EST.  Major.
• Core Retail Sales m/m is out at 8:30 AM EST. Major.
• PPI m/m is out at 8:30 AM EST. Major.
• Retail Sales m/m is out at 8:30 AM EST.  Major.
• Philly Fed Mfg Index is out at 8:30 AM EST. Major.
• Unemployment Claims are out at 8:30 AM EST. Major.
• Empire State Mfg Index is out at 8:30 AM EST. Major.
• Natural Gas Storage is out at 10:30 AM EST. Major.
• Crude Oil Inventories is out at 12 Noon. 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 two year dived Lower at around 8:30 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 8:30 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 a 20 plus ticks per contract on this trade.  Each tick is worth $6.25.  Please note: the front month for the ZT is now Dec '26.  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 26 - 10/14/26

Dow - Dec 2026- 10/14/26

Bias

Yesterday our bias was Neutral or Mixed which means the markets could go in any direction.  The markets veered to the Downside yesterday with the Dow lower by 114 points and the other indices closed Lower as well.  Today our bias is Mixed or Neutral.

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

Commentary

Yesterday the markets took a nose dive for no apparent reason.  But as we often say "anything can happen in a volatile market" and this market has proven itself to be quite volatile.   Ready to use Market Correlation to make you a better trader?