Markets veer to the upside

USD: Sept '25 is Down at 96.860.  

Energies: Aug '25 Crude is Down at 65.42.

Financials: The Sep '25 30 Year T-Bond is Higher by 14 ticks and trading at 114.29.

Indices: The Jun '25 S&P 500 emini ES contract is 110 ticks Higher and trading at 6251.00.

Gold: The Aug'25 Gold contract is trading Up at 3296.80.

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 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. Asia traded Mixed.  All of Europe is trading Higher.

Possible challenges to Traders

• Chicago PMI is out at 9:45 AM EST.  This is Major.

• FOMC Member Bostic Speaks at 10 AM EST.  This is Major.

• FOMC Member Goolsbee Speaks at 1 PM 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 9:30 AM EST with multiple news reports 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 9:30 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 20 plus 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 - 6/27/25

Dow - Sep 2025- 6/27/25

Bias

Yesterday we gave the markets a Mixed bias and the indices veered to the Upside.  The Dow gained 432 points, and the other indices closed Higher.  Today we aren't dealing with a correlated market, and our bias is to the Upside.

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

Commentary

On Friday the Supreme Court handed this administration a major victory in that lower-level courts cannot appeal an Executive Order issued by the Executive branch.  This virtually gives the President almost unlimited power in making sweeping decisions.   Want to learn Market Correlation and determine market direction hours before the Opening Bell?