Markets veer to the upside, again

USD: Sept '25 is Down at 96.075.  

Energies: Aug '25 Crude is Up at 65.55.

Financials: The Sep '25 30 Year T-Bond is Higher by 15 ticks and trading at 115.30.

Indices: The Jun '25 S&P 500 emini ES contract is 56 ticks Lower and trading at 6239.75.

Gold: The Aug'25 Gold contract is trading Up at 3357.50.

Initial Conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is 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 Higher 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 Lower except the Spanish Ibex exchange which is Higher.

Possible challenges to traders

• Fed Chair Powell Speaks at 9:30 AM EST.  This is Major.

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

• ISM Manufacturing PMI is out at 10 AM EST.  This is Major.

• Jolts Job Openings is out at 10 AM EST.  This is Major.

• ISM Manufacturing Prices is out at 10 AM EST.  This is Major.

• Construction Spending is out at 10 AM EST.  This is Major.

• Wards Total Vehicle Sales - All Day By Brand.  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 dived Lower at around 7 AM EST with no pending news.  The Dow climbed Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at 7 AM EST and the ZT dived Lower 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 Short 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 - 6/30/25

Dow - Sep 2025- 6/30/25

Bias

Yesterday we gave the markets an Upside bias and the indices didn't disappoint as the Dow closed Higher by 276 points and the other indices closed Higher as well.  Today our bias is to the Downside.

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

Commentary

Yesterday we witnessed the perfect example of market correlation action.  The Bonds dived Lower and the indices climbed Higher with the Dow up 276 points on the day.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?