Memorial day

USD: Jun '25 is Up at 99.285.  

Energies: Jul '25 Crude is Down at 61.45.

Financials: The Jun '25 30 Year T-Bond is Higher by 25 ticks and trading at 112.14.

Indices: The Jun '25 S&P 500 emini ES contract is 320 ticks Higher and trading at 5897.00.

Gold: The Jun'25 Gold contract is trading Down at 3294.10.

Initial conclusion

This is a nearly correlated market.  The USD is Up and Crude is Down which is normal, and 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 correlated with the US dollar trading Up.  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 Higher with the exception of the Shanghai exchange.  All of Europe is trading Higher except the Spanish Ibex exchange.

Possible challenges to traders

• Durable Goods is out at 8:30 AM EST.  This is Major.

• Core Durable Goods is out 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.

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.

On Friday the ZT climbed Higher at around 7:30 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 moved Lower at 7:30 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 30 plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of BarCharts

ZT -Jun 2025 - 5/23/25

Dow - Jun 2025- 5/23/25

Bias

Last Friday we gave the markets a Downside bias as Gold, the Bonds and Crude were all trading Higher last Friday morning, and this usually signifies a Down day.  The markets didn't disappoint as the Dow dropped 256 points, and the other indices closed Lower on Friday as well.  Today we are dealing with a nearly 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 one would think that the markets would want to close Higher due to a 3-day weekend, but such was not the case as the markets were correlated to the Downside and the markets closed Lower on Friday.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?