Mideast drags down markets

USD: Sept '25 is Down at 97.535.  

Energies: Aug '25 Crude is Down at 71.06.

Financials: The Sep '25 30 Year T-Bond is Lower by 5 ticks and trading at 113.03.

Indices: The Jun '25 S&P 500 emini ES contract is 112 ticks Higher and trading at 6007.25.

Gold: The Aug'25 Gold contract is trading Down at 3431.50.

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 Higher and Crude is trading Lower which is correlated. Gold is trading Lower 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 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 Higher with the exception of the Singapore exchange which is fractionally Lower.  All of Europe is trading Higher.

Possible challenges to traders

• Empire State Manufacturing Index is out at 8:30 AM EST.  This is Major.

• Lack of major economic news.

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 dived Lower at around 8:30 AM EST with no news pending.  The Dow er at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at 8:30 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 30 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 still Jun '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 - 6/13/25

Dow - Jun 2025- 6/13/25

Bias

On Friday we gave the markets a Downside bias as the Bonds and Gold were Higher.  The markets didn't disappoint due to geopolitical situations with the Dow down 770 points and the other indices closed Lower as well.  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

This past Thursday evening, we discovered that Israel had attacked Iran and knocked out their nuclear facilities in order to prevent them from attacking Israel.  It seems that Israel had planned this for some time and with that the markets all closed Lower on Friday.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?