Mixed bias – Down day

USD: Jun '25 is Up at 99.830.  

Energies: Jul '25 Crude is Up at 62.02.

Financials: The Sep '25 30 Year T-Bond is Lower by 17 ticks and trading at 111.15.

Indices: The Jun '25 S&P 500 emini ES contract is 268 ticks Higher and trading at 5969.00.

Gold: The Aug'25 Gold contract is trading Down at 3302.10.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up 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 Higher which is not 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 Singapore exchange.  All of Europe is trading Higher except the London exchange.

Possible challenges to traders

• Unemployment Claims are out at 8:30 AM EST. This is Major.

• Prelim GDP q/q is out at 8:30 AM EST. This is Major.

• Prelim GDP Price Index q/q is out at 8:30 AM EST. This is Major.

• FOMC Member Barkin Speaks at 8:30 AM EST. This is Major.

• Pending Home Sales m/m is out at 10 AM EST. This is Major.

• Natural Gas Storage is out at 10:30 AM EST. This is Major.

• FOMC Member Goolsbee Speaks at 10:40 AM EST. This is Major.

• Crude Oil Inventories is out at 11 AM EST. This is Major.

• FOMC Member Kugler Speaks at 2 PM EST. This is Major.

• FOMC Member Daly Speaks at 4 PM EST. This is not Major. - after hours

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 7:30 AM EST with no real news to speak of.  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 a dozen 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 - 5/28/25

Dow - Jun 2025- 5/28/25

Bias

Yesterday we gave the markets a Mixed market, which means the indices could go anywhere.  The markets veered to the Downside as the Dow dropped 245 points, and the other indices lost ground 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

Yesterday traders decided to take money off the table and the markets dropped.  The Dow dropped 245 points, and the other indices lost momentum as well.  Today we have a News Tsunami as we have about 10 different economic reports.  Can this change market direction?  Only time will tell... Want to learn Market Correlation and determine market direction hours before the Opening Bell?