Always nice to see some sense of normalcy in a usually unnormal market

USD: Sept '25 is Up at 97.155.  

Energies: Aug '25 Crude is Up at 65.85.

Financials: The Sep '25 30 Year T-Bond is Lower by 9 ticks and trading at 113.02.

Indices: The Sep '25 S&P 500 emini ES contract is 8 ticks Higher and trading at 6398.50.

Gold: The Aug'25 Gold contract is trading Down at 3368.30.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but 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. Asia traded Higher.  Europe is trading mainly Higher except the Paris and Milan exchanges.

Possible challenges to traders

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

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

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

• New Home Sales is out at 10AM EST.  This is Major.

• Natural Gas Storage is out at 10:30 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.

Yesterday the ZT dived Lower at around 8:30 AM EST with no economic reports pending.  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 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 about a dozen 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 - 7/23/25

Dow - Sep 2025- 7/23/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint.  The markets veered to the Upside with the Dow closing 49 points Higher and the other indices closed Higher as well.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

So yesterday remained an uneventful day and the markets did well.  Always nice to see some sense of normalcy in a usually unnormal market.  Today we have New Home Sales, out at 10 AM EST and this is major and may have an effect on the Fed will do next week when they have their FOMC Meeting.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?