Uncorrelated markets: Warning signals for traders

USD: Dec '25 is Down at 97.505.  

Energies: Nov '25 Crude is Down at 64.68.

Financials: The Dec '25 30 Year T-Bond is Lower by 6 ticks and trading at 116.04.

Indices: The Sep '25 S&P 500 emini ES contract is 96 ticks Lower and trading at 6373.25.

Gold: The Dec'25 Gold contract is trading Up at 3771.70.

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 Higher which is not 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.

Possible challenges to traders

• FOMC Member Goolsbee Speaks at 8:20 AM EST.  Major.
• Final GDP q/q is out at 8:30 AM EST.  Major.
• Unemployment Claims is out at 8:30 AM EST.  Major.
• Core Durable Goods Orders m/m is out at 8:30 AM EST.  Major.
• Durable Goods Orders m/m is out at 8:30 AM EST.  Major.
• Final GDP Price Index q/q is out at 8:30 AM EST.  Major.
• Goods Trade Balance is out at 8:30 AM EST.  Major.
• Prelim Wholesale Inventories m/m is out at 8:30 AM EST.  Not Major.
• FOMC Member Schmidt Speaks at 9 AM EST.  Major.
• FOMC Williams Speaks at 9 AM EST.  Major.
• Existing Home Sales is out at 10 AM EST.  Major.
• FOMC Member Bowman Speaks at 10 AM EST.  Major.
• Natural Gas Storage is out at 10:30 AM EST.  This is Major.
• FOMC Member Barr Speaks at 1 PM EST.  Major.
• FOMC Member Logan Speaks at 1:40 PM EST.  Major.
• FOMC Member Daly Speaks at 3:30 PM EST.  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 8:10 AM EST with no real eco news items 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 around 8:10 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 Dec '25 and the Dow is now Dec '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 - 9/24/25

Dow - Sep 2025- 9/24/25

Bias

Yesterday we suggested a Neutral or Mixed day but the indices dived Lower and Stayed Lower throughout the session. The Dow dropped by 172 points and the other indices closed Lower as well. Today we aren't dealing with a correlated market, and our bias is to the Downside.

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

Commentary

On Tuesday Fed Chair Powell made the claim that stocks and the markets in general was priced too high.  When I look at the markets today, I see certain similarities between today's market and markets of the past.  Overheated markets, high tariffs, inflation etc. are all things that occurred in 1929, and no one listened.  This is not to say that I predict a calamity like that, but the same things are repeating themselves.