News tsunami cometh

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 100.755.

Energies: Sep '26 Crude is Up at 83.26.

Financials: The Sep '26 30 Year T-Bond is Lower by 2 ticks and trading at 110.18.

Indices: The Jun '26 S&P 500 emini ES contract is 151 ticks Higher and trading at 7521.25.

Gold: The Aug'26 Gold contract is trading Up at 4070.06.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Up which is 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 Higher which is not 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 goes Up the other goes Down. Asia traded Mixed while all of Europe is trading Higher.

Possible challenges to traders

NFIB Small Business Index is out at 6 AM EST. Major.
ADP Weekly Employment Change is out at 8:15 AM EST. Major.
Core CPI m/m is out at 8:30 AM EST. Major.
Core CPI y/y is out at 8:30 AM EST. Major.
CPI m/m is out at 8:30 AM EST. Major.
CPI y/y is out at 8:30 AM EST. Major.
Fed Chairman Warsh Testifies at 10 AM EST. Major.
FOMC Member Barr Speaks at 12:40 PM EST. Major.
FOMC Member Goolsbee Speaks at 1 PM EST. Major.
FOMC Member Bowman Speaks at 2:55 PM EST. Major.

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 8:30 AM EST with no news items pending. The Dow dived Lower at around the same time. Look at the charts below and you'll see a pattern for both assets. The ZT climbed Higher at around 8:30 AM EST and the Dow dived Lower 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 about 10 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Sep '26. 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 26 - 7/20/26

Dow - Jun 2026- 7/20/26

Bias

Yesterday we gave the markets an Upside bias, but the markets had other ideas. The Dow dropped 307 points, and the other indices lost ground as well. Today our bias is to the Upside.

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

Commentary

Yesterday the markets were correlated to the Upside however the markets traded Lower due to the situation with Iran. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

Nick Mastrandrea over 20 years experience in trading and formerly held a NASD Series 7. He currently holds a NJ Life, Health and Variable Authority. Nick is a published writer and his work has appeared in Futures Magazine, TraderPlanet and others.

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