This is not a correlated market. The USD is Down and Crude is Up which is 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 Lower and Crude is trading Higher which is 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 Lower except the Sensex and Shanghai exchanges. Currently all of Europe is trading Lower.

Possible challenges to traders

ADP Weekly Employment Change is tentative. This is Major.
No Major Economic news.
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 various economic reports released at that time. The Dow climbed Higher at around the same time. Look at the charts below and you'll see a pattern for both assets. The ZT dived Lower at around 8:30 AM EST and the Dow 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 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 the ZT and YM are both Mar '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 -Mar 26 - 1/16/26

Dow - Mar 2026- 1/16/26

Bias

On Friday we gave the markets an Upside bias, but the markets had other ideas. The Dow closed Lower by 83 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

Last Friday we made a call for the markets to go Up, but it had other ideas as the markets fell across the board. We believe that geopolitical events across the globe are contributing to this. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD climbs to two-week high above 1.1700

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GBP/USD retreats from daily high, holds near 1.3450

GBP/USD corrects lower and trades modestly higher on the day near 1.3450 after coming in within a touching distance of 1.3500 earlier in the day. Investors ignore the data from the UK, which showed that the ILO Unemployment Rate remained unchanged at 5.1% in the three months to November, and continue to pay close attention to the EU-US conflict.

Gold extends rally, notches new record-high above $4,700

Gold builds on Monday's impressive gains and trades at a new record-high, well above $4,700 on Tuesday. Escalating geopolitical tensions and growing fears of deepening trade conflicts, alongside the broad-based selling pressure surrounding the US Dollar, fuel XAU/USD's rally.

Bitcoin extends decline as tensions around Greenland mount

Bitcoin price extends losses, trading below $91,000 at the time of writing on Tuesday amid escalating geopolitical tensions over Greenland. Investors are moving toward safe-haven assets, with Gold hitting fresh all-time highs, while BTC continues to nosedive.

Greenland tariffs: What happened, and how to position for the new Europe risk premium

Over the weekend, President Trump threatened a new round of tariffs on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the UK, with reporting flagging 10% from February 1 and a possible step-up later.

Crypto Today: Bitcoin, Ethereum and XRP extend correction as rising geopolitical tensions fade risky sentiment

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) prices are extending their losses on Tuesday as risk-on sentiment fades amid rising geopolitical tensions over Greenland.