Santa Claus came to town

Nick Mastrandrea Market Tea Leaves

As of this writing 7:45 AM EST, here's what we see:

USD: Mar '26 is Down at 97.560.
Energies: Feb '26 Crude is Up at 58.61.
Financials: The Mar '26 30 Year T-Bond is Higher by 5 ticks and trading at 115.14.
Indices: The Mar '26 S&P 500 emini ES contract is 5 ticks Lower and trading at 6959.75
Gold: The Feb'26 Gold contract is trading Up at 4522.50.

Initial conclusion

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 Higher. 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 Higher except the Nikkei and Singapore exchanges. Currently Europe is trading Higher except the Paris exchange.

Possible challenges to traders

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

Yesterday the ZT dived Lower at around 8:30 AM EST with many news items pending 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 20 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

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we had a news tsunami yesterday and felt this would make the markets more erratic. The indices veered to the upside and The Dow closed Higher by 65 points. The other indices closed Higher as well. Today we have an abbreviated session as it is Christmas Eve. Our bias is Neutral or Mixed today. The markets will close at 1 PM today and of course tomorrow it won't be open. We wish you and yours a very Happy Holiday!!!

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

Author

Nick Mastrandrea

Market Tea Leaves

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