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Tax day, down day

Nick Mastrandrea Market Tea Leaves

USD: Jun '25 is Down at 99.355.

Energies: May '25 Crude is Up at 61.22.

Financials: The Jun '25 30 Year T-Bond is Lower by 5 ticks and trading at 114.22.

Indices: The Jun '25 S&P 500 emini ES contract is 145 ticks Lower and trading at 5392.25

Gold: The Jun'25 Gold contract is trading Up at 3321.10.

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 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 Mixed. All of Europe is trading Lower.

Possible challenges to traders

Core Retail Sales m/m is out at 8:30 AM EST. This is Major.
Retail Sales is out at 8:30 AM EST. This is Major.
Capacity Utilization Rate is out at 9:15 AM EST. This is Major.
Industrial Production m/m is out at 9:15 AM EST. This is Major.
Business Inventories m/m is out at 10 AM EST. This is Major.
NAHB is out at 10 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
FOMC Member Hammack Speaks at 12 Noon. This is Major.
Fed Chair Powell Speaks at 1:30 PM EST. This is Major.
TIC Long Term Purchases is out at 4 PM EST. This is not 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 news to speak of. The Dow climbed Higher at the same time. Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM EST and the ZT moved 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 20 ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

ZT -Jun 2025 - 4/15/25

Dow - Mar 2025- 4/15/25

Bias

Yesterday we gave the markets a Mixed or Neutral bias as we didn't see much in the way of correlation Tuesday morning. The Dow traded Lower by 156 points and the other indices traded Lower as well. Today our bias is to the Downside.

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

Commentary

So yesterday the markets traded Lower with no continuation of the Upswing we witnessed the last couple of days. Today we have far more economic news than we've seen in the last few days.

Author

Nick Mastrandrea

Market Tea Leaves

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