The day after

USD: Dec '25 is Down at 98.460.  

Energies: Jan '26 Crude is Down at 57.85.

Financials: The Mar '26 30 Year T-Bond is Higher by 12 ticks and trading at 115.24.

Indices: The Dec '25 S&P 500 emini ES contract is 72 ticks Lower and trading at 6873.75.

Gold: The Feb'26 Gold contract is trading Up at 4244.50.

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 Lower and Crude is trading Lower 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 Lower except the Hang Seng.   Currently Europe is trading Higher.

Possible challenges to traders                                              

• Unemployment Claims is out at 8:30 AM EST. This is Major.
• Trade Balance is out at 8:30 AM EST. This is Major.
• Final Wholesale Inventories is out at 8:30 AM EST.  This is Major.
• Natural Gas Storage is out at 10:30 AM EST. This is Major.
• 30 Year Bond Auction starts at 1 PM EST. This is 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 climbed Higher at around 8:15 AM EST with no major news 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 8:15 AM EST and the Dow 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 Long 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 Mar '26 and the Dow is still 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

Bias

Yesterday we gave the markets a Mixed or Neutral bias and the markets veered to the Upside.  The Dow gained 498 points, and the other indices gained ground 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

Yesterday was FOMC Day and as predicted the Fed reduced rates by a quarter point or 25 basis points.  We think it should have been more but the Fed says otherwise.  Another they claimed is that they aren't too keen on rate reductions in the near future. Could this change? Of course anything is possible in a volatile market.