The markets had other ideas

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is Up at 102.020.

Energies: Nov '26 Crude is Up at 93.96.

Financials: The Dec '26 30 Year T-Bond is Higher by 7 ticks and trading at 103.31.

Indices: The Sep '26 S&P 500 emini ES contract is 68 ticks Higher and trading at 7872.00.

Gold: The Dec'26 Gold contract is trading Down at 4166.30.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Up which is not normal, and 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 Higher and Crude is trading Higher which is not correlated. Gold is trading Down which is 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. All of Europe is trading Higher at the present time.

Possible challenges to traders

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.
FOMC Member Barkin Speaks at 1:30 PM EST. Major.
Fed Beige Book is out at 2 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 two year dived Lower at around 8:30 AM EST with no real news pending. 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 EST and the Dow climbed Higher 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 20 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Dec '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 our bias was to the Upside however the markets had other ideas as the indices closed Lower. Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

Yesterday the markets took a nose dive for no apparent reason. But as we often say "anything can happen in a volatile market" and this market has proven itself to be quite volatile.

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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