Two out of three ain't bad

USD: Mar '26 is Up at 98.340.  

Energies: Feb '26 Crude is Up at 57.68.

Financials: The Mar '26 30 Year T-Bond is Higher by 7 ticks and trading at 115.09.

Indices: The Mar '26 S&P 500 emini ES contract is 90 ticks Higher and trading at 6923.00

Gold: The Feb'26 Gold contract is trading Up at 4425.40.

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 Higher which is not 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 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 exchange.  Currently all of Europe is trading Higher.

Possible challenges to traders                                              

• ISM MFG PMI is out at 10 AM EST. This is Major.
• ISM MFG Prices is out at 10 AM EST. This is Major.
• Wards Total Vehicle Sales - All Day by Brand. 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.

On Friday the ZT dived Lower at around 8 AM EST with no real 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 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 - 1/02/26

Dow - Mar 2026- 1/02/26

Bias

Last Friday we gave the markets an Upside bias and the markets didn't disappoint.  The Dow and S&P both closed Higher on Friday, the Nasdaq had a slight drawback of about 6 points.  Today we aren't dealing with a correlated market, and our bias is to the Upside.

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

Commentary

The markets climbed mainly Higher on Friday with two of the three main indices closing Higher.   Want to learn Market Correlation and determine market direction hours before the Opening Bell?