This is a nearly 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. All of Asia traded Higher except the Aussie Dow and the Indian Sensex. Currently Europe is trading Higher except the German Dax and Paris exchanges.

Possible challenges to traders

Core Durable Goods is out at 8:30 AM EST. This is Major.
Durable Goods is out at 8:30 AM 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.

Last Friday the ZT dived Lower at around 8:15 AM EST waiting for various economic reports. 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 8:15 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

Bias

On Friday we gave the markets a Downside bias as the markets were correlated that way and the indices for the most part didn't disappoint as the Dow dived Lower by 351 points with only the Nasdaq gaining ground. Today we're dealing with a Mixed market and our bias is to teh Downside.

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

Commentary

Only the weekend we got buried in a massive snowstorm, the like of which we haven't seen in years. This will undoubtedly place a toll on the markets today.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD remains well bid near 1.1850

Further weakness in the Greenback motivates EUR/USD to extend last week’s rally and advance to fresh yearly highs just pips away from 1.1900 the figure in quite an auspicious start to the new trading week. Earlier on Monday, Germany’s Business Climate held steady at 87.6 in January according to IFO.

GBP/USD climbs to four-month highs around 1.3680

GBP/USD builds on recent gains and extends ots intense march north to four-month tops near 1.3680 on Monday, a move that mirrors the generalised improvement in the risk complex on the back of persistent selling pressure hurting the Greenback.

Gold hits record highs past $5,100

Gold extends its impresive rally for yet another day on Monday, this time surpassing the $5,100 mark per troy ounce to hit all-time highs on the continuation of the Greenback’s retracement. The move higher in the precious metal is also uncerpinned by unabated geopolitical jitters while rising US Treasury yields seem to limit the upside somewhat.

Bitcoin, Ethereum and Ripple see slight recovery after recent corrections

Bitcoin, Ethereum, and Ripple prices recovered slightly at the time of writing on Monday after correcting by over 7%, 14%, and 7%, respectively. The top three cryptocurrencies are nearing key support levels, and if they hold, could consolidate or extend their recovery in the upcoming days.

Tariffs, rate decisions, and inflation: Your week ahead brief

Well, what a week it has been. And that is putting it mildly. Fortunately, for those of us nursing their geopolitical-induced headaches, this week offers a chance to refocus on central bank decisions, inflation figures, and corporate earnings.

Cardano Price Forecast: ADA downside risks intensify, opening the door to $0.27

Cardano (ADA) price hovers around $0.34 at the time of writing on Monday, after three consecutive weeks of correction since early January. The falling Open Interest (OI) further supports the ongoing correction signaling waning investor participation.