Upside momentum continues

Nick Mastrandrea Market Tea Leaves

USD: Jun '25 is Up at 99.415.

Energies: Jun '25 Crude is Down at 61.87.

Financials: The Jun '25 30 Year T-Bond is Higher by 12 ticks and trading at 115.18.

Indices: The Jun '25 S&P 500 emini ES contract is 55 ticks Higher and trading at 5498.00.

Gold: The Jun'25 Gold contract is trading Up at 3307.60

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Down which is 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 Lower which is 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 Mixed. All of Europe is trading Higher.

Possible challenges to traders

Revised UOM Consumer Sentiment out at 10 AM EST. This is not Major.
Revised UOM Inflation Expectations are out at 10 AM EST. This is not Major.
No Major Economic News to speak of.

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 fell Lower at around 8 AM EST with Unemployment Claims pending. 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 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 a dozen plus 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 - 4/24/25

Dow - Mar 2025- 4/24/25

Bias

Yesterday we gave the markets a Downside bias, but the markets had other ideas. The Dow gained 487 points on the session and the other indices gained ground as well. Today we aren't dealing with a correlated market, and our bias is Mixed.

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

Commentary

Every day is different with this market and the only thing I can think of is the institutionals aka the Smart Money wants to see the markets go Higher so the markets can have equal parity before all the shortfalls took place. Whether this is true or not, only time will tell. Today we have no real major news to speak of. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

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