What starts off lower, closes higher

USD: Mar '25 is Down at 106.805.  

Energies: Apr '25 Crude is Up at 72.25.

Financials: The Mar '25 30 Year T-Bond is Higher by 2 ticks and trading at 114.22.

Indices: The Mar '25 S&P 500 emini ES contract is 68 ticks Lower and trading at 6146.00.

Gold: The Feb'25 Gold contract is trading Up at 2967.40.

Initial conclusion

This is not a 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 Lower. All of Europe is trading Higher with the exception of the London exchange which is fractionally Lower. 

Possible challenges to traders

• Unemployment Claims is out at 8:30 AM EST. This is Major.

• Philly Fed Mfg. Index is out at 8:30 AM EST. This is Major.

• FOMC Member Goolsbee Speaks at 9:35 AM EST. This is Major.

• CB Leading Index m/m is out at 10 AM EST. This is Major.

• Natural Gas Storage is out at 10:30 AM EST. This is Major.

• Crude Oil Inventories is out at 12 Noon EST. This is Major.

• FOMC Member Musalem Speaks at 12:05 PM EST. This is Major.

• FOMC Member Barr Speaks at 2:30 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 Migrated Lower at around 7:30 AM EST with no economic news reported.  The Dow moved Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 7:30 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 about a dozen ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is now Mar '25 and the Dow is now Mar '25.  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 2025 - 2/19/25

Dow - Mar 2025- 2/19/25

Bias

Yesterday we gave the markets a Downside bias as both the Crude and Gold were trading Higher and that often leads to s Down day for the markets.  That didn't happen yesterday.  The markets opened Lower (as suggested) but during the afternoon migrated to the Upside and closing Higher on the day.  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 we suggested a Downside Day, but the markets traded Lower and then shifted gears and migrated Higher to close in positive territory.  Today we have UI Claims as well as both Natural Gas Storage and Crude oil Inventories.