Holiday session – Upside day

USD: Mar '25 is Down at 107.950.

Energies: Feb '25 Crude is Up at 70.51.

Financials: The Mar '25 30 Year T-Bond is Down 16 ticks and trading at 113.12.

Indices: The Mar '25 S&P 500 emini ES contract is 92 ticks Lower and trading at 6076.00.

Gold: The Feb'25 Gold contract is trading Up at 2645.70.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, and the 30 Year T-Bond is trading Lower.  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. Asia traded mainly Higher with the exception of the Sensex and Singapore exchanges.  Europe is trading mainly Higher except the Dax and Milan exchanges. 

Possible challenges to traders

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

• Lack of Major Economic News.

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 Tuesday the ZT migrated Higher at around 9:30 AM EST with no news in sight.  The Dow dived Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 9:30AM EST and the ZT moved 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 Long 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 - 12/24/24

Dow - Mar 2025- 12/24/24

Bias

On Tuesday we gave the markets a Neutral or Mixed bias, but the markets veered to the Upside.  The Dow gained 322 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 Neutral or Mixed.

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

Commentary

So, Tuesday was an abbreviated session as the markets closed early for the Christmas Holiday.  Apparently, Santa made his presence known as the indices all closed Higher.  Today we are very light on economic news as we have Unemployment Claims out at 8:30 AM EST and that would be about it for the day after Christmas.  Could this news alone serve to move the markets?  As in all things only time will tell.