Not a great start to 2025

USD: Mar '25 is Down at 108.805.

Energies: Feb '25 Crude is Down at 73.08.

Financials: The Mar '25 30 Year T-Bond is Up 13 ticks and trading at 114.05.

Indices: The Mar '25 S&P 500 emini ES contract is 36 ticks Higher and trading at 5925.50.

Gold: The Feb'25 Gold contract is trading Up at 2672.10.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not 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 Higher and Crude is trading Lower 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 Mixed.  Europe is trading mainly Lower with the exception of the Spanish Ibex exchange which is Higher. 

Possible challenges to traders

• ISM Manufacturing PMI is out at 10 AM EST.  This is Major.

• ISM Manufacturing Prices is out at 10 AM EST.  This is Major.

• Wards Total Vehicle Sales - all day by brand.  This is Major.

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

• FOMC Member Barkin Speaks at 11 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.

Yesterday the ZT migrated Lower at around 8:30 AM EST with weekly Unemployment Claims pending.  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 8:30 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 20 plus 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 - 1/02/25

Dow - Mar 2025- 1/02/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets veered to the Downside.  The Dow closed Lower by 152 points, and the other indices closed Lower as well.  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

Yesterday we suggested a Mixed market as this was the initial session for 2025.  That being said we never make a suggestion for the initial session on any particular year.  Why?  Because every year the markets may have a different mood in terms of events that could affect it.  This year we had the killings in New Orleans and the Cybertruck bomb in Las Vegas.  In addition, we just finished a presidential election and will need time to determine the mood for this year.