USD: Mar '25 is Up at 109.000.

Energies: Mar '25 Crude is Down at 78.06.

Financials: The Mar '25 30 Year T-Bond is Down 9 ticks and trading at 112.08.

Indices: The Mar '25 S&P 500 emini ES contract is 36 ticks Lower and trading at 5998.00.

Gold: The Feb'25 Gold contract is trading Up at 2730.10.

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 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 Higher which is not 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.  All of Europe is trading Higher. 

Possible challenges to traders

  • Core Retail Sales is out at 8:30 AM EST.  This is Major.

  • Retail Sales is out at 8:30 AM EST.  This is Major.

  • 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.

  • Import Prices m/m is out at 8:30 AM EST.  This is Major.

  • Business Inventories is out at 10 AM EST.  This is Major.

  • NAHB Housing Market Index is out at 10 AM EST.  This is Major.

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

  • FOMC Member Williams 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 as soon as the CPI numbers were released.  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 30 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

Chart

ZT -Mar 2025 - 1/15/25

Chart

Dow - Mar 2025- 1/15/25

Bias

Yesterday we gave the markets a Neutral or Mixed market as we didn't see enough evidence for a Long bias.  The Dow closed Higher by 703 points and the other indices closed Higher 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

Yesterday we gave the markets a Neutral or Mixed bias as we didn't see enough evidence to commit to an Upside bias.  The CPI numbers didn't really propel the markets forward but the bank stocks reporting quarterly earnings did.  JP Morgan Chase, Citibank, Wells Fargo and others reported earnings that exceeded expectations and propelled the markets forward.  Today we have Retail Sales numbers and that is always a market mover.  Will it be enough to continue the market's upward trend?  Only time will tell.

Trading performance displayed herein is hypothetical. The following Commodity Futures Trading Commission (CFTC) disclaimer should be noted.

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Trading in the commodities markets involves substantial risk and YOU CAN LOSE A LOT OF MONEY, and thus is not appropriate for everyone. You should carefully consider your financial condition before trading in these markets, and only risk capital should be used.

In addition, these markets are often liquid, making it difficult to execute orders at desired prices. Also, during periods of extreme volatility, trading in these markets may be halted due to so-called “circuit breakers” put in place by the CME to alleviate such volatility. In the event of a trading halt, it may be difficult or impossible to exit a losing position.

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