This is not a correlated market. The dollar is Up+ and Crude is Down- which is normal and the 30 year Bond is trading Higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The S&P is Lower and Crude is trading Lower which is not 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 with only the Aussie and Nikkei exchanges Higher. All of Europe is trading Mixed with only the London and Spanish IBEX exchanges trading Higher.

Possible Challenges To Traders Today

ADP Non-Farm Employment Change is out at 8:15 AM EST. Major.
FOMC Member Quarles Speaks at 9 AM EST. Major
Fed Chair Powell Testifies at 10 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
FOMC Member Williams Speaks at 1 PM EST. This is Major.
Beige Book is out at 2 PM EST. This is Major.

Treasuries

Traders please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.

We've elected to switch gears a bit and show correlation between the 10 year bond (ZN) and The S&P futures contract. The S&P contract is the Standard and Poor's and the purpose is to show reverse correlation between the two instruments. Remember it's liken to a seesaw, when up goes up the other should go down and vice versa.

Yesterday the ZN made it's move at around 8:45 AM EST. The ZN hit a High at around that time and the S&P moved Higher. If you look at the charts below ZN gave a signal at around 8:45 AM EST and the S&P moved Higher at around the same time. Look at the charts below and you'll see a pattern for both assets. ZN hit a High at around 8:45 AM EST and the S&P was moving Higher shortly thereafter. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15 minute chart to display better. This represented a Shorting opportunity on the 10 year note, as a trader you could have netted about 20 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Mar '21. The S&P contract is also Dec '20 as well. I've changed the format to Renko bars such that it may be more apparent and visible.

Charts Courtesy of MultiCharts built on an AMP platform

Bias

Yesterday we gave the markets an Upside bias as both the USD and the Bonds were trading Lower yesterday morning and this usually reflects an Upside day. The markets didn't disappoint as the Dow gained 185 points and the other indices gained ground as well. 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 morning the markets were correlated to the Upside and they didn't disappoint. However we should never overlook the importance of fundamental news as well. Case in point: yesterday Fed Chair Powell and Treasury Secretary Mnuchin testified to a Congressional committee; both of them specified the importance of additional stimulus for the US economy and the markets applauded this and went Higher. But what if they said otherwise? The markets probably would have dropped and that is why we always say this too could change. The good news is both Powell and Mnuchin agree that stimulus is necessary and Powell believes in the CARE Bill passed by the House last May and in six moths time has languished in the Senate. Chair Powell will have another to speak today at 10 AM EST.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD consolidates around 1.0900, bullish bias remains ahead of key US data

The EUR/USD pair is seen consolidating its strong gains registered over the past two days and oscillating in a narrow band during the Asian session on Tuesday. Spot prices currently trade around the 1.1900 mark, just below an over one-week high touched the previous day.

GBP/USD tilts bullish as markets barrel toward mid-week NFP print

GBP/USD is holding a broader bullish structure on the daily chart, with price trading well above the 50 Exponential Moving Average at 1.3507 and the 200 EMA at 1.3310, confirming the intermediate uptrend that has been in place since the November 2025 low near 1.2300.

Gold falls below $5,050 as traders await US jobs data

Gold price attracts some sellers near $5,035 during the early Asian session on Tuesday. The precious metal edges lower amid improved risk sentiment and some profit-taking. Traders brace for key US economic data later this week, including delayed employment and inflation reports.

Litecoin eyes $50 as heavy losses weigh on investors

Following a strong downtrend across the crypto market over the past week, Litecoin holders are under immense pressure. The Bitcoin fork has trimmed about $1.81 billion from its market capitalization since the beginning of the year, sending it below the top 20 cryptos by market cap.

The market is buying everything again but is it dancing on a borrowed floor

The market has a short memory and a fast trigger finger. Last week’s liquidation barely cooled before risk came roaring back, pushing the S&P toward record territory and reinstalling Big Tech as the engine of choice. This is not discovery. It is re exposure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.