Columbus Day? – The stock exchange is open

USD: December 24th is at 102,970.

Energies: Crude oil price as of November 24th is 73.90.

Finance: The Dec. 24 30-year T-Bond is down 20 ticks and trading at 119.24.

Indices: The Dec. 24 S&P 500 emini ES contract is 40 ticks higher, trading at 5869.75.

Gold: The December 24 gold contract is trading at 2671.20.

First conclusion

This is not a correlated market. The USD is rising and crude oil is falling, which is normal, but the 30-year T-Bond is trading lower. Financials should always correlate with the US dollar, so when the dollar is higher, bonds should follow, and vice versa. The S&P is higher and crude oil is trading lower, which is correlated. Gold is trading lower, correlating with the rising US dollar trading. I tend to believe that gold has an inverse relationship to the US dollar because when the US dollar falls, the price of gold tends to rise and vice versa. Think of it like a seesaw: if one is up, the other should be down. I am pointing this out to you to make you aware that something is wrong if we do not have an appropriate market. As a trader, you need to be aware of this and approach it with your eyes open. In Asia, trading is predominantly mixed. The whole of Europe also trades mixed.

Possible challenges for traders

• FOMC member Kashkari speaks at 9 a.m. EST. This is major.

• FOMC member Waller will speak at 3:00 p.m. EST. This is major.

• FOMC member Kashkari speaks at 5:00 p.m. EST. This is major.

Traders, please note that we have changed the bond instrument from 10 years (ZN) to 2 years (ZT). They work exactly the same.

We decided to switch gears a bit and show the 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 represent the inverse correlation between the two instruments. Remember, it’s comparable to a seesaw: if one seesaw goes up, the other should go down and vice versa.

On Friday, the ZT moved higher around 8:30 a.m. EST when the PPI numbers were released and began its upward climb. Take a look at the charts below and you will see a pattern for both assets. The Dow Jones moved lower at 8:30 a.m. and the ZT moved higher around the same time. These charts represent the latest version of bar charts and I have changed the time frame to a 15 minute chart for better presentation. This represented a long opportunity for the 2-year bond as you as a trader could have made more than 20 ticks per contract on this trade. Each tick is worth $7,625. Please note: The peak month for ZT is December and the Dow is now December 24th. I changed the format to filled candlesticks (not hollow) so that it is clearer and more visible.

Charts courtesy of Barcharts

ZT – Dec 2024 – 10/11/24

Dow – Dec 2024 – 10/11/24

Bias

On Friday, we gave the markets a neutral or mixed bias as we saw no signs of market correlation on Friday morning. Markets turned higher on Friday as the Dow gained 410 points and the other indices also gained ground. Today we are not dealing with a correlated market and our bias is upwards.

Could that change? Naturally. Remember that anything can happen in a volatile market.

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Therefore, today is considered a holiday in the United States, but herein lies the dilemma. The stock market is open, but the bond market is not, and that will make it very difficult to determine market correlation if the bond market is not open. There are a few FOMC members speaking, but that’s about it for the economic news. Given that today is a holiday with no bond market, I would lean towards neutral or mixed.