Inter Market Analysis

Inter market analysis is a series of articles studying related segments of the market to identify lead lags between trends in each segment. This can often forewarn you of impending changes in trend and allow for planning of required action based on it. For example midcaps v/s large caps, currencies v/s commodities and US markets v/s European markets and so on. In a global environment inter-market relationships are not restricted to a country but between countries and their respective asset classes as well.

US 10 Year Treasury notes

After days of anticipating one last push down in bond markets in wave v of 5 the move above the 20dma could mean that wave 5 is done for the fall that started in Sep'17. Here waves 1 and 5 of C are equal in time, but not in price. Similarly A=C was not achieved. For these reasons the move down appears truncated or ending early. Also as a last case maybe last nights rise in bond prices was a temporary move. However if it surpasses the 40dema at 119.70 then it maybe best to consider this done. What it means is that we start wave 2 of C up and retrace some of the losses for several weeks. Maybe back to the wave 4 high at 121.37. Keep the odds open with the resistance at 119.70 on watch, as bond yield charts are still open to one more move up in wave v of 5 to complete this move, till we fall below 2.91% on the 10 year yield. The record short positions in CFTC data across durations maybe the reason for short covering in the near term.

notes 240518


Bitcoin starts wave 3 down [blue], where 3=1 goes to 6824 and by the time we have a 5 wave decline with one of the waves extended we will be below the 6000 mark.


European Divergences

To my Critics I did not see the European indices making new highs even as the FTSE is now kissing the 7886 trendline from the 2015 highs. Time for some pushback. But what I am showing here is the DJ Euro stoxx 50 index in the top half of this chart and the FTSE in the lower half. Reason? An inter market divergence. The divergence between European stock markets shows up in the DJ Euro Stoxx not making a new high along with each new high top in the FTSE since 2015. Also the pink line shows divergences since Oct 2017. Long term divergences when they hold out are indicative of longer term trend reversals in the making. 


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