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.

Midcap v/s Largecap

Inter market divergences are a very good indicator of coming market turns, however no indicator is infallible. So for over a month now the new lows in Nifty are not confirmed by the Mid and Small cap indices and that in a way appears like the Nifty is over shooting itself on the downside. You may argue that the Midcaps fell more first as these indices are much lower but that they are not in crash mode for a while should also be noted. 


JP Morgan Bank of America CITIgroup

JP Morgan chase and other financial stocks have been forming triangular patterns and are the major component of the Dow. So while the Nasdaq made new highs last month the financials were quiet. However as the Fed moves ahead with higher interest rates tonight how will financial stocks react? US Financial stocks have mostly been happy with the higher rates as they earn higher interest rate spreads on lending and that is a boost to their profitability. So if they do react positively tomorrow these running triangle patterns could be wave 4 and could lead to one more rally to new highs in wave 5 before the trend terminates. On the other hand if they continue to decline you may think of they as ending diagonal patterns.

 jp 200318

Here is also Bank of America

 boa 200318

And CITIGroup

 citi 200318


New to Bitcoin and looking for a fast moving market to practice on with good wave patterns then Bitcoin with its high emotional levels is a good place. The recent fall ended in 3 waves where the third wave is short. While it can still bounce and head lower, the truncated third wave can warn of a possibility that the next major leg down is still not upon us and a more complex corrective pattern will form first. In that case a move above 8600 the wave iv high would be a sign of such and an event and could mean going back to 10500-11000 again.

btcusd 190318

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