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 Steel

US Steel just took off into a third wave. This is in line with the positive trend in Metal prices that continues in the background. US Steel took its own time to catch up and has only now gone past last years high. This could be a precursor of what is coming for other metal stocks as well.

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US 30 Year Treasury Bonds

The US 30 year bond yields sparked the stock market rout when they broke their March 2017 lows following the rest of the bond market. But since then it has been oversold and now a positive divergence on the RSI waiting to bounce back in wave 4. The US bond market is likely to bounce sharply to 147.70 swing high, it would be a 38.2% retracement of wave 3.

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Finally something changed enough on the Bitcoin chart to post an update. Now since I marked wave B at the the 06/01 high the initial declines were overlapping and I marked 1-2-1-2, till prices bounced back from almost the target at the 4th wave low. That last fall is a clear 5 waves. So everything in between then must be a B wave and so it is. It is a running triangle in wave B. Running because point A is not on the trendline of the triangle. The other points are and are contracting as well. C=A is achieved and so A-B-C down is done. Considering that this is the start of the Bitcoin bear market W done we should only be doing an X wave where it goes up in A-B-C and tops and we are in C, where C=A means we can go to 10952, just below the 38.2% retracement mark, or if it overshoots then near the B wave resistance at 12181. Once the trend turns down from wave C up at anywhere in this range we should be in wave Y to new lows below the recent 6000. 

Now for those who did not notice and who do understand that Bitcoin is a manifestation of the liquidity bubble of our age, while it has been an uncorrelated asset most think, note how the wave B top is at 28/01/2018, exactly where world equity markets topped and crahed. Ring any bells? Bitcoins X wave might be the closest indicator of the next top in world markets. Know this - at major market turning points Asset clases or different world equity markets can top with a lead lag after having gone along for years. But that does not change the idea that the two are not related. Bitcoin invented 2009 rallied with the Dow for 8 years now the top is over a month apart but starting 28/01/2018 the two are now together on their way down. Stay tuned to this possibility and if it proves true you know the reason.

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