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.

BSE IT index

The BSE IT index completed a 3 wave rise in a channel and has started to sell off today. The next major leg down may have now started as the decline is broad based. A similar parallel channel on Infosys is at 1047. Unless prices go above the upper end of the channel the implications are that this is an important resistance and the daily momentum indicator for the BSE IT index has crossed over to the sell side.


US 30yr Bonds

US 30 year bonds completed a 5 wave decline from the wave 4 triangle. Now either wave 5 extends or has ended and we have a bottom in place. The low matches the June 2015 swing low and so it is a good support level. The 2015 swing low was wave 4 of the rise and also a triangle on the way up.


US 5 year T Notes

US Yields made new multi year highs today. I decided to move away from the 10/30 year charts that I usually use because they did not give me a clear indication that we were in wave 4. So the 5 year note was a good idea. The Monthly chart shows wave C down developing and we are in wave 5 of C. The final wave is not over as C=A is not yet achieved as shown by the box. So yields should keep rising for the next few weeks. This will put pressure on most asset markets in the short term.


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