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.

Dow v/s Gold Miners

This chart should be really interesting especially because of what I think of the HUI index, waves 1 and 2. This at a time when the Dow is marked as 4 and 5. The highlight is the huge outperformance of HUI [Gold Bugs index of gold mining stocks] during 2001-2011, and that the index moved up even during the dot com bust defying the thought that some people have that gold miners would be hit if stocks in general fall. The main driver of the miners is gold prices. During the last year we have seen another trend start and are early in the game. So far the Dow is trying to play catch up, in the months ahead we will see if it can keep up. Based on my counts the answer is it will not be able to do so.



The CNX IT index faced strong resistance at the 20 week average. Most stocks did something similar. Also Infosys was at 61.8% of the previous fall. So the IT index shows wave 3 down may have started here. Momentum rolled over and the previous swing high at 10500 is a major resistance. 3=1 for the index is down to 8337.



The Realty index has not been participating in the fall so far so with momentum rolling over maybe it is time. C=A for the index points down to 951. 


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