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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 madness

This indicator is an old friend, and as midcaps continued to fall the RS of the cnx index v/s Sensex has gone to a level where it has often bottomed. Now during a bear market the indicator might fall lower but at such low levels one has to also consider the potential for a bottom for the medium term or a strong rally in midcaps while the trend is positive as this segment is now at a huge discount to the large caps. Any rally in the market might see bigger moves from the smaller stocks. 

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CNX Bank

CNX Bank - 8855 - I marked as 5th ended last week. The chart shows a triangular structure for wave 4 however I prefer an expanded flat and wave B can stretch to 8642-8512 before wave C up to 10200 can unfold.

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Nifty Midcap 50

Nifty Midcap 50 has a couple of alternates going for it as do other similar indices. That of an ending pattern or wave ii of an expanded flat or wave B of an expanded flat. Its not clear which one but the downside is upto 1690 [current 1737] if it goes to touch the lower line.

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