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 Auto

Do rising prices of Auto stocks change their fundamentals? The market will have you believe so. But till there is fresh evidence this chart is still that of an ending diagonal from 2010-2014 for the BSE Auto index and we should be in the final phases of this move before a massive reversal occurs. Weak fundamentals are normal in a cycle degree 5th wave and an ending in 5th with falling momentum should make it perfect. I mean the index went up 5 times from 2008-2010. But is up only 24% from the 2010 high to 2014 high. I that a loss of momentum or what. The Auto sector is rising on a death wish. Strong language but there are too many red flags here.



The IT index sold off as expected and the trend might still be down medium term but shorter term a five wave decline is almost complete. So expect a retracement of the entire fall first before the next leg down for tech. One should exit shorts here and wait for a bounce or retracement. 50% or 61.8% we will wait and see.



US 10 year treasuries declined and are on a neckline, give it one more day and a further dip would confirm that a larger trend down started. Meaning that the next round of interest rate rises has started from the US. This would put pressure on interest rate sensitive investments around the world.


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