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.

Copper and Gold

Copper and Gold have been having an awkward relationship for a while. While most commodities move in the same direction with a lead lag, these two have lagged to the extent that it is looking like an inverse relationship. So while both are up over two years they do so in alternation. The chart should speak for itself. So with Copper breakout last week gold sold off and I wonder if that is a trend for now. The reason for this inversion could simply be the way inflation and bond yields have been swaying causing Real interest rates to swing both ways. That has a rather direct impact on this asset class. Falling real interest rates are bullish for gold and they rise on economic demand expansion.


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BSE Midcap

The BSE Midcap index has either completed wave B in 3 waves [a-b-c] and will see a big decline in wave C down, or is forming a triangle where too a dip to the blue line maybe on cards before a bounce back. 


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