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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.

US 30yr Bonds

The 30 year bonds formed a triangle and broke on the downside. The triangle would therefore mostly be wave 4 and we are in wave 5 down already. Wave 5 see a drop to 147 where 5=1. The drop should cause some worry in markets as bond yields hit new highs but the move should be the last one for this wave as it will quickly get oversold.

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BSE Metals

BSE Metals index was moving higher but stopped. It stopped at exactly where B=138.2% of A. This is a critical level for confirming that we have indeed started a fresh move. The rise so far is not 5 waves clearly on the index and failure at this level [12350] can mean that we are forming an expanded flat before another move up. An expanded flat would mean wave C down to 11100 is due first. So the weakness seen today in Metal stocks might continue a while longer if this turns out to be true. 11834 is the 20dma as the immediate support to watch if the trend up is to hold.

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VIX - Volatility index

The US CBOE VIX has not been making new lows with the new highs in the US stock market. An inter market divergence that maybe indicative of a impending trend reversal.

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