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 10 Year T Notes

US 10 Year notes continue to fall in line with the bearish wave count as prices are unable to go above the 40dema. I have considered the alternate near term bullish case but as long as prices are falling from the averages the trend is down for bonds and higher for yields near term. This is one of the reasons you see gold under pressure despite a falling dollar.

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Bitcoin remains the best manifestation of excess liquidity of our times. So as an indicator its charts keep getting clearer as patterns and wave counts start to show up very clearly given the large participation in the instrument. EW is nothing but a measure of psychology of crowds. So the chart below shows the breakout post the 7800 mark last discussed that led to one leg higher. This new leg fits a rising channel and prices reversed from the upper end [log scale], perfectly and pierced the lower end though not closing below the lower end. The lower end at 9480 and rising steeply is the key support now, and a break would mark a short to medium term trend reversal in prices again.

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US 30 year T Bonds

While the US 2 year yields were rising the 10 year remained flat and the 30 year bonds are rallying now. This takes me to the view I presented in the Long Short report. That a risk off rally in Bonds into December maybe likely. In this scenario wave 3 down longer term has not started and wave C of 2 up kicks off. The signs of that are now visible and till the recent lows are broken by bond prices bonds may rally and yields may decline. The chart of the 30 year shows a small inverted Head and Shoulders bottom [blue neckline] and a breakout above 155.4 should further add to this view.


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