#intermarket analysis

Summary Daily Trend: Downtrend developing Cycle Position: Early daily cycle phase Key Level: Trading below the 10 day moving average Implication: Continued weakness supports stocks and metals The Dollar is approaching a short-term decision point as it continues to trade below the declining 10 day moving average. After forming a recent daily cycle low, the Dollar has failed to generate…

Summary Miners printed their low last Monday on day 20, within the timing band for a daily cycle low (DCL). Last week’s break below the lower daily cycle band triggered a daily downtrend. A close back above the 10 day moving average confirmed day 20 as the DCL. Closing above the upper daily cycle band has renewed the daily uptrend. The Miners printed their lowest point last week on Monday,…

Summary The dollar is in the process of breaking back below the 10 day moving average. Momentum from the recent day 24 daily cycle low has stalled. Price remains pinned along the 15-year trend line. Today’s dollar weakness supported strength in stocks and precious metals. The dollar weakened today and is now in the process of breaking back below the 10 day moving average, signaling that…

Summary The dollar is testing a critical 15-year trend line. This level represents a major long-term decision point. A rejection would reinforce the broader dollar downtrend and ease financial conditions. Dollar weakness could act as a catalyst for a breakout and potential melt-up in stocks. The dollar has been steadily climbing along a major 15-year trend line — a level that carries…

Intermarket analysis is a powerful method for understanding the dynamic relationships between various asset classes, including equities, bonds, commodities, and currencies. By studying these interconnections, traders and investors can gain valuable insights into broader market trends, assess sentiment, and make well-informed decisions.

For Indian traders and investors, intermarket analysis holds particular significance due to the intricate link between global and domestic markets. With India's growing economy and increased foreign participation, understanding these relationships can provide a competitive advantage.

The Foundations of Intermarket Analysis

John Murphy, a pioneer in intermarket analysis, identified four fundamental relationships:

Commodities vs. Bonds: Rising commodity prices often signal inflationary pressures, which typically lead to higher bond yields.

Bonds vs. Equities: Bond yields influence equity valuations through the cost of capital and expectations for interest rates.

Equities vs. Currencies: Strong domestic equity markets often coincide with a strengthening currency.

Currencies vs. Commodities: Commodities tend to have an inverse relationship with the currency of their primary producer or exporter.

For a deeper understanding, John Murphy's book on intermarket analysis is highly recommended and available on Amazon.