What Risk-Off Looks Like From An Intermarket Perspective
- Posted by JC Parets
- on May 25th, 2012
One of my favorite things about John Murphy’s crew is how well they collect data from a variety of asset classes to help tell a story. Arthur Hill’s depiction of the Intermarket world this morning is perfect example of the level of talent at StockCharts.com:
Today we’re looking at a 6-Month Performance Chart of 30-Year Bonds, US Dollar, Stocks, Gold and Crude Oil. We’ve seen a clear flight to safety with Bonds and the Dollar sitting at 6-month highs. Meanwhile, Gold and Crude Oil are doing the exact opposite down near 6-month lows. Notice that stocks are stuck somewhere in the middle trying to find their way:
I’ll be watching how Crude Oil and Gold react to these low levels, while the Dollar and Treasury Bonds hang out in the nosebleed section. A reversal of fortunes here should certainly take stocks higher, along with Gold and Crude Oil. But if buying pressure continues into the dollar and bonds, then I would expect the Stock Market to struggle.
I think it’s important to learn from the success and misfortunes of other asset classes. Wouldn’t we be selling ourselves short if we chose to ignore this stuff?
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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