The Strange Intermarket Landscape

I want to give a big shout-out to Corey Rosenbloom who is doing some amazing work at Afraid to Trade. I don't know Corey personally but his technical analysis is excellent. He is a Chartered Market Technician (CMT) and does some awesome Intermarket work on his site. His most recent blog post gets into some of the strange action that we've seen in the Intermarket Landscape over the last couple of months.

We've discussed here for a long time that when market participants have an appetite for risk, money flows into Stocks and Commodities as it comes out of the safe haven of the US Dollar and Treasury Bonds. The opposite has also been true when the market is risk-averse: the bid goes towards the Dollar and Bonds as it gets out stocks and commodities. Gold has consistently had a mind of its own, sometimes trading as a safe haven, and other times with risk-on assets when it becomes a "source of funds" during market declines.

Rosenbloom points out that ALL of these markets (except for Gold) have been rising from the September or October lows to the current January highs. Take a look at this chart that he put together comparing them:

From Afraid To Trade:

"Why are all markets rising and what does it mean?

When will one or more of these markets reverse back to “normal?”

The answer is beyond the scope of this post but it merits further attention.

Would it be possible for all markets to break above their respective resistance levels?  Yes, anything could happen, but that would be the lower-probability (and some would say “very unlikely”) outcome.

The classical thinking would be that either the Risk-On markets fail to overcome resistance and reverse lower, boosting Risk-Off assets above their resistance, or vice versa (Risk-On Markets boost higher, reversing Risk-Off Markets)."

I think he nailed it in this post. Read the rest of it here and make sure that you're reading Afraid to Trade on a regular basis. You can also follow him on Stocktwits at @afraidtotrade.

Nice job Corey.

Source:

Something's Gotta Give in the Intermarket Landscape (AfraidToTrade)

Tags: $GC_F $GLD $SPY $TLT $UUP $DX_F $USO $CL_F