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Flashcards in Intermarket Analysis Deck (10)
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Four Asset Classes involved in Intermarket Analysis

1. Bonds
2. Stocks
3. Commodities
4. Currencies


Commodities and Currencies Trend (2)

1. Trend in the same direction
2. Counter to the dollar (very reliable relationship)


At market tops, asset classes turn in which order?

1. Bonds (leading indicator for stocks)
2. Stocks
3. Commodities


If oil stocks lead the market may be toppy - why?

Not a good thing for stocks (major market tops and spiking oil prices has historically been correlated.)

If oil prices rise, inflation also rises, which may induce the Fed to raise rates.


Sector that leads early during expansion (?)
Sector that leads early in a contraction (?)
Sector that leads during a contraction (?)

1. Consumer discretionary (early expansion)
2. Energy (early contraction)
4. Consumer staples (contraction)


Intermarket Relationships (6)
Leading relationships (2)

1. Dollar and Commodities (inverse)
2. Bonds and Commodities (base metals) (inverse)
3. Bonds and stocks (inverse since 1998)
4. Stocks and Commodities (positive since 2008)
5. Rising Dollar and U.S. Stocks (positive)
6. Weaker Dollar international stocks (positive)
7. Bonds lead stocks
8. Stocks lead commodities
- Cycles tend to be less reliable at bottoms than tops


New normal vs. Old normal

1. Stocks and Bonds now inversely correlated
2. Stock and commodity prices now closely correlated


Asset classes that lead in a crisis (2)

1. Gold
2. Oil


Sector rotation order

1. Cyclical
2. Technology
3. Industrials
4. Basic materials
5. Energy
6. Staples
7. Healthcare
8. Utilities
9. Financials


Inflationary correlation
Deflationary correlation

Inflation: BSD
Deflation: BD