Intermarket Analysis Aug 3rd Week 2016
Intermarket analysis is a difficult part of the investor and traders analysis because it involves lots of market and the interrelationship between them can shift between inverse or positive depending on whether its a deflationary period or inflationary period. I confess I don't understand that much about all these stuff and I don't really need to know that much after all I follow the trend most of the time. However, intermarket analysis does help when you think that a market is about to change direction. You look at all indicators and analysis and then you consider what other markets are doing as a confirmation of your analysis. Anyway, still have lots to learn about this. Below are the many charts that accompany this week's intermarket analysis.
The Big 3 and world markets
After the day of BREXIT we saw so many stocks in the UK getting hit hard especially the banks. Surprisingly, the market did not drop further but rallied. In the US the markets hit new highs. I wrote a piece titled Why The Stock Market Crashed After BREXIT And Staged One Of The Greatest Bull Run In Recent History
Did you notice the monthly bottoming tail that signaled the recent low in FTSE? Bottoming tails are very powerful and the often point to a reversal. This is especially true when bottoming tails form in longer time frames. Read How Bottoming Tails Can Signal A Reversal And Provide A Great Trading Opportunity.
The Mighty Dollar And Currencies
Stage analysis is very good for longer term analysis. Basically there are 4 stages that every market and stock will go through in one time or another. To understand more read The 4 Stages Every Stock And Market Goes Through.
Commodities
Ok, if you are a seasoned trader, all this information will lead you to trading opportunities and focus on the right sectors and what to expect and help you form a bias. For those who are not yet so familiar with the markets what does all this mean?
Below is the summary of this weeks intermarket analysis
Please follow your own trading strategy to enter and exit positions. Sometimes by following trading setups, I enter even before there is a 100% confirmation of my intermarket analysis. One thing that is certain is this...If a market is trending higher, you always buy breakout and dips. Either in your preferred time frame or lower time frames. I like to enter using 60 min charts so even if longer term things are not so good, I'm probably out of the position before it happens.
Below is the summary of this weeks intermarket analysis
- The major indexes in US, S&P 500, Nasdaq and Dow Jones are all in long term bull markets. We remain bullish till the charts tell us so.
- Major stock markets around the world are setting up bullish patterns and this is good for stock markets
- US dollar is in a trading range and not trending. Therefore, any bullish patterns in commodities are more likely to follow through
- Gold and silver have begun an uptrend but it may consolidate a bit because of the amount of supply from the past
- Oil may be finding a bottom and longer term, this may be bullish for oil
Please follow your own trading strategy to enter and exit positions. Sometimes by following trading setups, I enter even before there is a 100% confirmation of my intermarket analysis. One thing that is certain is this...If a market is trending higher, you always buy breakout and dips. Either in your preferred time frame or lower time frames. I like to enter using 60 min charts so even if longer term things are not so good, I'm probably out of the position before it happens.
