An August Bend in the Intermarket Landscape

Aug 20, 2013: 11:30 AM CST

If you follow Cross-Market analysis or Intermarket Analysis, you may have noticed a subtle shift or bend in current relationships in 2013.

Let’s take a look at the recent shift, note what’s happened, and then peek at the broader picture of cross-market money flow in 2013.

Cross Market Internmarket Analysis ETF Money Flow SPY TLT USO GLD UUP

For a reference, we’re seeing the leading ETFs (Exchange Traded Funds) for a quick glance at the Cross-Market or Intermarket Landscape:

USO (US Oil Fund) for Crude Oil; SPY for the SP500; UUP (labeled USD above) for the US Dollar Index; GLD for Gold; and TLT for Bonds/Treasuries.

I created a performance chart starting the comparison in June 2013 but the main focus on the chart above is the highlighted region from mid-August to note a ‘bend’ or subtle shift in the ongoing relationships.

Throughout most of 2013, money has been flowing INTO stocks and oil (positively correlated) and OUT OF Bonds and Gold (positively correlated) and by proxy, Stocks and Oil have generally been negatively correlated with Gold and US Treasuries.

In fact, let’s step up to the broader picture of Money Flow throughout 2013 so far:

Cross Market Internmarket Analysis ETF Money Flow SPY TLT USO GLD UUP

Using green and red trendlines, we can see the broader money flow (ETF performance) with a rising (green) trend for the SPY and USO (stocks and oil) and a declining (red) trendline for TLT (US Treasuries) and GLD (Gold).

Strangely enough, there’s no discernible trend – except for a sideways one – for UUP (the US Dollar Index fund).  In fact, UUP is roughly unchanged from the start of 2013 so we’ll leave that aside for now.

At the moment, TLT is down 14% for the year while GLD trades 19% lower at the moment.

Stocks (SPY) and Oil (USO) are the relative strength leaders for the year, both rising roughly 13% so far.

Let’s draw our attention back to the recent August shift in Money Flow via ETF performance.

Specifically, Oil and Stocks have temporarily separated as have Gold and Treasuries.

For a short period of time, Gold has traded up along with Oil while Treasuries have traded down with stocks.

Continue watching this “bend” or short-term shift in Money Flow as a n interesting development that’s affecting the Intermarket Landscape at the moment.

Relationships can bend, but unless there’s a major fundamental factor at work, they tend to resort to pre-established relationships.

Join fellow members to receive daily commentary and detailed analysis each evening by joining our membership services for daily or weekly commentary, education (free education section), and timely analysis.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “An August Bend in the Intermarket Landscape”

  1. Updating Syria Risk-On Intermarket Money Flow for August 27 | Afraid to Trade.com Blog Says:

    […] a subtle shift – that is not so subtle now – in my prior August 20th post: “An August Bend in the Intermarket Landscape.”  Be sure to check that out for some background and “early warning signs” that […]

  2. Updating Syria Risk-On Intermarket Money Flow for August 27 | iClouDNA Says:

    […] a subtle shift – that is not so subtle now – in my prior August 20th post: “An August Bend in the Intermarket Landscape.”  Be sure to check that out for some background and “early warning signs” […]