Quick Charting Shifts in Intermarket Money Flow and the Fed

Nov 1, 2013: 12:55 PM CST

As a follow-up post to Wednesday’s “Risk-Off Money Flow in Reaction to the Federal Reserve,” let’s take a snapshot of the current “cross-market” money flow to see that indeed a sudden “Risk Off” play developed in the aftermath of the Fed announcement.

Risk Off Risk On Money Flow Intermarket Analysis Cross Market analysis

The chart above shows ETFs as representatives of the broader markets of US Stocks (SPY), Gold (GLD), Crude Oil (USO), 10-Year US Treasuries (IEF), and the US Dollar Index (UUP).

These are the same markets we detail in each weekend’s Intermarket Report.

We’re just seeing the perspective  – using a line chart to represent cross-market money flow – from October into November, but we note key trends throughout the month.

Markets were relatively stable or balanced through the start of October, though mid-October (blue line) saw accelerations or reversals in ongoing trends.

Namely, money flowed quickly into Stocks, Gold, and the 1o-Year US Treasury Note (a strange cross-market pairing) and out of Crude Oil and the US Dollar Index (another strange pairing).

These trends continued until the Federal Reserve “we will change nothing – as expected” announcement Wednesday afternoon which saw the instant “Risk-Off” shift I highlighted immediately following the announcement.

A tighter zoom shows the specific money flow that continued from the announcement:

Intermarket Money Flow Cross Market ETF Risk Off Fed Day Federal Reserve Announcement

Preceding the policy “no change” announcement on the afternoon of October 30th, we’ve seen continued “Risk Off” Money Flow, namely out of stocks, gold, and oil but also the US 10-Year Treasury Note.

The only “bullish” reversal has been the traditionally Risk-Off or safety play into the US Dollar.

Of the four “sell-off” markets, stocks have held their own in terms of relative strength (declining at a lesser angle than the sharper sell-offs in Gold, Oil, and Treasuries).

Even if you trade a single market, it’s often helpful to pull back the perspective to the broader picture of “Money Flow” or Risk-On/Risk-Off behavior across the main markets.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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2 Comments

2 Responses to “Quick Charting Shifts in Intermarket Money Flow and the Fed”

  1. Jay Trader Says:

    Nice blog. Thanks or the charts

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