Quick Glance at the Intermarket Landscape to end June

Jun 22, 2012: 7:50 AM CST

As June winds to a close, let’s take a quick look at the current Risk-On/Risk-Off trends within the Intermarket Landscape.

Here’s the current Cross-Market Picture:

For a quick review, the way we interpret the line chart above is to divide the broader markets into “Risk-On” or “Risk-Off” markets:

“Risk-On” Markets include Stocks and Commodities (shown above with Gold and Crude Oil)

“Risk-Off” Markets include US Treasuries (10-Year Note Price above) and the US Dollar Index

Doing so provides a context to assess money flow or price trends relative to each other, rather than in isolation.

The chart-style above gives us a quick vantage point from which to observe broad money flow in the markets.

What’s the message?

If we start with March 2012, we saw a definitive shift towards the safer markets (Risk-Off) and away from offensive markets (Risk-On) which continued steadily until early June’s quick reversal.

From there, the Cross-Market picture took on a “Relief Rally” mode, or initial shift back to Risk-On markets which had clearly fallen in value (the S&P to 1,275; Gold back to $1,550; and Oil down to $82).

Treasuries and the US Dollar also fell from their respective peaks into 135 and 83 accordingly, taking on the form of a retracement.

Thursday’s cross-market price action suggested a dramatic shift BACK to the Risk-Off money flow, resulting in a sharp sell-off in stocks, oil, and gold (which fell $50 in a single session).

Going forward, we will be paying close attention to the landscape to assess whether a broader return to the Risk-Off trends continue.

As June pushes to an end, we will specifically be watching 1,300/1,275 in the S&P 500; $1,550 in Gold; and the $80 level (broken Thursday) in Oil.

For detailed charting and analysis, consider joining us in the Weekly Intermarket Membership Reports published each weekend for you.

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!


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