Quick Glance at the Intermarket Landscape to end June

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

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