6 Inter-Market Charts Highlighting Current Stock Market Dynamics

Aaron Jackson

Inter-market analysis is useful for determining underlying market conditions for active investors.

Several inter-market tools are underutilized because the takeaways aren’t exactly clear and ratios often act differently than stocks.

That said, taking a step back and focusing on the bigger picture really helps tune out the noise.

Here’s a look at some intermarket charts to watch moving forward.

Software Sector relative to the S&P 500

There aren’t many industries with stocks coming out of bases and hitting 52 week highs.  Software is one of those groups. Software stocks relative to the S&P 500 is testing the prior highs. We’re watching to see if leadership can continue beyond earnings season.

software sector stocks performance versus sp 500 bullish january 2019

Biotech Sector relative to the S&P 500

Biotech relative to the S&P 500 has trended higher for over a decade. Is this a false break of the trend?

biotech sector stocks performance versus sp 500 bearish lower january 2019

Consumer Sector relative to the S&P 500

Consumer Staples Relative to the S&P 500 has been a telling ratio. It broke trend resistance as stocks rolled over in October while it topped at out as stocks collapsed in December. This is something to watch in the coming weeks for signs of bottoming.

consumer staples sector stocks performance versus sp 500 bullish january 2019

Financials Sector relative to the S&P 500

Financials relative to the S&P 500 found major support at an old pivot line from 2013.  Market bulls would love to see a higher high in the coming weeks.

financial sector stocks performance versus stock market bearish january 2019

China Technology relative to U.S. Technology

Chinese tech relative to U.S. tech has been in a deep downtrend. Now the ratio is compressed. The direction of the next few weeks could be quite telling. If we’re looking for ‘risk-on’ action out of China and emerging market leadership, this is where we’d expect to see it.

china technology stocks performance versus us tech bullish january 2019

Junk Bonds relative to U.S. Treasury Bonds

Junk Bonds relative to U.S Treasuries broke down hard in Q4  Now the ratio is testing the old base area from below. It’s worth watching to see if this stops now, continues farther into the range or even exceed it.

junk bonds jnk performance versus treasuries tlt bearish chart january 2019

Thanks for reading. Trade ‘em well.

 

Twitter:  @ATMcharts

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