Inter-market Relationships

Relationships between:

- stocks and bonds 
- bonds and commodities 
- commodities and the dollar.

in an inflationary environment include:

• A positive correlation between stocks and bonds (with bonds usually leading).
• A negative correlation between bonds and commodities.
• A negative correlation between the US dollar and commodities.

In a deflationary environment: 

• A negative correlation between bonds and stocks.
• A negative correlation between commodities and bonds.
• A positive correlation between stocks and commodities.
• A negative correlation between the US Dollar and commodities.

NDX in tight consolidation

With Aug. 15 looking like a breakout the next day was a complete reversal and the index has still remained under a resistance level 4812 area. This is summer trading with volume being low consolidation is likely to continue. It will be interesting to see if the market continue to see new highs for the reset of the year or we see a big dip (a 10% correction) as everyone is anticipating this year. The economy is doing well as shown with the earning estimates beating expectations. Another reason for the markets move higher this summer was the upward trajectory in oil and gas prices.

Relationship Between the FED and Repo

NFP Day Tomorrow (Friday Aug 5th)

The market has been trading in a close range waiting for the two important economic news to come out.

Aug 05 12:30

287K  Consensus

180K Previous

Unemployment Rate (Jul):

Aug 05 12:30

4.8%  Consensus

4.9% Previou