Intermarket Signals for the S&P 500
As most people probably realize, the S&P 500 had a dramatic reversal on Thursday. (The 5.6 percent range from low to high was the biggest since March 2020, according to TradeStation data.) Today we’ll consider some intermarket patterns on other charts.
First is the U.S. dollar index. The greenback’s relentless advance has plagued the bulls for most of 2022, especially in recent weeks as the EURUSD pair broke parity. But something interesting could have begun on September 28. That’s when DXY was unable hold a new multiyear high and then broke the previous session’s low – a bearish outside day.
A similar candlestick appeared on October 13. Both are potential reversal patterns. Also consider this month’s lower high. Has the U.S. currency peaked for now?
Second, the 10-year Treasury Yield remained below long-term resistance around 4 percent despite last week’s inflation reports exceeding forecasts. Has TNX reached an intermediate-term high? That could be another potential positive for equities.
Third, “Dow Theory.” The Dow Jones Transportation Average made a higher low this month despite the broader index making a lower low. That’s a potentially bullish “non-confirmation” of the new low:
Intermarket signals like these matter less than price action on the primary SPX chart. They can take time to play out but could be positive. Traders may want to review them, especially with the calendar of events shifting away from inflation and toward company news.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing in cryptocurrencies involves significant risks. Please click here for TradeStation Crypto’s risk disclosures on investing and trading in cryptocurrencies.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
First is the U.S. dollar index. The greenback’s relentless advance has plagued the bulls for most of 2022, especially in recent weeks as the EURUSD pair broke parity. But something interesting could have begun on September 28. That’s when DXY was unable hold a new multiyear high and then broke the previous session’s low – a bearish outside day.
A similar candlestick appeared on October 13. Both are potential reversal patterns. Also consider this month’s lower high. Has the U.S. currency peaked for now?
Second, the 10-year Treasury Yield remained below long-term resistance around 4 percent despite last week’s inflation reports exceeding forecasts. Has TNX reached an intermediate-term high? That could be another potential positive for equities.
Third, “Dow Theory.” The Dow Jones Transportation Average made a higher low this month despite the broader index making a lower low. That’s a potentially bullish “non-confirmation” of the new low:
Intermarket signals like these matter less than price action on the primary SPX chart. They can take time to play out but could be positive. Traders may want to review them, especially with the calendar of events shifting away from inflation and toward company news.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing in cryptocurrencies involves significant risks. Please click here for TradeStation Crypto’s risk disclosures on investing and trading in cryptocurrencies.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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