🔗 Intermarket Analysis
🎯 Markets Don’t Exist in Isolation
No market moves alone. Bonds, stocks, commodities, and currencies dance together in predictable relationships. Understanding these connections gives you an edge.
🌐 The Four Pillars
Asset Class Relationships
Interest Rates (Bond Yields)
↑
/|
/ |
Currencies ←──────→ Equities ←──────→ Commodities
\ |
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↓
Economic Growth
Normal Intermarket Relationships
| Relationship | Normal State | What It Means |
|---|---|---|
| Bonds ↓ = Stocks ↑ | Inverse | Lower rates boost equities |
| Dollar ↓ = Commodities ↑ | Inverse | Cheaper USD = higher commodity prices |
| Bonds ↑ = Yields ↓ | Inverse | Bond prices and yields move opposite |
| Growth ↑ = Cyclicals ↑ | Positive | Risk-on environment |
📊 Key Intermarket Ratios
The Big Three
| Ratio | Calculation | Signal |
|---|---|---|
| Gold/Oil | Gold ÷ Oil | Inflation expectations |
| Copper/Gold | Copper ÷ Gold | Growth vs. safety |
| XLY/XLP | Consumer Disc. ÷ Staples | Risk appetite |
Yield Curve Spreads
| Spread | Normal | Inverted | Signal |
|---|---|---|---|
| 10Y-2Y | Positive | Negative | Recession warning |
| 10Y-3M | Steep | Flat/Inverted | Fed policy vs. market |
🎯 Defensive vs. Risk-On Rotation
The Risk Spectrum
| Risk-On (Growth) | Risk-Off (Defense) |
|---|---|
| Technology stocks | Treasury bonds |
| Emerging markets | US dollar |
| High-yield bonds | Gold |
| Small-cap stocks | Consumer staples |
| Cyclical sectors | Utilities |
| Commodities | Swiss franc/Yen |
Tracking the Rotation
Risk-On Indicators:
– ✓ Small-caps outperforming large-caps
– ✓ High-yield spreads narrowing
– ✓ Copper rising, gold flat
– ✓ Emerging markets strong
– ✓ Yield curve steepening
Risk-Off Indicators:
– ✓ Treasury bonds rallying
– ✓ Dollar strengthening broadly
– ✓ Gold outperforming stocks
– ✓ Low-volatility stocks leading
– ✓ VIX rising
🔍 Cross-Market Confirmation
The Confirmation Framework
Strong trends show confirmation across markets:
| Stock Trend | Confirmed By | Divergence Warning |
|---|---|---|
| Bullish rally | Bond yields rising (growth), copper up | Bonds rallying (flight to safety) |
| Bearish decline | Dollar strength, gold flat/up | Bonds falling with stocks (inflation fear) |
Sector Rotation Signals
| Rotation | From | To | Economic Signal |
|---|---|---|---|
| Early cycle | Defensives | Cyclicals | Recovery beginning |
| Mid cycle | Value | Growth | Growth acceleration |
| Late cycle | Growth | Value | Slowing growth |
| Recession | Cyclicals | Defensives | Contraction |
🛠️ Intermarket Tools
Essential Charts to Watch
| Chart | What It Shows | Platform |
|---|---|---|
| $USD (DXY) | Dollar strength | Any charting platform |
| $TNX (10Y Yield) | Interest rates | Free platforms |
| $GOLD | Safe-haven demand | Any charting platform |
| $WTIC | Oil/Energy | Any charting platform |
| $COPPER | Growth indicator | Any charting platform |
Correlation Matrices
Use correlation tools to find:
– Assets moving together (same trade)
– Assets moving opposite (hedge opportunities)
– Correlation breakdowns (regime change)
🎓 Learn With Titan
| Market Setup | Intermarket Context | Titan’s Interpretation |
|---|---|---|
| Stocks up, bonds up, dollar down | Goldilocks | Ride the trend |
| Stocks down, bonds down, dollar up | Inflation scare | Defensive posture |
| Stocks down, bonds up, dollar up | Risk-off flight | Watch for reversal |
| Stocks flat, copper rising, yields up | Rotation setting up | Research cyclicals |
| Gold rising, oil falling, dollar weak | Stagflation fears | Defensive + commodities |
⚠️ Intermarket Traps
- Assuming relationships are static — Correlations break down
- Ignoring timeframe — Daily vs. monthly correlations differ
- Causation vs. correlation — Both can be symptoms, not causes
- Overweighting one signal — Use intermarket as context
- Missing the exceptions — Flight-to-quality can override normal patterns
💡 Key Takeaways
- 🎯 Markets are connected—trade the relationships
- 🎯 Divergences between markets often signal turning points
- 🎯 Risk-on/risk-off drives short-term correlation
- 🎯 Long-term trends emerge from fundamental intermarket shifts
A stock trader who ignores bonds is flying blind. A bond trader who ignores currencies is missing half the picture. The complete trader sees the whole ecosystem.
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