InvestingHaven’s research team suggests that a new primary market trend could arise depending on what leading markets will do around inflection points. Note that investors should not look at one market only, but at the combination of all leading markets and the collective direction(s) before coming to conclusions.
First, the transportation index is near all-time highs. As seen on the first chart, this is a major resistance area. What happens with the transportation index will have major implications on the stock market as a whole.
Second, the US dollar is testing its breakout point. The dollar broke through major resistance in November last year after 3 failed attempts in 2015/2016. This breakout could have MAJOR implications for markets: bearish for commodities, gold and currencies. Right now, the dollar is trading exactly at major support.
Third, base metals arrived at major resistance as well. Base metals are a strategic asset, and they are watched closely by all investors in order to get an idea of the health of the economy and the value stock market segment. If they fail to move higher, it would raise a red flag.
Next, crude oil, without any doubt the leading commodity globally, is struggling to move higher as it entered a major resistance area. Although it seems to be consolidating, it clearly lost steam, and investors are doubting whether that is bullish (preparing a new move higher) or bearish (resistance being too strong). It is too hard to make a forecast at this point, investors should let the market do its work.
Last but not least, gold is trading at an important trend line. InvestingHaven’s point of view is that gold will only enter a bull market once above $1350. A move above $1220 would suggest a tactical bull market, not yet a structural bull market. If $1220 does not hold, gold will be eyeing $1000.
Investors should watch closely what happens with all 5 leading markets collectively which are discussed in this article in order to get an idea of the next major move(s). That is what intermarket analysis stands for and why it is so important.
The iShares Dow Jones Transport. Avg. ETF (NYSE:IYT) closed at $166.34 on Friday, up $2.49 (+1.52%). Year-to-date, IYT has gained 2.15%, versus a 2.60% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Investing Haven.