Intermarket Analysis
Overview
Intermarket analysis studies the correlations and divergences between asset classes — equities, bonds, commodities, currencies, and crypto — to gain a macro edge. When relationships that normally hold start breaking down, it often foreshadows major market regime shifts. Traders use these cross-market signals to confirm or contradict setups in their primary market.
Key Concepts
Stock-bond correlation and risk parity. Dollar index (DXY) inverse relationship with commodities and crypto. Yield curve signals (2Y-10Y spread). Gold vs real yields relationship. BTC correlation with Nasdaq/SPX. Copper-gold ratio as growth indicator. VIX as equity sentiment barometer.
Entry Signals
DXY breaking down while BTC and gold diverge upward. Yield curve steepening after inversion (risk-on rotation). VIX spike above 30 following by rapid decline (volatility reset). Copper-gold ratio turning up (growth expectations rising). Bond yields falling while equities rising (Goldilocks).
Exit Signals
Intermarket correlation breaking from expected behavior. DXY strengthening into risk-off with all correlations aligning bearish. Major divergence closing (confirmation complete, edge expired). Correlation regime shift detected.
Best Timeframes
Daily, Weekly — intermarket signals are most reliable on higher timeframes. Use for directional bias, not intraday timing.
Pro Tips
Correlations are not static — they shift across market regimes. Always check whether the current correlation regime is risk-on, risk-off, or transitioning. Don't over-rely on a single intermarket relationship; use confluence across multiple cross-market signals.
More Topics in This Category
Event-Driven Trading
Event-driven trading capitalises on price dislocations caused by scheduled and unscheduled catalysts — earnings announcements, FOMC meetings, governance votes, protocol upgrades, token unlocks, mergers, and geopolitical shocks. The edge comes from correctly anticipating the event's impact or exploiting the volatility expansion around it.
Earnings & Valuation Analysis
Earnings and valuation analysis evaluates a company's financial performance and market pricing to determine whether its stock is undervalued, fairly valued, or overvalued. By examining revenue growth, profit margins, earnings per share, and valuation multiples such as price-to-earnings and price-to-sales ratios, traders and investors can assess whether the current market price is justified by fundamentals.
Macro Trading
Macro trading uses macroeconomic data — GDP, inflation, interest rates, employment, and central bank policy — to establish directional biases across currencies, equities, bonds, and commodities. Traders position for large economic regime shifts rather than intraday noise, using fundamental catalysts as the primary edge.
Value Investing & Intrinsic Value
Value investing identifies assets trading below their intrinsic or fundamental value and holds until the market recognises the discount. In traditional markets this means studying P/E ratios, discounted cash flows, and book value; in crypto it extends to token economics, revenue-generating protocols, and fully diluted valuation analysis.