Looking To Bonds To Tell Me Where The Stock Market Is Headed Next

Instead of looking at financial markets or asset classes on an individual basis, intermarket analysis looks at several strongly correlated markets or asset classes, such as stocks, bonds and commodities. This type of analysis expands on simply looking at each individual market or asset in isolation by also looking at other markets or assets that have a strong relationship to the market or asset being considered.

Typically, there is an inverse correlation between stock and bond. When the economy is acting poorly, central bankers tend to lower interest rates to help stimulate growth. As interest rates go down, bond prices go up. On the flip side, when the economy is doing well, company profits are increasing, which leds to inflation, which causes interest rates rise to tame that inflation, which pushes bond prices do down.

https://markets.businessinsider.com/news/stocks/stock-market-news-today-second-straight-weekly-decline-sp-500-2020-9-1029582977#

https://markets.businessinsider.com/news/stocks/stock-market-outlook-3reasons-investors-should-stay-bullish-ubs-2020-9-1029583744#

https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp-500-drop-before-year-end-2020-9-1029583381

MY TRADING METHODOLOGY IN A NUTSHELL BELOW

I’m a supply and demand trader. The premise of supply and demand trading is when the market makes a sharp move up or down the large institutions i.e banks/hedge funds are not able to get their entire trade placed into the market, leaving pending orders to buy or sell at the zone with the expectation the market will return to the zone and the rest of their trading position will be filled.

I use multiple time frame (MTF) analysis to improve my discretionary trading decisions. MTF analysis involves analyzing the same asset on multiple time frames. The rule of thumb when using MFT is you want your charts to scale down/up by 4X – 6X. In my case I tend to look at:

Monthly Charts (curve time frame) – which represents that jet fighter flying over the football stadium.
Weekly Charts (trend time frame) – which represents the concession stands looking down at the field.
Daily Charts (entry time frame) – which represents being on the football field with the player.
4 Hr Charts (entry time frame) – which represents the center hiking the ball to the quarterback.