Intermarket Signals for the S&P 500

SP:SPX   S&P 500 Index
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.

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