Market Analysis Patterns
Market Pattern Analysis
Trend Identification
Uptrend
- Higher highs and higher lows
- Moving averages trending upward
- Price rises accompanied by volume increases
Downtrend
- Lower highs and lower lows
- Moving averages trending downward
- Decreased volume on bounces
Range-Bound Market
- Trading within defined range
- Moving averages sideways
- Declining volume trend
Risk-On / Risk-Off Assessment
Risk-On Environment Characteristics
- Stock markets rising (especially emerging markets)
- High-yield currency buying (AUD, NZD, etc.)
- VIX index declining
- Interest rates rising
- Risk assets like crude oil rising
Risk-Off Environment Characteristics
- Flight to safe assets (yen buying, Swiss franc buying)
- Gold prices rising
- Bond buying (yields falling)
- VIX index rising
- Emerging market currencies and stocks selling
Economic Indicator Interpretation
Employment Data (US)
Nonfarm Payrolls (NFP)
- +200k or more above expectations: Strong employment, rate hike expectations
- -100k or more below expectations: Employment deterioration, rate cut expectations
Unemployment Rate
- 3.5% or below: Near full employment
- 4.0% or above: Signs of employment environment deterioration
Inflation Indicators
CPI (Consumer Price Index)
- 2% YoY: Fed target level
- 3%+: Inflation alert
- Below 1%: Deflation risk
PPI (Producer Price Index)
- Important as CPI leading indicator
- Captures upstream inflation
Central Bank Policy
Fed (Federal Reserve)
- Watch dot plot
- Policy rate outlook changes
BOJ (Bank of Japan)
- YCC (Yield Curve Control) policy
- ETF purchase trends
ECB (European Central Bank)
- 2% inflation target
- Response to regional disparities
Inter-Market Correlation Analysis
Positive Correlation Patterns
- Stocks ↑ → Interest rates ↑ (strong economy)
- USD/JPY ↑ → Nikkei ↑ (exporters favorable)
- Crude oil ↑ → Inflation expectations ↑
Inverse Correlation Patterns
- Interest rates ↑ → Bond prices ↓
- Dollar ↑ → Gold prices ↓
- VIX ↑ → Stocks ↓
Seasonality & Anomalies
Monthly Patterns
- January Effect: New year fund inflows
- Sell in May: Pre-summer doldrums position closing
- September: Historically weak month
- December: Tax-loss selling, Santa Claus rally
Day-of-Week Effects
- Monday: Weekend risk pricing
- Friday: Position adjustments
Fiscal Year-End
- End of March: Japanese corporate fiscal year, repatriation flows
- End of December: Western corporate fiscal year
Technical Indicator Usage
Trend Indicators
- Moving Averages: 25-day, 75-day, 200-day line relationships
- MACD: Identifying trend turning points
- Bollinger Bands: Volatility and contrarian entry points
Oscillators
- RSI: Over 70 overbought, below 30 oversold
- Stochastics: Short-term turning points
- Volume: Confirming price movement reliability
Sentiment Analysis
Capturing Investor Psychology
- Put/Call Ratio: Option market skew
- Bull/Bear Ratio: Investor surveys
- Fear & Greed Index: CNN Fear & Greed Index
News Flow Analysis
- Headline tone changes
- Media coverage frequency
- Social media buzzwords