People love correlations. “Traders” love to correlate news, government, yadi yadi yada….got so repetitive. But there is another correlation that is worth mentioning. It is the Obama factor. LOL not! It is where the money flows. This is a correlation worth noting because it is consistent and makes plenty of sense.
What is this awesome correlation?
Gold (/GC), Oil (/CL), Dollar(/DX), ES (/ES), Bonds (/ZB)
When the money flows from one of these, it will go to another one.
Market goes up. Dollar goes down.
Market goes down, gold goes up, dollar goes up. Oil goes up.
Dollar goes down bonds goes up.
It doesn’t always happen as cleanly, however, it seems that when you take from one it gets distributed in some way to one other four.
How does it make sense?
Well if the market goes up. Fundamentally, you want the dollar to go down. The dollar going down helps our revenue generating from companies and establishments outside the states. Also, the products and services we provide outside the US will become more affordable.
The market goes down. Gold goes up. There is fear in the market for a recession of some sort. And so instead of investing in the dollar, gold will retain its value more than the dollar. You may see bonds go up too.
The reasoning is fundamental. The technicals are also interesting to note. That when one sets up a distribution, the other sets up and accumulation.
ES GOES DOWN
BONDS GOES UP
DOLLAR GOES UP
OIL GOES DOWN
GOLD GOES DOWN
This is how money flows.