Are you bad at predicting market direction? Keep a Close Watch on this two key indicators

The consolidation market in the second quarter is still continuing, but in this seemingly light shock, there have been some changes in the past two weeks, and both groups of risk assets with high linkage before show signs of deviation.

Although there are deviations in their respective news and fundamentals, if this totally different market continues for a while, it is likely to be the precursor of a key breakthrough.

Crude oil VS copper

This group of combinations is the variety that we focused on in the first quarter. Historically, they have maintained a high degree of synchronization, and after the deviation at the end of last year, they returned to the same direction in the first quarter of this year. However, recently, the situation of weak oil has intensified.

As can be seen from the following figure, after entering June, the rebound of oil price lags behind that of copper. During this period, OPEC's production reduction led by Saudi Arabia also provided good news in theory, but still failed to effectively boost oil prices.

Worries about the sluggish demand side of the whole crude oil market in the second half of the year are the core factors to suppress oil prices in the long run. If the demand for crude oil is weak, so will the general direction of the whole market, and the opportunity of economic weakness will be greater than that of strong economic recovery. Therefore, at this stage, the rise of crude oil or the fall of copper price should appear in the market outlook.

However, if this deviation from the market continues for a period of time, it will imply the start of the big market, which we will discuss in detail according to the actual progress. At this stage, we should pay attention to whether these two varieties can quickly repair the deviation.

US stock VS currency

Since the Federal Reserve threw money in 2019, the linkage between the currency circle and the US stock index has become closer and closer. Although in these years, the two are not following the trend, but there is still a certain reference value as a whole.

As we all know, last week's news about Coin'an and Coinbase severely hit the performance of counterfeit coins, and the mainstream currencies were under significant pressure. At the same time, there was a small breakthrough in the US stock index. Similar to the previous group of comparisons, we believe that this deviation should not last too long. If the trend of strong stocks and weak currencies is further strengthened, it is expected that there will be reversal and big market after the threshold comes.

(Regardless of the significant difference in volatility, the time of the two trends in the same direction is much longer than the inverse correlation)

It should be noted that many of the current declines in the currency circle are caused by the withdrawal of market makers. Compared with mature markets, the liquidity of currency circle is very fragile in nature, which is also the background factor of ups and downs.

However, although the stock market is liquid most of the time, there have been many situations in which regulators need to rescue the market in extreme cases. For the time being, we can use recent stories as appetizers in financial markets.

After comparing the above two sets of indicators, we believe that the consolidation market is coming to an end. Although seasonal factors may continue for some time, the changes between assets suggest that the big market is expected to come in the third quarter. Everyone can be prepared, and no matter which direction they break through, they will bring relatively more ideal trading opportunities.

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