The intermarket analysis says that it is still better to be invested in equities and bonds than in commodities and U.S. dollar.
Equites and Bonds are Rising
The 30-year U.S. Treasury Bonds, $USB, declined from July 2016 to March 2017 (First Panel Chart 1). It made double bottom near 147.00-146.00 level in December 2016 and March 2017. Since then it has been rising. The bounce from December lows is at 50% retracement if the decline from July high. The next resistance is at 61.8% Fibonacci retracement level near 165.00 level.
S&P 500, $SPX, is on a tear since bottoming in February 2016 (Second Panel Chart 1). Prior to that they were moving sideway for more than fifteen months after a multi-year rise. The trend is strong is not showing any sign of reversal.
Commodities are struggling to get traction for some time. Reuters/Jefferies CRB Index, $CRB, declined from June 2014 to December 2016 (Third Panel Chart 1). It bounced from lows near 154.85 in January 2016 to high of 196.36 in January 2017. It made double top near that level with a prior visit in June 2016. It has declined from those highs and is forming a horizontal channel.
Since late-December 2016, the U.S. Dollar index, $USD, has been declining. Now it is at level from which it twice bounced-off – once in June 2015 and then in May 2016. This time, however, the chances of a bounce are not that strong. Following the bottoming in May 2016, Dollar index broke above the upper limit of a horizontal channel in November 2016. The upside break was not sustainable and it fell back within the channel in April 2017 before testing the support for few weeks. This makes the third visit to the earlier support significant and more likely that it will not held.
Equities, The Best Performer
The equities are doing better than other three asset classes. The ratio of $USB/$SPX is in a down ward trend (First Panel Chart 2). Other two ratios, $CRB/$SPX (Second Panel Chart 2) and $USD/$SPX (Third Panel Chart 2), are also trending down.
The bonds, $USB, underperformed the dollar index in the second half of 2016 (Fifth Panel Chart 2). In 2017, the bonds are outperforming the dollar index.
Since June 2017, the commodities index is outperforming 30-year Treasury bonds after underperforming it from January 2017 (Last Panel Chart 2).