Hello everyone, There are some useful Sentiment indicators based on FX Options trading activity and US Yeild Curve analysis. Just to start a discussion... As of 07/25/08, US Options Markets Open Interest Ratio was: EUR/USD 1.13 Neutral GBP/USD 1.85 Bearish USD/CHF 3.59 Bearish USD/JPY 0.83 Bullish AUD/USD 0.35 Bullish US Yield Curve is shifting upward, my reading for 10Yr Yield / 2Yr Yield Ratio is -1.57% at a close on 07/25/08 - Bullish for US Dollar.. Let me know if this is an interesting piece of info. I have more stuff on Oil, Gold, Stocks, Bonds influence on Forex Markets. Inter-Market Analysis is pretty powerful addition to the Trend and Momentum analysis...Opinions welcome!
One of the best intermarket indicators is bonds/ES. Roughly a 90% negative correlation, and one of em always seems to move before the other, giving you a heads up on the lagging contract before it moves. I watch both like a hawk all day (90% of my trading is in these two contracts).
Not sure what you referring to, but thanks. Do you understand put/call ratio and US Yield Curve readings?
Internal ratios are read from an advancing position relative to a declining, who are always one. A ratio of .11, for an example, would be 1 appreciating stock or option for every 10 depreciating. Not the best of odds for a call or long. Yield curve spreads are simliar but a little bit more complex. http://www.cbot.com/cbot/pub/cont_detail/0,3206,1070+12541,00.html
Very simple, just referring to prices of ES and ZB. Extremely highly correlated. Sharp movement in one more often than not gives a heads up to take the other the opposite direction, before it breaks. I do this all the time (doing it as I type actually). Yes, I used to look at put/call and yield curve stuff ages ago. Complicated things too much. I take my trading as simple as humanly possible. Don't use "indicators" either.