Using The Yen To Trade The S&P

If you've been reading my blog lately, you would know that I have been using the Japanese Yen as a leading indicator to trade the S&P.

Just to summarize, there is an inverse relationship between the S&P and the Japanese Yen and at times the yen will move slightly ahead of the S&P giving us some insight as to what stocks may due.

Today stocks gapped down lower while the Yen was sharply higher. You'll notice in the above 2 day 5 minute bar chart that stocks continued making new lows up until about 10:45. If you look at what the yen was doing, you will see that the yen stopped going higher. In fact, the yen made its high about an hour earlier. So basically we have a new low in the S&P at 10:45 which is not confirmed by a new high in the Japanese Yen. I take that as a bullish signal for stocks and as you can see the stock market rallied for the rest of the day.

Last week I posted similar examples of how I've been using the Yen to trade the S&P and you can read that post by clicking here.