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,Use The AUD/JPY For Confirmation To confirm the trend (at times the EUR or USD is hit with unique news that distorts the pair predictive value), look at the trend for the AUD/JPY.The JPY is the ultimate safe-haven currency, and behaves the opposite way.Thus if the AUD/JPY trend is up-risk, appetite is on and the trend in stocks and commodities should be higher.If it down, the opposite happens.Use Crude Oil and Other Commodity Trends Together With Currency Trends For Added Confirmation Predicting shifts in risk appetite and stock movements can be improved by getting confirmation from commodities, especially very liquid ones like crude oil.
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,While the S has grown 15% since this day, the PMI is down 7.2%.Since this day, the PMI also dipped below 50 for the first time since July 2009, when the US was in the depths of a recession.This is an important indicator because a PMI above 50 represents a common opinion among business managers of expansion of the manufacturing sector, while below 50 projects contraction.To measure the negative historical divergence of the PMI from the S I divided the S 500 by the PMI.The higher this ratio is, the greater the negative divergence of the PMI from the S Moreover, given the S 500's high correlation with the PMI, the greater the chance the S will follow the PMI downwards resulting in a contraction, and the greater the stock market risk.
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