Here we have Dow Jones Industrial Average Index compared to Kansas City Financial Stress Index.
What you may notice at the first look is a correlation of Stress Index and DJI bottoms (at least I noticed that way)
So here is my take on remarkable peaks (ignoring small ones because they have not indicated big changes) on Financial Stress Index:
1. Stress is caused by sign of weakness in DJI and it rises while the bearish move in DJI gains momentum
2. Stress Peak (top) is in. DJI is almost bottomed.
3. Fiancial Stress Index cools down and DJI starts bullish trend for 5-10 years, till the index squeezes again and another event happens.
After the Stress Peak in 1998, some other peaks occurred until 2002 but DJI didn't drop below the bottom of 1998, and resumed the bullish trend, reapiting the third phase.
Finally, how to interpret and use this idea and the index is up to you, but I would be glad to see your comments and views.
What you may notice at the first look is a correlation of Stress Index and DJI bottoms (at least I noticed that way)
So here is my take on remarkable peaks (ignoring small ones because they have not indicated big changes) on Financial Stress Index:
1. Stress is caused by sign of weakness in DJI and it rises while the bearish move in DJI gains momentum
2. Stress Peak (top) is in. DJI is almost bottomed.
3. Fiancial Stress Index cools down and DJI starts bullish trend for 5-10 years, till the index squeezes again and another event happens.
After the Stress Peak in 1998, some other peaks occurred until 2002 but DJI didn't drop below the bottom of 1998, and resumed the bullish trend, reapiting the third phase.
Finally, how to interpret and use this idea and the index is up to you, but I would be glad to see your comments and views.
