A Look at Industry Indexes, the S&P, Shanghai A-Index, and Commodities since 2010 (Interesting Divergences)

Ever since the financial collapse and massive bailouts in 2008, the global markets have been completely driven by fiscal and monetary policy, bailout programs, and manipulation in the global banking system. At this point in the crazy manipulated cycle, it seems like everyone is just waiting for the Fed to pull the rug under the market and economy (pull their liquidity/tighten or end QE), or waiting for a black swan event to disrupt markets in the Eurozone, Asia or Latin America.

Below are charts of industry indexes, equity indices, and commodity futures contracts that have been directly involved in the Chinese and U.S. growth stories (or anti-growth) since 2010. There have been interesting divergences between major indexes and commodity prices. Here's what I compared in the charts below via TradingView.com (the symbols aren't color coded in the key for some reason):

  • Shanghai Class A-Index (yellow)
  • Lumber Future (LS1!, CME) (light green)
  • Dow Jones U.S. Automobiles Index (DSAU) (red)
  • Dow Jones U.S. Autoparts Index (DSAT) (dark blue)
  • S&P Commodity Trends Indicator (STIS) (purple)
  • S&P 500 (SPX) (brown)
  • Continuous Commodity Index ETF (GCC) (black)
  • Steel ETF (SLX) (light blue)
  • Philadelphia Housing Index (PHX) (orange)
  • High Grade Copper Future (HG1!, COMEX) (darker shade of green)

You can clearly see that the U.S. growth story (housing, lumber, automobiles, auto parts, S&P 500) started to diverge with the Chinese growth story (Shanghai A-shares, commodities, steel, copper) towards the end of 2011, which made sense because the Chinese government was engineering a slowdown to prevent massive inflation, while the Fed remained accomodative. It's interesting that steel stocks (SLX) haven't been participating in the auto rally (DSAU, DSAT). Is it because China is oversupplied with steel? I should have added the U.S. Steel Coil future to the chart. It looks similar to the copper future, but it depends on the time-frame. I see that SLX has been rallying since July.

Since January 2010 (source: TradingView.com)

Since Late May 2011

Since August 2011

Since January 2012

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