(In case nobody is awake at five A.M. reading blogs like I am, this is my third post today... please be sure to scroll down to read the other two)
A chart everyone should become familiar with is the Japanese Yen. This is a direct measure of risk-appetite. Look at the spike in October/November, and look how the Yen continued to strengthen even beyond that, suggesting the market lows were not in. A strong Yen is bearish for the stock market, and vice versa.
For some reason very few people discuss this measure of risk sentiment. Not only is it relevant, but it is very easy to track with a variety of TA methods.
Right now the Yen is in a corrective phase that will take it lower. It did find support at the 200 MA, and breaking that could signal a major shift in the direction of the stock market.
This is not a 1:1 measure with the stock market, but the decline in the Yen as of late is reflected in the recent rally. It tends to slightly lead the stock market.
Enjoy!
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