The theory of a Blow-Off Top in markets is alive and well. We hear many participants calling for a big move higher on risk, a grand finale so to speak.
This is where correlations play a strong role in allowing us to find clues to validate or invalidate this thesis.
First, a chart that shows AUD vs SP and illustrates how tightly correlated these two are.
The SP Chart by itself shows a parabolic index, so we find a tightly correlated asset and analyze is to find a probable path.
We chose to leave the USD out and look at AUDCHF.
This chart shows a probable path higher. A legitimate count that has the pair moving 10%+ higher.
A Blow-Off Top is not out of the question.