Euro Dow Correlation

I keep meaning to do this so I just did, being that credit/risk basket indicators are negatively dislocated compared to the market, which I have shown in previous posts on the new indicators, often (actually all of the recent examples show that it is more like ALWAYS) offer excellent short side entries as the market tends to revert back to the credit/risk basket which leads the market.

A dislocation is more or less, when the market acts emotionally and runs up (or in some cases the opposite which create buying opportunities) and falls out of sync with the normal broad risk assets and credit that typically rally with the market when the rally is strong. Being credit leads the market, when credit and the other risk assets that should rally with the market don't, a dislocation occurs and the market is overvalued and has historically reverted back to the mean of credit/risk assets. Sometimes the market acts just as emotional on the reversion and falls very fast and even overshoots the reversion to the mean. In the historical examples, the reversion to the mean of credit/risk assets, usually happens almost all at once on a big gap down on an open. This is why I started adding to short positions yesterday, but left room to add more as the dislocation can always carry further.

I looked at the EUR/USD which has a typical correlation with the Dow-30 of 1 EUR/USD pip= 2 Dow Jones 30 points.

From Friday's close to the present, as would be expected considering the dislocation seen yesterday and today, the Dow is rich compared to the FX correlation by about 164 points, or Dow $11,450.

The Dow is up 72 points today @ $11,596, so that gives you some idea of the scale of dislocation.

I really need to create an indicator that does this for me automatically.