Stocks opened the second quarter with gains, but underlying intermarket signals remain mixed and fragile, with the VIX still elevated. Critical technical levels and cross-asset trends could shape the market’s next sustained move, mirroring the U.S. large caps’ start to 2025.

Intermarket Analysis & Historical Context

While history isn’t repeating itself, there are similarities to last year. Current geopolitical tensions echo previous trade-war jitters, and price action year-to-date is comparable. Digging deeper into intermarket trends may offer clues about the future direction of asset classes.

S&P 500 Performance

The S&P 500 experienced its best day since last May on March 31st, but remains below its 200-day moving average. The 6174 level, representing the high of the April 2025 to January 2026 rally, remains a key area of interest. The rising 200-day moving average is approaching the March 31 close and the April Fool’s Day rally.

Treasury Yields

Treasury yields have seen a slight decline, moving from 4.484% last week to below 4.3% at the start of April. A symmetrical triangle consolidation pattern is holding firm, with support near the 4% level and downtrend resistance just above 4.6%.

Commodities and Energy Prices

Commodities remain firm despite some wobbling in oil prices, which are near $100 per barrel. The Invesco DB Commodity Index Tracking Fund (DBC) is at its highest level since mid-2022, displaying a “high and tight” pattern.

Oil's Role as a Macro Wild Card

Energy prices play a leading role in DBC’s performance. The resolution of geopolitical tensions, particularly in Iran, is a key factor. Technicians are watching the $27.50 level on DBC; a breach could signal a potential drop towards $25, with support near $23.

US Dollar Index

The US Dollar Index briefly surpassed a key level as the first quarter ended. However, the dollar has since declined ahead of key employment data. The 50-day and 200-day moving averages are upwardly sloped, suggesting bullish control of short- and long-term trends. Choppy price action is expected to persist.

Looking Ahead

Turnaround Tuesday saw rallies in stocks and bonds, cooling commodities, and a pullback in the dollar. While oil dominated performance last month, this is unlikely to continue. Traders should monitor intermarket trends for emerging correlations as equities enter a historically bullish period.

Disclaimer: This analysis is for educational purposes only and should not be considered financial advice.