In the on-going search for short term leading indicators FXE has done a nice job of leading SPY action over the past 2 months. Above is the FXE chart with SPY shown as the orange line overlay…all on 2 minute bars. These correlations tend to exhaust periodically and the ETFR Pairs Model is an easy way to monitor the reliability of the correlation via the equity curve/R Squared line. FXE is most useful as a forecaster on very short time frames… 1 and 2 minute bars…and we made a few real time momentum calls in the chat room on Friday using the FXE to trade SPY, which produced a clear 2 minute edge. Definitely worth a look for short attention span traders.
