NEW YORK (TheStreet) -- Global markets have been rattled the past few weeks by uncertainty over central bank stimulus.In late May, the Federal Reserve released what looked to be foreshadowing comments about an end to quantitative easing, and more recently the Bank of Japan failed to relieve the volatility that had crept up in Japanese markets. With central banks playing such an important role in the daily movements of financial markets, anything they say or fail to say is sure to incite a fury of activity. This week Fed Chairman Ben Bernanke will speak on Wednesday, and investors hope he clarifies his statements from last month in order to bring back stability to world markets. The Fed may be the first to rein in stimulus among the world's major central banks, but actual tightening does not look to be a viable solution until possibly 2014. The first chart to study below is of S&P Equal Weight ETF ( RSP) over SPDR S&P 500 ( SPY), which measures the S&P 500's market breadth. When the pair moves higher, it signals that a majority of the stocks in the S&P are taking part in the rally, a bullish indicator.
The chart below is of DB USD Index Bullish ( UUP) over CurrencyShares Swiss Franc Trust ( FXF). The Swiss franc has acted as an alternative safe-haven currency to the yen, as volatility has shaken all Japanese assets. Fear over the Fed's next move has sent dollar bulls to the sidelines and led to a strong selloff in the pair below. Although the Fed will probably be the first central bank to tighten policy, this pair should continue higher this week based on a clearer outlook from the Fed. The International Monetary Fund urged the U.S. on Friday to clean up its fiscal mess and continue monetary support for its economy. If the Fed heeds this advice and continues to support its economy, U.S. dollar volatility will fall and buyers should reenter the market.
The final pair is of Barclays TIPS Bond Fund ( TIP) over Barclays 7-10 Year Treasury Bond Fund ( IEF), which measures inflation expectations in the Treasury market. Foreign investors have been fleeing U.S. debt because of fear of rising rates and diminished bond value. Similarly, inflation-protected securities have witnessed large outflows as investors don't see a need in hedging against inflation now. At the time of publication the author had no position in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.