INTERMARKET Technical ANAlysyS TRADING STRATEGIES FOR THE GLOBAL STOCK, BOND, COMMODITY, AND CURRENCY MARKETS "It's a tribute to Murphy that he's covered ground here that will become standard within a decade. This is great work." —John Sweeney Technical Analysis of Stocks and Commodities Magazine Events of the past decade have made it clear that markets don't move in isolation. Tremors in Tokyo are felt in London and New York; the futures pits in Chicago move prices on the stock exchanges worldwide. As a result, technical analysis is quickly evolving to take these intermarket relationships into consideration.
Written by John Murphy, one of the world's lead ing technical analysts, this groundbreaking book explains" these relationships in terms that any trader and investor—regardless of his or her technical background—can understand and profit from. • Reveals key relationships you should understand—including the rela- tionship between commodity prices and bonds, stocks and bonds, commodities and the U. dollar, the dollar versus interest rates and stocks, and more • Explains the impact of intermarket relationships on U. and foreign stock markets, commodities, interest rates, and currencies • Includes numerous charts and graphs that reveal the interrelationship between stocks, bonds, commodities, and currencies Intermarket Technical Analysis explores the art and science of technical analysis at its state-of-the-art level.
It's for all traders and investors who recognize the globalization of today's financial markets and are eager to capitalize on i t. John Wiley & Sons, Inc. Professional, Reference and Trade Group 605 Third Avenue, New York, NY. 10158-0012 New York • Chichester • Brisbane • Toronto • Singapore Trắc nghiệm kiến thức Forex tại : https://tracnghiemforex.com/ INTERMARKET TECHNICAL ANALYSIS TRADING STRATEGIES FOR THE GLOBAL STOCK, BOND, COMMODITY AND CURRENCY MARKETS John J.
Murphy Wiley Finance Editions JOHN WILEY & SONS, INC. New York • Chichester • Brisbane • Toronto • Singapore Trắc nghiệm kiến thức Forex tại : https://tracnghiemforex.com/ In recognition of the importance of preserving what has been written, it is a policy of John Wiley & Sons, Inc. to have books of enduring value printed on acid-free paper, and we exert our best efforts to that end. Copyright ©1991 by John J.
Murphy Published by John Wiley & Sons, Inc. All rights reserved. Published simultaneously in Canada. Reproduction or translation of any part of this work Contents beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful.
Requests for permission or further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Preface v This publication is designed to provide accurate and 1 A New Dimension in Technical Analysis 1 authoritative information in regard to the subject matter covered. It is sold with the understanding that 2 The 1987 Crash Revisited—an Intermarket Perspective 12 the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other 3 Commodity Prices and Bonds 20 expert assistance is required, the services of a competent 4 Bonds Versus Stocks 40 professional person should be sought.
From a Declaration of Principles jointly adopted by a Committee of the 5 Commodities and the U. Dollar 56 American Bar Association and a Committee of Publishers. 6 The Dollar Versus Interest Rates and Stocks 74 Library of Congress Cataloging-in-Publication Data 7 Commodity Indexes 95 Murphy, John J. 8 International Markets 122 Intermarket technical analysis: trading strategies 9 Stock Market Groups 149 for the global stock, bond, commodity, and currency markets / John J.
10 The Dow Utilities as a Leading Indicator of Stocks 173 p. 11 Relative-Strength Analysis of Commodities 186 ISBN 0-471-52433-6 (cloth) 12 Commodities and Asset Allocation 206 1. 13 Intermarket Analysis and the Business Cycle 225 HG4529.M86 1991 14 The Myth of Program Trading 240 332.6-dc20 90-48567 15 A New Direction 253 Printed in the United States of America Appendix 259 Glossary 273 20 19 18 17 16 15 14 13 Index 277 Trắc nghiệm kiến thức Forex tại : https://tracnghiemforex.com/ III To Patty, my friend and to Clare and Brian Preface Like that of most technical analysts, my analytical work for many years relied on traditional chart analysis supported by a host of internal technical indicators. About five years ago, however, my technical work took a different direction.
As consulting editor for the Commodity Research Bureau (CRB), I spent a considerable amount of time analyzing the Commodity Research Bureau Futures Price Index, which measures the trend of commodity prices. I had always used the CRB Index in my analysis of commodity markets in much the same way that equity analysts used the Dow Jones Industrial Average in their analysis of common stocks. However, I began to notice some interesting correlations with markets outside the commodity field, most notably the bond market, that piqued my interest. The simple observation that commodity prices and bond yields trend in the same direction provided the initial insight that there was a lot more information to be got from our price charts, and that insight opened the door to my intermarket journey.
As consultant to the New York Futures Exchange during the launching of a futures contract on the CRB Futures Price Index, my work began to focus on the relationship between commodities and stocks, since that exchange also trades a stock index futures contract. I had access to correlation studies being done between the various financial sectors: commodities, Treasury bonds, and stocks. The results of that research confirmed what I was seeing on my charts—namely, that commodities, bonds, and stocks are closely linked, and that a thorough analysis of one should include consideration of the other two. At a later date, I incorporated the dollar into my work because of its direct impact on the commodity markets and its indirect impact on bonds and stocks.
The turning point for me came in 1987. The dramatic market events of that year turned what was an interesting theory into cold reality. A collapse in the bond market Trắc nghiệm kiến thức Forex tại : https://tracnghiemforex.com/ during the spring, coinciding with an explosion in the commodity sector, set the stage V vi PREFACE for the stock market crash in the fall of that year. The interplay between the dollar, the commodity markets, bonds, and stocks during 1987 convinced me that intermarket analysis represented a critically important dimension to technical work that could 1 no longer be ignored.
• Another by-product of 1987 was my growing awareness of the importance of international markets as global stock markets rose and fell together that year. I noticed that activity in the global bond and stock markets often gave advance warnings of what our markets were up to. Another illustration of global forces at work was given at the start of 1990, when the collapse in the American bond market during the first quarter was foreshadowed by declines in the German, British, and Japanese markets. The collapse in the Japanese stock market during the first quarter of 1990 also gave A New Dimension advance warning of the coming drop in other global equity markets, including our own, later that summer.
This book is the result of my continuing research into the world of intermarket in Technical Analysis analysis. I hope the charts that are included will clearly demonstrate the interrela- tionships that exist among the various market sectors, and why it's so important to be aware of those relationships. I believe the greatest contribution made by intermarket analysis is that it improves the technical analyst's peripheral trading vision. Trying to trade the markets without intermarket awareness is like trying to drive a car without looking out the side and rear windows—in other words, it's very dangerous.
The application of intermarket analysis extends into all markets everywhere on the globe. By turning the focus of the technical analyst outward instead of inward, intermarket analysis provides a more rational understanding of technical forces at work in the marketplace. It provides a more unified view of global market behavior. One of the most striking lessons of the 1980s is that all markets are interrelated— Intermarket analysis uses activity in surrounding markets in much the same way financial and nonfinancial, domestic and international.
stock market doesn't that most of us have employed traditional technical indicators, that is, for directional trade in a vacuum; it is heavily influenced by the bond market. Bond prices are very clues. Intermarket analysis doesn't replace other technical work, but simply adds much affected by the direction of commodity markets, which in turn depend on the another dimension to it. It also has some bearing on interest rate direction, inflation, trend of the U.
Overseas markets are also impacted by and in turn have Federal Reserve policy, economic analysis, and the business cycle. an impact on the U. Events of the past decade have made it clear that The work presented in this book is a beginning rather than an end. There's still markets don't move in isolation.
As a result, the concept of technical analysis is a lot that remains to be done before we can fully understand how markets relate now evolving to take these intermarket relationships into consideration. Intermarket to one another. The intermarket principles described herein, while evident in most technical analysis refers to the application of technical analysis to these intermarket situations, are meant to be used as guidelines in market analysis, not as rigid or linkages. Although the scope of intermarket analysis is broad, forcing us to The idea behind intermarket analysis seems so obvious that it's a mystery why we stretch our imaginations and expand our vision, the potential benefit is well worth haven't paid more attention to it sooner.
It's not unusual these days to open a financial the extra effort. I'm excited about the prospects for intermarket analysis, and I hope newspaper to the stock market page only to read about bond prices and the dollar. The you'll agree after reading the following pages. bond page often talks about such things as the price of gold and oil, or sometimes even the amount of rain in Iowa and its impact on soybean prices.
Reference is John J. Murphy frequently made to the Japanese and British markets. The financial markets haven't February 1991 really changed, but our perception of them has. Think back to 1987 when the stock market took its terrible plunge.
Remember how all the other world equity markets plunged as well. Remember how those same world markets, led by the Japanese stock market, then led the United States out of those 1987 doldrums to record highs in 1989 (see Figure 1. Turn on your favorite business show any morning and you'll get a recap of the overnight developments that took place overseas in the U. dollar, gold and oil, treasury bond prices, and the foreign stock markets.
The world continued trading while we slept and, in many cases, already determined how our markets were going to open that morning. Trắc nghiệm kiến thức Forex tại : https://tracnghiemforex.com/ 1 A NEW DIMENSION IN TECHNICAL ANALYSIS THE PURPOSE OF THIS BOOK 3 FIGURE 1.1 was a time when stock traders didn't watch bond prices too closely, when bond A COMPARISON Of THE WORLD'S THREE LARGEST EQUITY MARKETS: THE UNITED STATES, traders didn't pay too much attention to commodities. Study of the dollar was left to JAPAN, AND BRITAIN. GLOBAL MARKETS COLLAPSED TOGETHER IN 1987.
THE SUBSEQUENT interbank traders and multinational corporations. Overseas markets were something GLOBAL STOCK MARKET RECOVERY THAT LASTED THROUGH THE END OF 1989 WAS LED BY we knew existed, but didn't care too much about. THE JAPANESE MARKET. It was enough for the technical analyst to study only the market in question.
To consider outside influences seemed like heresy. To look at what the other markets World Equity Trends were doing smacked of fundamental or economic analysis. All of that is now changing. Intermarket analysis is a step in another direction.