Investor's
Library 
Review of Intermarket Technical Analysis
by John Murphy
How do bonds influence the price of stocks? What about the effect of stock prices on bond prices? What is the influence of commodity prices on interest rates? How are the dollar and other currencies interrelated with other markets, and what influence do they have on each other?
This superb book by world-famous technical analyst John Murphy will answer these and many other similar questions.
It would appear that most market observers focusing on distinct markets have been unable to see the proverbial "forest for the trees". Enter John Murphy, who insightfully illustrates the relationships of various markets and correlates their effects on one another in his book Intermarket Technical Analysis.
Mr. Murphy demonstrates with remarkable clarity the interrelation of commodities, bonds, stocks, gold, utilities, interest rates, the dollar, energy prices and foreign currencies, substantiating his claims with unadulterated charts that provide irrefutable evidence. The book is well researched, and the format is organized in such a way that anyone bereft of time could do a quick study simply by looking at the abundance of charts and reading the accompanying bold print explanations.
He uses long-term charts to put the relationships into historical perspective and shorter term charts to illustrate the usefulness of intermarket analysis as a tool for market timing. Let me say, here, that, because of long lead or lag times, intermarket technical analysis has limited use, if any, for the very-short-term trader.
More sensitive signals are needed in that situation although trend changes can certainly prepare the short-term trader for impending developments in other markets. Observed in unison, market patterns become much more reliable and predictable than when viewed independently.
Intermarket technical analysis emphasizes trends. It is the trend itself that is most important when analyzing different markets, and any divergence should be viewed as a warning of impending changes -- the greater the divergence, the more serious the situation.
Technical analysis is the preferred method for studying the various markets because fundamental explanations are often not known until after moves occur. Mr. Murphy takes the time to discuss the fundamental reasons behind the trends.
Mr. Murphy suggests using relative strength and ratio analysis to compare the various markets, especially among individual commodities. Under the “Myth of Program Trading”, he argues that program trading augments, rather than precipitates, market declines or advances; therefore, it is an effect, not a cause.
For anyone curious to know why intermarket technical analysis has only recently been exposed, Mr. Murphy offers the following explanations: First of all, it was not until the 1980s that new futures contracts, such as T-bonds, T-bills, the dollar index, CRB Index and Eurodollars, were introduced. And, prior to 1973, gold and monetary exchange rates were fixed. Finally, advances in global telecommunications attracted attention to the action in other markets in the U.S. and around the world.
The aforementioned comments comprise only a portion of what Mr. Murphy covers in glorious detail. His book gives all the particulars of the specific inter-relationships of the various markets in an intelligent, easy-to-understand way.
Edward D. Dobson, President
Traders Press, Inc.
Greenville, SC
http://www.traderspress.com
More specific details and a detailed table of contents may be viewed at: https://www.traderspress.com/detail.php?PKey=387
