Intermarket Analysis: Profiting from Global Market Relationships

Introduction to Intermarket Analysis

In 1990, I completed a book entitled Intermarket Technical Analysis: Trading Strategies for the Global Stock, Bond, Commodity, and Currency Markets. My point in writing it was to show how closely related all the financial markets really are, both domestically and internationally. The book’s main thesis was that technical analysts need to broaden their chart focus to take these intermarket correlations into consideration. Analysis of the stock market, for example, without consideration of existing trends in the dollar, bond, and commodity markets was simply incomplete. The book suggested that financial markets can be used as leading indicators of other markets and, at times, confirming indicators of related markets. Because the message of my earlier text challenged the single market focus of the technical community, some questioned whether this newer approach had any place in the technical field. Many questioned whether intermarket relationships existed at all—and whether they could be used in the forecasting process. The idea that global markets are linked to each other was also viewed with some skepticism. How things have changed in just one decade.

Intermarket analysis is now considered a branch of technical analysis and is becoming increasingly popular. The Journal of Technical Analysis (Summer- Autumn 2002) asked the membership of the Market Technicians Association to rate the relative importance of technical disciplines for an academic ...