Trading with Intermarket Analysis
A Visual Approach to Beating the Financial Markets Using Exchange-Traded Funds
Wiley Trading Series

With global markets and asset classes growing even more interconnected, intermarket analysis?the analysis of related asset classes or financial markets to determine their strengths and weaknesses?has become an essential part of any trader's due diligence. In Trading with Intermarket Analysis, John J. Murphy, former technical analyst for CNBC, lays out the technical and intermarket tools needed to understand global markets and illustrates how they help traders profit in volatile climates using exchange-traded funds.

Armed with a knowledge of how economic forces impact various markets and financial sectors, investors and traders can profit by exploiting opportunities in markets about to rise and avoiding those poised to fall. Trading with Intermarket Analysis provides advice on trend following, chart patterns, moving averages, oscillators, spotting tops and bottoms, using exchange-traded funds, tracking market sectors, and the new world of intermarket relationships, all presented in a highly visual way.

• Gives readers a visually rich introduction to the world of intermarket analysis, the ultimate tool for beating the markets
• Provides practical advice on trend following, chart patterns, moving averages, oscillators, spotting tops and bottoms, using exchange-traded funds, tracking market sectors, and intermarket relationships
• Includes appendices on Japanese candlesticks and point-and-figure charting

Comprehensive and easy-to-use, Trading with Intermarket Analysis presents the most important concepts related to using exchange-traded funds to beat the markets in a visually accessible format.

Acknowledgments ix

Introduction xi

Part I The Old Normal 1

Chapter 1 Intermarket Analysis: The Study of Relationships 3

Chapter 2 Review of the Old Normal 15

Chapter 3 The 1997–1998 Asian Currency Crisis 25

Part II The 2000 and 2007 Tops 35

Chapter 4 Intermarket Events Surrounding the 2000 Top 37

Chapter 5 The 2002 Falling Dollar Boosts Commodities 47

Chapter 6 Asset Allocation Rotations Leading to the 2007 Top 59

Chapter 7 Visual Analysis of the 2007 Market Top 73

Part III The Business Cycle and ETFs 89

Chapter 8 Intermarket Analysis and the Business Cycle 91

Chapter 9 The Impact of the Business Cycle on Market Sectors 105

Chapter 10 Exchange-Traded Funds 123

Part IV The New Normal 129

Chapter 11 The Dollar and Commodities Trend in Opposite Directions 131

Chapter 12 Stocks and Commodities Become Highly Correlated 145

Chapter 13 Stocks and the Dollar 161

Chapter 14 The Link between Bonds and Stocks 179

Chapter 15 The Link between Bonds and Commodities 197

Conclusion: It’s All about Relationships 215

About the Author 227

Index 229

John J. Murphy is a former technical analyst for CNBC and has over forty years of market experience. He is senior writer for StockCharts.com, a website that specializes in financial charts and technical analysis education. Murphy has appeared on Bloomberg TV, CNN, FOX, and the Nightly Business Report, and has been widely quoted in several other media outlets. In 1992, he was given the first award for outstanding contribution to global technical analysis by the International Federation of Technical Analysts, and received a lifetime achievement award from the same organization in 2014. He is a recipient of the Market Technicians Annual Award. In addition to two previous books on intermarket analysis, he also authored two editions of The Visual Investor, all of which are published by Wiley. He also authored Technical Analysis of the Financial Markets. Murphy has a bachelor of arts in economics and a master of business administration from Fordham University. He currently lives in New Jersey.