Intermarket Analysis – Profiting From Global Market Relationships by John J. Murphy
If you invest in stocks, understanding the forces than influence stock movement can be of great help to you in making investment decisions. Some of those forces are movements that take place in other markets – namely bonds, commodities and currencies. John Murphy, highly regarded in the technical analysis field, is one of the pioneers of intermarket analysis, i.e., how the various markets are interrelated and how they influence each other.
Murphy’s book is a follow-up to his first book on the subject of intermarket analysis (Intermarket Technical Analysis : Trading Strategies for the Global Stock, Bond, Commodity, and Currency Markets, 1991). He describes intermarket relationships during the period from the 1980s through the fall of 2003, during which some of the market correlations presented in his first book actually changed (read as: he kinda had to do a follow-up!). Murphy attributes the change, with stock markets becoming decoupled from bond markets, to the deflationary environment that began in the late 1990s with the severe downturn in Asian markets and currencies.
Murphy does a very good job of presenting the material in an easy-to-read, easy-to-follow style, with many accompanying charts and graphs. The book is nicely organized, with each chapter examining intermarket relationships during a different significant time in the markets, times during which either the market movements themselves were notable or other world events had an influence on them (e.g., the 1991 Persian Gulf War). He also explores other important relationships, such as the one between gold and the U.S. Dollar, and discusses the economic cycle model as well as the sector rotation that takes place within the stock market itself.
If you would like to understand market movements from a larger economic perspective (or if you’ve never even given a thought to investing in markets other than stocks!), BMB believes you will find this book quite enlightening. Murphy’s one of the best, and he’s given us another great book to learn from. On the downside: this book isn’t exactly cheap. You might try to get a good price on a new or used copy somewhere like Amazon, or check to see if your library has it. If they don’t, ask if they might be willing order it or if they have a program by which they can borrow books from other libraries.
You can sample this book by reading an excerpt from the first chapter of this book here (PDF format).
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