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Saying there is no correlation between markets is like saying supply and
demand do not effect a markets price. Bonds don't reflect the cost of
money? The cost of money doesn't effect a companies bottom line? Earnings
don't effect a stocks price? You could go on, corn, cattle etc, etc, etc.
To trade the correlations depends on your time frame of trading. This is a
very provable correlation between intermarkets over a certain time span.
Short term like daily probably not and probably couldn't be proved.
Robert
At 11:07 AM 5/28/00 -0600, Gary Fritz wrote:
>OM wrote:
> > So let it be clear that I am not the one suggesting the use of
> > causal reasoning. Intermarket analysis suggests that x causes y.
> > I am simply pointing out that while x may correlate significantly
> > with y, that is no proof of the *causation* that is sought by
> > *intermarket analysts*.
>
>I think you're making an unwarranted assumption -- that people trade
>using intermarket analysis because they believe in a causative
>relationship. I believe many people who use intermarket analysis
>could care less whether X causes Y, or Y causes X, or parakeet causes
>kumquat. They've just observed that there is a high degree of
>correlation between X and Y, and they've devised rules that allow
>them to trade profitably using that correlation, and that's ALL they
>care about. They aren't diving deeply into the ontology or
>epistemology or philosophy of the thing. They're just trying to make
>money.
>
>Gary
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