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-- Gary wrote:
> 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...
You may be right, in which case you will agree that their analysis has no more foundation that the man who trades based on the high correlation of stocks to the Lakers vs. Portland results? You'll agree that high correlation is the only requirement, not causation, and that therefore any high correlation is material for trading using this "intermarket" theory?
Reading at:
http://www.murphymorris.com/JMEMAv2.html
it sure sounds to me as though Murphy, as one intermarket analyst, sees causative relationships between markets:
"Bond prices are very much effected by the direction of the commodity markets, which in turn depend on the trend of the US dollar..."
What baloney.
I'm still waiting to hear from all those who've purchased Murphy's "bestseller" on this topic. Where are you all? Just who out there is using this form of analysis? We've debated the theory, our positions are staked, now why don't you come and prove one side or the other right? (I'd love to be proven wrong and see how action in one market can be used to trade another so please, step up to the plate!)
All the best,
OM
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