Intermarket Analysis in TradeStation

Intermarket analysis is a powerful concept that has been researched for two decades by Murray Ruggiero to understand and identify potential market turning points. In fact, back in the 1990s, he worked on and wrote a book and papers on this method which can be used to generate 100% objective trading signals that are highly correlated with market turning points. Ever since then, this method has continued to be further refined and used within the financial community.

The premise of intermarket analysis is simple. Markets are not independent of one another and therefore there are some stable relationships. However, these relationships do not always happen at the same chronological time. One example relationship is gold vs. the dollar. As the dollar goes down, gold goes up because it now takes more dollars to buy the same amount of gold. Conversely as the dollar goes up, gold goes down because now you can buy the same amount of gold with fewer dollars as each one is worth more. However, every time the dollar goes down, gold does not immediately go up. Sometimes it lags. When it does lag, we say that we have “divergence” and we would expect if the dollar is going down for gold to eventually go up. Therefore, we would predict a market turning point for gold – that it will go up to match the weaker dollar. That is the basic premise of intermarket analysis and divergence!

This page contains links to articles that Murray has written on the subject of intermarket analysis. We highly encourage you to explore this concept further. As always, Investopedia is a great source for learning about these types of concepts.

Intermarket Analysis Articles

Intermarket Analysis is Fundamentally Sound
In this first part of his three-part series, Murray looks into the history of this topic and also explains why it is fundamentally sound. It is important when evaluating new strategies to ensure that they pass the basic sanity test. This concept has a solid logical premise which helps explain why it works so well! Read more…

Development of Intermarket Trading Systems
In this second part of Murray’s three-part series, Murray looks at how to develop intermarket trading systems. It explains how to verify that it is statistically solid and explores one of the core intermarket relationships – UTY and the 30-year treasury bonds. There are many possible intermarket relationships, however the UTY-bond relationship is one of the ones that has held up very well. Read more…