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The Market Technicians Association is the premier global organization for those interested in technical analysis!

The cost of membership is $300 per year and includesThe cost of membership is $300 per year and includes the following services FREE OF CHARGE!

• Weekly technical analysis webcasts, like the one you are participating in today, with leading analysts

•A Knowledge Base of technical analysis information, whitepapers, and educational videos

•A private social network for technical analysts and other financial professionals, called MyMTA

• Local Chapter Meetings, Regional Seminars, and an Annual Symposium

Find out more at http://go.mta.org/benefits

Intermarket AnalysisIntermarket AnalysisIntermarket Analysis Intermarket Analysis Has Become AnHas Become AnHas Become An Has Become An

Indispensable Part of Indispensable Part of d spe sab e a t od spe sab e a t oTechnical AnalysisTechnical Analysis

John MurphyJohn MurphyJohn MurphyJohn MurphyStockcharts.comStockcharts.com

A REVIEW OF THE A REVIEW OF THE NEWNEW NORMAL NORMAL

IN INTERMARKETIN INTERMARKETIN INTERMARKET IN INTERMARKET RELATIONSHIPSRELATIONSHIPS

---- BONDS AND STOCKS TRENDBONDS AND STOCKS TREND INVERSELYINVERSELY

---- STOCKS AND COMMODITIES TREND STOCKS AND COMMODITIES TREND TOGETHERTOGETHER

---- THE MAIN REASON FOR THE CHANGES IS THE MAIN REASON FOR THE CHANGES IS THE DEFLATIONARY TREND OF THE LASTTHE DEFLATIONARY TREND OF THE LASTTHE DEFLATIONARY TREND OF THE LAST THE DEFLATIONARY TREND OF THE LAST

DECADE DECADE

””LINK BETWEEN BONDS AND LINK BETWEEN BONDS AND STOCKS CHANGED INSTOCKS CHANGED INSTOCKS CHANGED IN STOCKS CHANGED IN 19981998””::IntermarketIntermarket Analysis Analysis

Bond Yields Lead Stocks Lower at Recent Top

Stocks and Commodities Are Stocks and Commodities Are Trending Together Trending Together (Just like (Just like

in the Deflationary 1930s)in the Deflationary 1930s)in the Deflationary 1930s)in the Deflationary 1930s)

COMMODITIES LEAD COMMODITIES LEAD STOCKS LOWER SINCE MAY STOCKS LOWER SINCE MAY

FIRMING DOLLAR PUSHES FIRMING DOLLAR PUSHES COMMODITIES LOWER COMMODITIES LOWER

Inverse Relationship Between Inverse Relationship Between Stocks and the Dollar Stocks and the Dollar

Dollar September Surge Dollar September Surge C f SC f SConfirms Stock BreakdownConfirms Stock Breakdown

SECTOR ROTATION MODELSECTOR ROTATION MODELSECTOR ROTATION MODEL SECTOR ROTATION MODEL

S t R t tiSector Rotation Model:

Defensive Rotation Followed Defensive Rotation Followed Sector Model at Market TopSector Model at Market Top

Global LinkagesGlobal Linkagesgg Global Stocks are Closely CorrelatedGlobal Stocks are Closely Correlated

Commodities Tied to Emerging MarketsCommodities Tied to Emerging Markets

hi ilhi il China Imports: Brazil ExportsChina Imports: Brazil Exports

Dollar Direction Impacts Foreign StocksDollar Direction Impacts Foreign StocksDollar Direction Impacts Foreign StocksDollar Direction Impacts Foreign Stocks

Rising Dollar Hurts Foreign Shares Rising Dollar Hurts Foreign Shares

INFLUENCE OF DOLLAR ONINFLUENCE OF DOLLAR ONINFLUENCE OF DOLLAR ON INFLUENCE OF DOLLAR ON FOREIGN STOCKSFOREIGN STOCKS

Foreign Markets Are Leading Foreign Markets Are Leading U.S. Market Lower U.S. Market Lower

Commodities Fall With Commodities Fall With Emerging Markets Emerging Markets

PEAK IN EURO LED TO PEAK IN EURO LED TO O S SO S SWEAKER EURO SHARESWEAKER EURO SHARES

German Stocks and CRB German Stocks and CRB Bounce off Support TogetherBounce off Support TogetherBounce off Support TogetherBounce off Support Together

CRB and Stocks Get October CRB and Stocks Get October B t F F lli D llB t F F lli D llBoost From Falling DollarBoost From Falling Dollar

Rising CRB and S&P 500 Rising CRB and S&P 500 Punish BondsPunish BondsPunish Bonds Punish Bonds

2011 Intermarket 2011 Intermarket RelationshipsRelationships

Dollar Dollar andand CRB CRB ↨↨ OppositeOpposite

D llD ll dd St kSt k ↨↨ O itO it DollarDollar and and StocksStocks ↨↨ Opposite Opposite

StocksStocks and and CRB CRB ↑↑↑↑TogetherTogether↑↑↑↑ gg

BondsBonds ↨↨ Stocks and CRBStocks and CRB

Bond YieldsBond Yields & & StocksStocks ↑↑↑↑ TogetherTogether

WHAT INTERMARKET WHAT INTERMARKET ANALYSIS DOESANALYSIS DOESANALYSIS DOESANALYSIS DOES

Bridges Gap Between EconomicBridges Gap Between Economic Bridges Gap Between Economic, Bridges Gap Between Economic, Fundamental and Tech. AnalysisFundamental and Tech. Analysis

Helps Move Technical Analysis Helps Move Technical Analysis Into Financial Mainstream Into Financial Mainstream

Adds New Dimension to Adds New Dimension to Traditional Technical AnalysisTraditional Technical AnalysisTraditional Technical AnalysisTraditional Technical Analysis

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MTA, please contact Shane Skwarek at shane@mta.org

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