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What is intermarket analysis?

Posted: Fri Sep 28, 2007 3:18 pm
by LarkTr
Hello!
I'd like to clear up a question of that intermarket analysis. It is becoming more and more popular and is the issue under discussion on a number of forums.
In theory it is clear enough, but what do people mean under intermarket analysis software. Vintage Point claims to be such a software. And I've emcountered another trading software Amplesight trader here at www.amplesight.com . They write about special tools for revealing of market interdependencies and brekthrough it can make.
But is it really possible to create a single software for performin this huge amount of analytical work. What do you think?

Posted: Tue Nov 06, 2007 1:58 pm
by CyberiaCafe
Hi Lark and admins,

Sorry if this is a thread necro (posting in a thread too long dead) but here goes.

Your question seems rather indeterminate. Are you proceeding from first principles?

Posted: Wed Nov 07, 2007 12:59 pm
by LarkTr
Hello,

CyberiaCafe, thank you for the willingness to answer.
I've just started and the intermarket principle looks promising to me. If it's not so, please, tell, I'd appreciate any opinion.
I'm not good at fundamental analysis, looking for correlations and so on. So I wonder if there are any real technical instruments for doing intermarket analysis.

Posted: Wed Nov 07, 2007 2:51 pm
by CyberiaCafe
I'll try, but no guarantees.

I think your original question was asking if there was an available method to compare all available markets of instruments against each other to find anything usable is ... overly broad.

I think what "intermarket analysis" means, initially, is taking a hunch, anecdotal observation, one of TRO's pronouncements, etc, and checking it out - are events in your primary market of interest correlated with events in your secondary market of interest. This could be correlations of anything - price, volume, what time markets open, seasonality, etc, and testing your hunches against the available data. If what you're testing makes a statistically significant reduction in the primary's variance, then it's of benefit. Another way it might help you is changing what fraction of the time your entry direction (long, short) is correct - the further it is from 50%, the less likely chance is at work and the more likely you've found something usable.

One such alleged example I have heard is the USD price of oil and the AUDUSD exchange rate. Don't quote me on that.

Anyone more knowledgeable than me, feel free to correct me on my inevitable errors.