Here’s your paragraph turned into easy key points without missing anything:
Inter-Market Analysis Overview
Concept:
o It’s about understanding relationships between different markets globally.
o No charts here—conceptual, “dry” but very useful info.
o Requires 100% focus and note-taking.
Why important:
o World markets are linked; certain sectors and asset classes have correlations.
o Some relationships are obvious; others require knowledge of countries’ exports and economic
structure.
o Understanding these relationships improves long-term market analysis.
4 Major Groups in Inter-Market Analysis
1. Bond & Interest Rate Markets
2. Commodities Markets
3. Stock Market
4. Currencies Market
They are related but don’t move in exact lockstep; there can be lead/lag time (6–12 months).
Why not use full fundamental data
Data like CPI, jobs, etc. is overwhelming and hard to follow.
Focusing on these 4 groups gives similar insights without wading through massive data.
Key Relationships
1. Bonds & Stocks – Positive correlation
Bonds ↑ → Stocks ↑ (lower rates help stocks).
Bonds ↓ → Stocks ↓ (higher rates hurt stocks).
Bond prices are a leading indicator for stocks (6–12 months lag).
Rare case: Deflation → Bonds ↑, Stocks ↓, Commodities ↓.
2. Bonds & Commodities – Inverse correlation
Bonds ↑ → Commodities ↓.
Bonds ↓ → Commodities ↑.
Commodities are a leading sign of inflation.
Relationship may take 6–12 months to reflect.
3. Currencies & Commodities
USD vs Commodities → Inverse.
o USD ↑ → Commodities ↓.
o USD ↓ → Commodities ↑.
Strong USD hurts agricultural exports (grains, meats).
Weak USD boosts agricultural exports.
USD ↑ often supports Stocks & Bonds ↑.
USD ↓ often sees Stocks & Bonds ↓.
Commodity currencies (AUD, NZD, CAD) move with commodities.
Indexes to Watch
CRB Index → heavily weighted to agricultural/grain markets (soybeans, wheat, corn, cattle, hogs).
Goldman Sachs Commodity Index (GSCI) → energy-focused.
Goldman Sachs Industrial Metal Index → global industrial metals (zinc, copper, aluminum).
Specific Market Links
Bullish USD → Bearish Gold.
Bullish Gold → Bullish AUD/NZD (gold exporters).
Bullish Oil → Bearish USD/CAD (CAD strong with oil exports).
Dow ↑ → Nikkei ↑.
Nikkei ↓ → Bearish USD/JPY.
Yields ↓ → Bearish currency (money seeks yield).
Gold ↓ → Bullish USD/CAD.
Conclusion
Aligning several of these relationships with your long-term analysis increases confidence.
Rare to see all relationships out of alignment.
Timing is the hardest part in long-term trading—requires patience and allowing market fluctuation.
Here’s the easy key points version of your paragraph without missing anything:
Lower Time Frame vs Daily Chart
Trading on a daily chart requires:
o Larger stop losses (bigger ranges).
o More patience for trades to play out.
Using inter-market relationships helps in all trading styles (scalping, day trading, swing, position, long-
term).
No Guarantees
Nothing is 100% certain—markets can change suddenly.
Human decision-making adds unpredictability.
Analyst (you) must adapt.
Value of Studying Market Relationships
These relationships provide long-term directional bias aligned with fundamentals.
Saves time—no need to process endless fundamental data like CPI, jobs, exports.
Works similarly to fundamentals (both can have lag time before trends show).
Observing macro shifts in price reveals when long-term trends are forming.
Why It Works Without Fundamentals
Price across all 4 market groups (Bonds, Commodities, Stocks, Currencies) reflects real fundamentals.
Big institutions (banks, exporters, producers) already use fundamental data to plan.
You can simply watch price relationships to reach the same conclusions.
Bottom Line
This info isn’t flashy (no fancy patterns), but it’s high-value and practical.
Helps you avoid the time-consuming, complex task of tracking all fundamental data.
Understanding inter-market relationships gives you a macro view that mirrors what fundamentals show.
Price action + relationships = insight into global market direction.
