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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (17515)	11/22/1999 9:06:00 PM
From: Sal D	Read Replies (1) \| Respond to of 29382

Sergio, how are you, good to see the Amigo thread still cooking. Just a few thoughts on intermarket interaction. Commodity prices may be the least understood link in the intermarket chain. Even if you have no interest in trading commodity markets, you should monitor their movements. Commodity prices trend in the opposite direction of bond prices. Industrial metals such as copper and aluminum are especially sensitive to economic trends. Gold is viewed as a traditional leading indicator of inflation and carries important psychological weight. Oil related stocks are also dependent to a large extent on the trend of oil. Commodity prices affect the direction of bond prices. Bond prices , in turn, affect the direction of stock prices (falling bond yields are positive for equity prices , rising bond yields are negative for equities). However it is important to recognize that turns in the bond market often precede similar turns in the stock market by several months. That being the case, important turns in the direction of bond prices can provide an early warning of an impending turn in stocks. The general rotation is commodities turn first, bonds second, and stocks last. I know this is basic stuff (and mostly dribble) but I needed something to say. All of this is taken from old notes I have from reading The Visual Investor by John J. Murphy, a good beginner book. Joe