market links?

[suggy]

lo all


just wanted ur thoughts really. I am aware as most others are that the US market leads the world, and generally the other stock markets as well. I was under the impression that the FTSE follows its path under a lot of influence from America. however, in the last 3 weeks on separate occasions I have noticed that it has done completely different things.i.e. falling while the US rises. so . . .

1. do you ever try and use the FTSE as a guide to the US (is the relationship reversible)?

2. surely the people who buy/sell into this trend take a big risk going against prevailing US markets?

3. is it just different financial information from the leading companies that are behind this or public opinion or anything else you can think of?


I guess this comes back to the whole awareness thing but with a financial lean. just wondered what y'all thought? 🙂 thanks

 

[Helenqu]

Couple of links on Intermarket analysis for you:

http://www.stockcharts.com/education/Resources/Glossary/intermarketAnalysis.html

http://www.traders.com/Documentation/RESOURCE_docs/TradersNotes/TradNB_Inter9904.html


There also a book by JJMurphy specifically on Intermarket Analysis.


HTH

 

[juanbyte]

A few years ago when I started trading, the Dow fell about 17% over several months. I decided to see how much the FTSE fell over the same period, it was within 1% of the US. Over time most markets come together simply because if one market falls considerably the others are therefore dear pricewise.

Some trade the Dow/FTSE differential, if say the Dow has dropped and the gap between the two has widened they may buy the Dow and sell the FTSE.

 

[TBS]

There is no definative spread or specific relationship between all the markets (FTSE has recently made new lows, whilst the SP and Dow have not) . The dax has generally kept plummeting far more than the rest.

These create trading opportunities and is one reason that trades like dax/Ftse spread has become very poular over the past year or so.

You may also consider certain pairs trades between similar stocks, where one is more prone to bigger moves than another - the UK banks have produced some interesting trades in the past few months.