The commodity futures world from the more traditional world of stocks and bonds was already starting to break down. Twenty years ago, commodities referred to such things as corn, soybeans, porkbellies, gold, and oil. These were traditional commodities that could be grown, mined, or refined. Dramatic changes took place from 1972 to 1982 with the introduction of futures contracts on currencies, Treasury Bonds, and stock index futures. The term "commodities" gave way to "futures" since bonds and stocks were hardly commodities. But they were futures contracts. Since then, the world of futures trading has blended with that of traditional stocks and bonds to the point that they can hardly be separated. As a result, the technical analysis methods used to analyze the different financial markets have become more universally applied.

On any given day, quotes are readily available for dollar futures, bond futures, and stock index futures-and they often move in sync with one another. The direction those three markets move is often affected by what happens in the commodity pits. Program trading, which occurs when the price of the S&P 500 futures contract is out of line with the S&P 500 cash index, is a day-to-day reality. For those reasons, it seems clear that the more understanding you have about the world of futures trading, the more insight you will gain into the entire financial marketplace.

It has become clear that action in the futures markets can have an important influence on the stock market itself. Early warnings signs of inflation and interest rate trends are usually spotted in the futures pits first, which often determine the direction stock prices will take at any given time. Trends in the dollar tell us a lot about the strength or weakness of the American economy, which also has a major impact on corporate earnings and the valuation of stock prices. But the linkage goes even deeper than that. The stock market is divided into sectors and industry groups. Rotation into and out of those groups is often dictated by action in futures. With the tremendous growth in mutual funds, and sector funds in particular, the ability to capitalize on sector rotation into winning groups and out of losing ones has become much simpler.

• Intermarket Overview

• Intermarket - Stocks, Bonds and Commodities

• Intermarket - Commodities, The Dollar and Large Caps Stocks

• Stocks Sectors and Industry Groups

• Intermarket Correlation and Neural Network Software

• Relative Strength Analysis and Sectors

• Relative Strength and Individual Stocks

• Deflation Scenario

Inter-market analysis as it deals with the interplay between currencies, commodities, bonds, and stocks. Our primary message is how closely the four markets are linked. We'll show how to use the futures markets in the process of sector and industry group rotation within the stock market itself.