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Among other interesting comments, Gary Fritz observed:
> > You'll agree that high correlation is the only requirement, not
> > causation, and that therefore any high correlation is material for
> > trading using this "intermarket" theory?
>
> I think I'd agree with that. Causation is NOT required to trade
> successfully. All that's required to trade successfully is a set of
> rules that works often enough.
Note also that causation need not be direct or obvious, even
where it does exist. Though I am not prepared to cite one,
I can imagine the existence of a factor that strongly influenced
the price of, say, gold, yen, and the S&P, so that these markets
displayed a correlation even when one could not be shown to
affect the other.
On the other hand, who cares? A lot of what passes for
analysis, both technical and fundamental, "works" simply
because it helps some people to pull the trigger, after which
good trade management takes over.
Owen Davies
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