The Link Between Stocks and Futures: Intermarket Analysis

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Technical Analysis of the Financial Markets

By: John Murphy

Excerpts from Chapter 17

The Link Between Stocks and Futures: Intermarket Analysis

Noted technical analyst John J. Murphy in his latest book, Technical Analysis of the Financial Markets, which was published by the New York Institute of Finance in 1999, devotes an entire section in the chapter on Intermarket Analysis to Louis Mendelsohn’s work. The section, entitled Intermarket Neural Network Software, reads as follows:

“One major problem with the study of intermarket relationships is that there are so many of them – and they’re all interacting at the same time. That’s where neural networks come into play. Neural networks provide a more quantitative framework for identifying and tracking the complex relationships that exist among the financial markets. Louis Mendelsohn, president of Market Technologies, was the first person to develop intermarket analysis software in the financial industry during the 1980s. Mendelsohn is the leading pioneer in the application of microcomputer software and neural networks to intermarket analysis. His VantagePoint software, first introduced in 1991, uses intermarket principles to trade interest rate markets, stock indexes, currency markets, and energy futures. VantagePoint uses neural network technology to detect the hidden patterns and correlations that exist between related markets.“