Hi this might be a very dumb question, but i will ask it anyway. If commodities rise, do equities rise too. I am trying to get my head round market fundamentals.
thanks
Tok
I believe that there [I]was[/I], historically, a correlation there, but that it’s less true now. (I think that’s partly because most of the market is now “speculative” rather than “protective”). So this is probably a subject on which out-of-date information can easily be misleading?
Commodities are mostly a bet on “unexpected inflation”, in a sense, so there’s not so much correlation between commodities and equities, and it can even be a negative correlation.
This will interest you, I think: [B]Diversify with Commodity ETFs as Correlation to Equities Declines | ETF Trends[/B]
I’m trying to avoid them, myself … :33:
Thanks for your reply Lexys :D…i too feel hate and loathing towards fundamentals, i am a technical trader but i did pay for a good course and i have to bite the bullet and go back and do my home work.
thanks again
Tok
Maybe a read of John J Murphy - the TA author.
His latest book is “Trading with Intermarket Analysis” (published 2013)
He shows why the line between TA and FA are becoming increasingly blurred.
Also keep in mind that sectors of the stock market can react differently to commodity price movements. Consider how a rise in oil prices might impact the airline industry versus how it might impact green energy companies or the stock of oil companies themselves.