Chief Technical Analyst StockCharts.com President, Murphy Morris Money Management Co. & Author Intermarket Technical Analysis
"The Basics on Intermarket Analysis"
Transcription of Audio Interview, March 15, 2003
Editor's Note: We have edited the interview in this transcription for clarity and readability.
JIM PUPLAVA: Welcome back everyone. It’s time to introduce my guest this week. Joining me on the program is John Murphy. He’s a former Technical Analyst for CNBC. He has over 30 years of Market experience and is an author of several best selling books including, Technical Analysis Of The Financial Markets, which is widely regarded as the standard reference in the field. His book, InterMarket Technical Analysis, created a new branch of technical analysis emphasizing Market linkages. stock and Commodities Magazine in October 2002, described his inter-market work as “unparalleled”. His third book, The Visual Investor, applies charting principles to sector analysis. John has appeared on numerous media outlets including, Bloomberg, CNN Moneyline, Nightly Business Report and Wall Street Week with Louis Rukeyser. He is also President of MurphyMorris, a money management firm. John, I want to talk about your book, InterMarket Technical Analysis because it was such a pioneering work at the time it was done. Can you explain how it works?
JOHN MURPHY: First, let me just say at that particular time when I wrote that, which was the early 1990’s, late 1980’s, I was working in the futures area and one of the advantages of doing that is that, in the futures area, we trade stock indexes, we trade bonds, we trade currencies, we trade commodities and we kind of throw them all into the same mix; and as a result of having done that for about ten years or so, I began to notice that there were very strong correlations between those groups. I mean, for example, the bond market which is just a proxy for interest rate, has a big impact on the stock market, I mean, most people realize that. But you can look at it on the charts and the bond market in many ways is a leading indicator for the stock market. bond prices in turn, are very much influenced by the direction of commodity prices. Commodity price is kind of a leading indication of inflation or deflation and there’s a very close correlation between interest rate direction and commodity price direction, and then finally the currency markets, which is the fourth group that we look at, have a big impact on commodity prices. So, the whole point of it is that all of these markets and also the global markets, which is another whole area, but all these markets, they’re all linked and they all affect one another and the whole point of inter-market work is that if you’re following the stock market for example, and if you’re just looking at the stock market, you’re missing an enormous amount of information. You have to know what’s going on with the bond market. For example, right now we have a very weak dollar and that’s having a very bearish impact on stocks. So, you have to know what’s going on with the dollar, you have to know what’s going on with the gold and the oil markets and you have to know what’s going on in interest rates. That’s really the whole point of InterMarket Analysis. You’re just trying to look at the whole big picture.
JIM PUPLAVA: How critical, John, are these linkages between all markets? For example, can at any one time, any of these linkages be out of sink, and give a technician a false signal?
MR. MURPHY: Yes they do. This does happen. There are periods of time when two indexes that let’s say move in opposite directions, will kind of get linked a little bit. We follow those things. We have ways of measuring the correlations between these markets, and when the correlations are strong, that’s when we pay a lot more attention to the inter-market work. When the correlations get out of sink, then we kind of back peddle a little bit, we back off a little bit. Ultimately we are technical analysts, so even when the inter-market work gets a little out off kilter, we still fall back on the charts and we still do our traditional technical analysis of the individual groups. We get a little more cautious, a little bit more gun shy when the inter-market relationships aren’t working.
JIM PUPLAVA: Is that sort of in a technical *parlance non-confirmation?
MR. MURPHY: Yes, for example, if you had two markets that normally move in opposite directions, like, bond prices and commodities, normally move in opposite directions. Right now we have a situation where bond prices are moving up and commodity prices are going up. That’s very unusual. So, one of them is giving us a false signal at that point. One of the reasons for example, we are very suspicious of this recent rise in the bond market because, in bond prices because, it’s taking place in the climate of rising commodity prices. So, we’re very suspicious of this upside move in the bond market, this recent upside move.
JIM PUPLAVA: I guess maybe, the best way to understand inter-market analysis, how these linkages work is, let’s go back to the stock market crash of 1987. In your book, InterMarket Analysis, you take the reader through how it began with the dollar and how these different markets were linked to each other, leading to the stock market crash. I wonder if we might replay that scenario for our listeners.
MR. MURPHY: Yes, in fact that was, the events of 1987 really solidified the value of inter-market work in my mind, because we all know that the stock market collapsed in the fall of that year and with devastating collapse. A lot of people blamed it on things like program trading and things like that. But, the fact of the matter was the inter-market picture for several months had been telling us that The market was due for a fall. The main thing was, first of all, the US Dollar had dropped very sharply during that year. The falling dollar is normally a negative factor for the stock market. That created some inflationary pressure and in the chapter in that book, we pointed out, that in the spring of that year, commodity prices began a very significant upturn, creating some inflation pressures and that was with direct result of the falling dollar. Right around the same time, in the spring of that year, the bond market started to collapse, which is again, what normally, happens. Commodity prices start to move up, that creates inflationary pressures and the bond market turns down and the bond market, historically leads the stock market by about six months, historically the bond market tends to peak. So, all spring and all summer we were writing in our stuff and talking to our clients and saying we have to be extremely careful in the stock market. We’re getting inter-market non-confirmations all over the place. Then, I think it was August of that year, the stock market started to roll over and I think it wasn’t until October that it really turned down quite sharply. But the inter-market forces were clearly telling us that the rally in the stock market had reached a very dangerous point. And also, Jim, the fact that the Global Markets all collapsed at the same time, that was another factor which, even today we’re seeing this. There’s a very close linkage between all of the markets around the world. But, that really convinced me of the value of inter-market work and I devoted an entire chapter in the book to that particular year-1987.
JIM PUPLAVA: Let’s see if you can, John, for our listeners; summarize some of the basic premises of your inter-market work. For example, that all markets are inter-related, you use external data as opposed to, internal data; the emphasis for example, on futures and the preferred vehicle of analysis, is technical analysis.
MR. MURPHY: Well, this is one of the things about technical analysis that I think really has to be addressed is that in order to do inter-market work correctly you really have to look at a lot of markets. We basically, look at everything. On any given day we look at gold, we look at oil, we look at the dollar, we look at the Japanese market. We look at basically everything. I think one of the real advantages of chart work or technical work is the fact that you can look at so many markets at the same time and you don’t have to be an expert in any one of the markets. You’re just basically looking for trends. You can look at a chart of the bond market and you can clearly see that bond prices are going up, you can look at a chart of the dollar and you can clearly see that the dollar is going down. That gives us an enormous advantage over people who use fundamental analysis, for example, by the nature of fundamental work, it requires a lot more specialization. As a result, I think many times fundamental analysts on Wall Street, they lose site of the big picture and I think that gives us an enormous advantage. That’s why I think the charting approach lends itself so well to inter-market analysis and also one other thing, we’re also doing economic forecasting in a way, the difference between us, we talk about the same thing economists talk about, the only difference is we use the markets as economic indicators. For example, we use the stock market as a leading indicator for the economy. So over the last several months for example, we’ve been saying the economy is weak. Because the stock market is weak and economists have kind of taken a different view, and now the economy is beginning to weaken again. We do the same thing that economists do, but we believe that the fundamentals of the marketplace or the economy are reflected in the markets themselves, so that’s why we rely heavily on the markets and we rely heavily on chart analysis.
JIM PUPLAVA: And then let’s summarize the key linkages and then I want a follow up question. How have those linkages changed over time? So we’ve talked about the basic premises, now let’s talk about the key market relationships and summarize those.
MR. MURPHY: Well for example, it really starts with the US Dollar. The US Dollar normally when it starts to fall, as it’s doing right now that starts to create some inflationary pressures. That’s normally bullish for commodity prices. As you are aware, commodity prices have been the strongest asset class for the last year. By the way, one market that is very positively affected by the falling dollar is the Gold Market and that explains why over the last year, we’ve had a weak dollar, we’ve had a very strong Gold Market. So that’s bullish for Gold. Normally that’s also bearish for bonds, but we haven’t seen that yet. We can talk about that a little bit. But, commodity prices affect interest rates. Sooner or later, if this rally in the Commodity Markets continues, I think sooner or later that’s going to *be upward pressure on interest rates and then again that has an impact on the stock market.
JIM PUPLAVA: Since you wrote the book in 1991, I wonder if we might talk about how these linkages have changed over time. For example, the almost opposite correlation between, let’s say stocks and bonds, now they seem to be coupled in the fact that we’ve seen a falling interest rate environment, yet we still have falling stocks.
MR. MURPHY: That’s right Jim. We attribute that to deflation. In fact it’s interesting, I was updating the book, Technical Analysis of the Financial Markets, I was in the process of updating that book two or three years ago and I was writing the chapter on InterMarket Analysis, and I included a little thing right at the end, just as an after thought called, The Deflation Scenario and I said these things won’t work in a deflation. The reason I wrote that was in 1997, 1998 we had this Asian currency crisis. Currencies collapsed all over Asia. They started to raise interest rates to try to stem that decline. As a result, the stock markets broke down and that had a ripple affect all over the world. Commodity prices collapsed all over the world and the safe haven became the US bond market and for a period of about six months, the US bond market went through the roof, but what caught my eye was, that the stock market fell and that was the first time we had seen that kind of decoupling to that extent; and also it was the first time that I had heard the word deflation used. That was the first time the people openly talked about deflation and as a result of that, I wrote that little thing. I said if we are beginning to move into a deflationary environment, commodity prices will fall, that will certainly happen. Which they did, bond prices will go up, which they did, but stock prices will fall, so in a deflationary environment, bonds and stocks decouple, bond prices go up, interest rates go down. But that doesn’t help the stock market and I think that has been the model deflation over the last five years and that also explains why the Federal Reserve has lowered interest rates twelve times and it really hasn’t had much of an impact on the stock market. In a deflationary environment, falling interest rates really don’t have that impact. Now that may be changing because they say with this big back up in commodity prices, I think what’s happening, Jim, I think the government is trying to re-flate the economy. There’s been a lot of talk even over the last couple of days that the government no longer favors the strong dollar policy; I think the Federal Reserve is very concerned about deflation. One of the ways you fight deflation is to create a little inflation. So, I think this collapse in the dollar, I don’t know, I won’t say that its been engineered by the government, but they’ve certainly allowed it to happen and that’s pushing up commodity prices, maybe creating a little inflationary pressure, I kind of think that’s what’s going on now. So, it may suggest that these deflationary trends that we’ve seen, may be diminishing a little bit, but so far I still think that’s what’s holding bond prices down though. If you were to take the Japanese stock market for example, where deflation really exists and overlay it on a chart of the yield on the ten year Treasury note, you can’t tell them apart. They look identical. So, I think it’s the deflation coming from Asia is really what’s holding down global rates. Not only in the US, but all over the world.
JIM PUPLAVA: Well, getting back to this, then we’ve certainly seen the Bernanke speech talking about the possibility of re-inflating, we’ve had the Secretary of the Treasury, Snow, basically hinting that he wouldn’t mind if the dollar would go down. If that happens, John, and we see the dollar continue to fall. Let’s say commodity prices continue to rise along with gold, would you expect at that point then, these inter-market linkages to once again, be back in sync?
MR. MURPHY: Yes, I think that’s probably what will happen. That’s why I think in time, this will start to push interest rates higher again and we’ll probably get back into a more normal inter-market relationship. Unfortunately I don’t think that will be good for the stock market. Interestingly, everyone will all be concerned about deflation and how that’s hurt the stock market. The Federal Reserve, in a way, is almost trying to push interest rates higher, which would be part in parcel of the economic recovery. But rising rates aren’t good for the stock market either, so that’s one of the reasons that I think the stock market is in a *secular bear Market. I think the stock market will continue to under perform, possibly for the next several years and as part of that, I think there’s weakness in the dollar, I think commodities as an asset *class, hard assets, this is the first time in twenty years that we have seen Commodity Market as a whole out-perform the stock market and I think there’s a generational shift going on here. We’ve had twenty years of paper assets all the money was made in bonds and stocks and commodities were just a terrible place to be. I think we’re getting, all the charts that we look at, going back twenty years, are showing clear signs of reversal. So, I think, I’ll tell you over the next five years or so, I think maybe the only place where money will be made will be in hard assets, like gold and oil and anything related to commodity prices.
JIM PUPLAVA: And speaking of commodity prices, one thing that we’ve seen, we’ve got natural gas prices up, we’ve got oil prices that are up, why do you think there has not been a direct linkage in the sense of rising commodity prices and then let’s say the stocks of oil companies, for example your Chevron, Texaco, your Exxon, Mobil?
MR. MURPHY: Well, that has been very unusual because normally, even if you go back to the last raise in Gulf War we had in 1990, when the price of oil spiked at $40.00, oil stocks did very well in that environment and then they started to taper off a little bit. Natural Gas stocks have participated very well; in fact, they have been the strongest portion of the energy patch. But you’re right; most of the big integrated oils have really not participated. I take that maybe as an early indication that the market believes that a lot of this rally in oil is overdone, there is a war premium built into it and they don’t’ necessarily believe that this rally is for real. Of course Natural Gas and heating oil right now, I guess what I’m saying, I agree with that view. I think this rally in oil is somewhat overdone and also the real leaders in the energy complex for the last month have been heating oil and Natural Gas and that is primarily the result of cold weather. And here in the Northeast, I’m in the Northeast; we’ve got the terrible winter. But we’re in the month of March, so over the next few weeks or within a month the cold weather will have passed. So, I think the potential exists for a correction of downward movement in natural gas and heating oil prices. So, I think the oil markets have gotten ahead of the stocks. I think the oil market is probably going to have to correct and we saw the same thing in the gold market, by the way. Where gold was rallying and the gold stock kind of petered out a little and that caused a correction in the gold market.
JIM PUPLAVA: Let’s talk about gold, because recently in fact, on the day you and I are speaking, you put out a piece on the gold market. Talk about the gold market and your views, because it looks to me like its broken out, but there is for example, one chart that you feature, unfortunately we’re on radio, but were, it’s sort of hit this resistance. I’m talking in particular about the Amex Gold Index.
MR. MURPHY: Right. Well, you’re right. On the short-term basis, I think the Gold rally has run its course. The gold market in particular, our initial upside target was about $400. We didn’t quite reach it. We got to about $390 and we’re in a pretty big correction in the gold market right now. But, if you look at the Gold Indexes, like we did run a story today on the American stock Exchange Gold Bugs Index. And there are actually two indexes that we follow. The XAU Index which is more popular and the American stock Exchange Index, the difference is that the American stock Exchange Index, which has been much stronger, only has un-hedged gold stocks and that’s where the real strength has been. But even there if you look at the chart of that you’ll see that this last rally that began last October, moved right up to the high that was set, *look like at the beginning of last June and which is a always a critical spot for a market when it moves up and *retests an *old high and it wasn’t able to get through it and we’d been in a pretty sharp downward correction ever since then, so I think that’s what I meant when I talked about the discrepancy that normally the price of gold and gold stocks move in the same direction and when the gold stocks ran into this wall here and started to back off a little bit. I think that really contributed to the correction in the gold market. However, I do happen to believe that this rally in the gold market is for real. Like I said, we go back twenty years and we are breaking all kinds of, I don’t want to get too technical, but *trend lines and all kinds of other things for the first time in twenty years. So, I think we are in the early stages of a major bull market in gold, but I think it just got overdone and I, in fact, I think for most people, normally it’s very dangerous to buy gold stocks on strength. I happen to be a big believer on buying them on weakness and we’ve been telling people that if you don’t have exposure to gold, this is probably a good opportunity to start moving a little money into a gold mutual fund or something like that, because I think gold is going to do very well over the next five years.
JIM PUPLAVA: And do you think that perhaps this sharp upward rise that was saw, let’s say in bullion prices, from December almost to mid February, likewise with oil where you saw the commodity prices rising but you did not see the same strength in gold stocks or oil stocks, was the market’s way of telling us that the price of the commodity, itself, had gotten way ahead perhaps over war fears, in comparison to what was going on the equities?
MR. MURPHY: I think that is the case and another thing about the energy markets, because that’s really the only portion of the commodity markets that are still holding up at this point, if you look at the futures markets in particular, if you look in the newspaper, they post delivery * for example, the nearby oil contract right now, let’s say it’s trading around $36, $37 Dollars. If you look at the contracts that expire over the summer, there down around $30.00. If you look at the contracts of natural gas, they’re almost half the price of the nearby contract, that’s the market’s way of telling us that it doesn’t really believe, that this tightness will continue. There is a war premium built in, there’s no question about it, and I think I do agree with the consensus view that if this war situation is resolved in relatively quick fashion, we probably will get a pull back in oil and we’re already in a pull back in gold. Our knee jerk reaction, I think we will get a set back in these commodity markets and that could very easily coincide with a nice bounce in the stock market. So, I don’t think we’re going to get a replay of what happened in the last war on a longer-term basis, but I do think on a short-term basis, in fact the oil market right now, major long-term resistance is at $40 a barrel. We hit $39.99 last week and backed off. So, I think the oil market may also be putting in a short-term peak here.
JIM PUPLAVA: And getting back to the price of gold, where do you think we find strong support for gold in this market? Is it at the $325 level?
MR. MURPHY: Yes, that’s exactly where, if you look at a long term chart of gold, going back five years, late last year in the fourth quarter, gold hit a five year high basically and it really, a very big break out and one of the rules of charting is that if you get a break out like that the market usually pulls back. It should come back to the top of that previous base gold and then trading at a sideways range for about five years. The top of that basing pattern, or the break out point, as we call it, is around $325. In fact, I wrote a piece just last week, saying that I thought gold could pull back to the $325 to $330 area. So, and I think that’s probably where we’re headed. If my bull market theory is correct, it shouldn’t get below that. That should be pretty good support, so I would say if gold would stay on that, that would be a wonderful opportunity for people, investors to start nibbling back at the gold market. Right now we’ve been kind of, about a month ago, we turned more *cashes on the market and we suggested backing away a little bit. But, I think $325 that’s the flow into the gold market.
JIM PUPLAVA: How do you read the stock market, John, because we’ve certainly have had falling interest rates, nice rally in the ten year treasury notes, we’ve got the falling dollar, but it seems that if you look at individual markets, the NASDAQ has held up rather strongly, is it possible that we could get, perhaps, not the same kind of bull Market that followed the Gulf War, but a nice maybe 10 to 20 percent rally in the markets, sort of a relief rally, so to speak, if things go well?
MR. MURPHY: Well that’s the way I’ve been playing it, because I think that, basically, the stock market is in a *sector of bear market, a long term down trend and we’re still within the context of that. But since last July, the Market has been basically just been moving sideways and a very broad range, looking at the DOW for example, let’s say 9,000 to 7,000 something like that and right now we are down right near the lower end of that and our technical indicator, the shorter term ones are indicating that the market is in a very oversold condition. So my InterMarket scenario as to what’s going to happen over the next few months, is I think, a lot does depends on the Iraq situation, if it is resolved one way or the other, I think we’re going to get a pull back in gold, pull back in oil, we’re probably going to bounce in the dollar and I think we’ll get a good bounce in the stock market. But, I think maybe we may move up to the upper end of that range again. You know, like the DOW might get up to the 9,000 level, something like that. I don’t think it’s going to be the beginning of a big bull market, but I do think we could get a pretty sizeable bounce. One of the more positive developments is, you mentioned the NASDAQ, one of the things we follow very closely is it’s a ratio between the NASDAQ and the New York stock Exchange Index and normally when the NASDAQ is outperforming, that’s normally a sign of strength and so we’ve been talking about this the last week. The fact that the NASDAQ is holding up a little bit better than the rest of the market is also one indication that the market may be attempting to stabilize in here.
JIM PUPLAVA: So, let’s assume the scenario that things do hopefully go well, in a possible war. We see the dollar rally temporarily, we see gold oil pull back and stock markets go up, but I want to get back in terms of what we were talking about earlier, with your InterMarket work, where you’ve got a trend of the dollar going down, you’ve got a trend in rising commodity prices, is it unusual, John, so to speak, where they, a lot of people believe that we’ve hit bottom in the stock market that as I read it, this is the first time where we’ve had a bear market where most mutual fund investors are still fully invested, cash levels at mutual fund companies are still high, valuations, I would argue are still high and there’s still a general state of bullishness and for example, on any good news, there seems to be a rush for example, and strengthen the NASDAQ. Does that strike you as odd?
MR. MURPHY: It bothers me. It is odd and it bothers me quite a bit, but even after a decline in the NASDAQ of something like 80 percent, I mean, I think it’s over 80 percent, it’s the worse bear Market since 1929 and yet there’s complacency in the market. I think the attitude is it’s almost sad because I do get a chance to talk to a lot of investors and I think the problem is that a lot of people who rode the market down, figured well, it’s too late to sell now, so I may as well hold on. I can understand that attitude, but it’s a dangerous attitude. I think part of the problem there’s been a failure to recognize that the investment climate has changed. The buy and hold philosophy for example, over the last 20 years would be the absolute correct, in a bull Market sector, I keep using the word sector, I mean the very long term bull Market, the best philosophy is buy and hold, but that 20 year up trend is over and in that environment and I think for the next several years a buy and hold philosophy simply isn’t going to work and that’s why I personally feel a lot of investors, let’s just assume that we get lucky and we do get a really nice rally in the stock market, and say a down side corrects in the gold market, I would advice someone, if that happens, take some of the money out of the stock market, sell that on strength, take some money out and put it into the gold market. Use that opportunity to rotate some of that money into the gold market. That’s the way I would play it. I think people don’t fully realize that we get into these periods of under performance, back in the 70’s it lasted for almost 15 years. From 1966 to 1982, the market under-performed for something like, 15, 16 years. When the market peaked in 1929, it didn’t reach those highs again until the 1950’s. I mean that’s 20 years. So, once these bubbles burst, the market tends to under-perform for sometimes as long as a decade and so that’s why I think that a lot of people, I can understand them not wanting to sell now, but I think if we get a decent rally in the stock market I think people have to consider taking some money out of the stock market.
JIM PUPLAVA: So if I were to summarize, in your opinion, what I like about your opinion, John, you’ve worked both sides of the fence. You’ve worked in the commodities markets and you’ve worked in the stock market, in your opinion and view of technical analysis and what your indicators are telling you, it looks like begun a new bull Market and what I call things, or hard goods, or commodities and an extended bear Market in paper, would that be correct?
MR. MURPHY: Exactly right. In fact we showed two charts on our Website recently, with a 20-year chart of the stock market going up and a 20-year chart of the gold market going down. This is the way it normally works. gold and the stock market and gold are a proxy for commodities. They move in opposite directions and if you draw an up trend line on the stock market you’ll see that the 20 year up trend line in the stock market has been broken, which means we’re in a secular bear market in stocks at the exact same time the 20 year down trend line in gold has been broken, so gold has entered a *secular bull market. This is a generational shift and unfortunately Wall Street doesn’t talk about this because Wall Street had been very suspicious of the rally in the gold market because most people realize and Wall Street professionals know that the gold market generally moves in the opposite direction of the stock market. So if you’re bullish on gold, by implication you have to be bearish on stocks and of course Wall Street can never be bearish on stocks and so can never be bullish on gold, so the word is very * The other thing too is that the gold market, the universal gold stocks is extremely small, so that if, at some point, people do begin to catch on to what’s happening here, it’s not going to take a lot of money moving into the gold stocks to really, I think, cause some significant moves to the upside, but that’s the way I would be playing, if people, just the realization that the money is moving toward hard assets. This is a trend that could last for the next five to ten years. The moneys not going to be made in the stock market, it’s going to be made someplace else.
JIM PUPLAVA: And finally, I read an article recently, John, You’ve been practicing and pioneering technical analysis, your work with InterMarket analysis was certainly pioneering and started a new branch of technical analysis. But, you wrote an article recently, after more than three decades of practicing in the field, the longer you’re in the business, the more simple your indicators become. I wonder if you might talk about that and what do you watch these days?
MR. MURPHY: Actually, I sometimes carry it to an extreme. I wrote a piece recently, I called it Confessions of a Technical Analyst, and one of the things that I said was, that after doing this for 30 years I finally came to the conclusion, that if I really try to synchronize everything I’d run into one statement, it’s that you simply look at the line on the chart and you ask yourself, Is the line going up or is the line going down? If the line is going up you buy it and if the line is going down you sell it. It’s as simple as that. But, one of the problems with technical work I find, is that, if you pick up a software program and they are so readily available now, the average investor, there’s like 80 technical indicators in there, and it’s virtually impossible to do that type of work, you just become totally paralyzed, because I look at so many markets constantly, I really can’t afford to play with 100 different indicators, so I’ve narrowed it down to, my chart work has really simplified over the years. I do look at the trend. I do some chart pattern analysis, I use some moving averages, relative strength analysis, and I probably have about half dozen or so indicators that I rely on quite heavily. That’s what I advise people to do. Just find five or six things that work for you and use them, but try not to complicate it, because really all you’re trying to do is you’re really trying to determine is something going up or is something going down, and you don’t have to be an expert technical analyst. In fact I sometimes think the simpler we make it, the better we are; and that’s always been my focus to try to simplify as much as possible and over the years, I don’t know if I’m just getting old and senile and tired or what, or just wiser. But I find that I use fewer and fewer indicators and I think my work has gotten better as a result.
JIM PUPLAVA: I know you’re on a new work on InterMarket Analysis. Will that become a new book?
MR. MURPHY: Well, yes because it needs updating. I’ve updated little bits and pieces in various books, but yes, I’m in the midst of doing that right now. In fact the conversation we just had about deflation and all these things, that’s really going to be, and what has changed and what hasn’t changed, that’s really going to be the focus of the book. The book, unfortunately, it takes about six months after you finish a book, before it’s available in the press. But, by this time next spring the book should be available.
JIM PUPLAVA: In the meantime, John, why don’t you tell our listeners about your website and what they can find by going there?
MR. MURPHY: Well, I’m the Chief Technical Analysis for StockCharts.com and it is an Internet based charting service and obviously if someone wants to chart the Market, The stock market, The bond market, The Currency, anything they basically want to do, they can simply go there and do it. One of the nice things about an internet base charting service, you know in the old days you’d get software, you’d get charting software and then you’d have to import the price data from somewhere else. When you log into StockCharts.com all the data is right there. You can get a chart of the DOW and the chart comes up. We even have real time prices, right up to the minute and a lot of the work on the website is free. So, if someone just wants to chart the market, and they don’t want to get too sophisticated, they can go on there and they can chart. There’s a chart school on, that we put a lot of importance on education. So, it’s a good way to learn how to do it and there’s no cost. If someone wants to get into some of the more advanced work, there are some fees, but it’s not even necessary to do that, and I also provide my analysis on the website also. It’s just a relatively inexpensive way for someone to familiarize themselves with the markets and the best way to learn charting is to actually chart the market and that’s StockCharts.com. We also manage money, MurphyMorris Money Management, as I mentioned the money management firm which is based on technical principals. Someone can reach us there through MurphyMorris.com. We’ve actually again, they say you can’t time the market, but we’re very proud of the market that we’ve never had a losing year in the market, even over the last three years, using the technical principals. We’ve actually managed to make money over the last three years. We’re very proud of that.
JIM PUPLAVA: Well John, I’d like to thank you for being so generous of your time and joining us on The Financial Sense Newshour. It’s been a real pleasure and honor to have you on the program. I want to just point out congratulations a little bit delayed, for our listeners The International Federation of Technical Analyst awarded John an award and he was the recipient of the 2002 Market Technicians Association Annual Award. Congratulations, John, on all the work that you do and providing for investors and the pioneering work you do in the field itself.
MR. MURPHY: Well thank you very much, Jim, I appreciate that.
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