CTA Intermarket Analysis & Asset Allocation

Question 1

In intermarket analysis, what is the typical historical relationship between bond prices and stock prices?

Accepted Answer

They often move inversely — rising bond prices (falling yields) can support stocks, while falling bond prices (rising yields) may pressure stocks

Answer

They always move in the same direction

Answer

They are unrelated

Answer

Bond prices lead stock prices by exactly one quarter

Question 2

According to intermarket analysis, what is the typical relationship between commodity prices and bond prices?

Accepted Answer

Rising commodity prices (inflationary) tend to push bond prices lower (yields higher) as inflation erodes bond value

Answer

They move together in the same direction

Answer

Commodity prices and bond prices are uncorrelated

Answer

Bond prices lead commodity prices by 6 months

Question 3

In intermarket analysis, which asset class is typically considered the first to turn at major economic turning points?

Accepted Answer

Bonds

Answer

Equities

Answer

Commodities

Answer

Real estate

Question 4

What does 'relative strength analysis' between two markets tell a technician?

Accepted Answer

Which market is outperforming the other, helping identify leadership and optimal allocation

Answer

The absolute price level of each market

Answer

The volatility difference between two assets

Answer

The correlation coefficient between two price series

Question 5

The US Dollar Index's relationship with commodity prices (especially gold and oil) is generally:

Accepted Answer

Negatively correlated — a stronger dollar tends to push commodity prices lower

Answer

Positively correlated — a stronger dollar raises commodity prices

Answer

Uncorrelated — they move independently

Answer

Correlated only during recessions

Question 6

In intermarket analysis, 'sector rotation' refers to:

Accepted Answer

The movement of investment capital from one industry sector to another as the business cycle evolves

Answer

Rotating out of all equities into cash during bear markets

Answer

Rotating between domestic and international markets quarterly

Answer

Changing brokerage firms to seek better commissions