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John Murphy: ETFs Have Revolutionized Trading


One of the most well-known and respected technical analysts says he uses ETFs as the main tool to trade opportunities based on intermarket correlations.

“Ten years ago, if you wanted to trade commodities or currencies, you had to trade futures. Also, in the old days, you had to use mutual funds if you wanted to trade sectors,” John Murphy tells TraderPlanet. “The beauty of ETFs is that they let you trade any part of the stock market that you want – large cap, small cap, for example.”

Murphy is the author of the venerated Technical Analysis of the Financial Markets and other books on trading and investing. He is also the chief technical analyst at StockCharts.com.

“ETFs have revolutionized the ability to take advantage of intermarket relationships,” Murphy said in the TraderPlanet article.

There are thousands of exchange traded products listed around the world and the global ETF business recently surpassed $2 trillion. [Global ETF Assets Cross $2 Trillion Mark]

ETFs are liquid baskets of securities that can be bought and sold on exchanges. They let investors buy entire segments of the stock, bond, commodity, currency and futures markets with one trade.

The largest and oldest U.S. ETF, SPDR S&P 500 (SPY), recently marked two decades of trading.

“ETFs let investors diversify in ways that simply weren’t available 20 years ago,” said Jim Ross, global head of the ETF business at State Street Global Advisors. [SPDR S&P 500 ETF ‘Changed the Way Stocks Trade’]

“You can move in and out of the market; and if you are a chartist you can chart volume data,” Murphy added. “They trade just like a stock. Also, there are ETFs for every region of the world. By following 50 ETFs you can track everything in the world.”

Full disclosure: Tom Lydon’s clients own SPY.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.