OLD SCHOOL VERSUS NEW SCHOOL, LET’S SORT IT OUT

April 8th, 2015 by Leonard

Directional Sign Posts 04-08-15

 

OLD SCHOOL VERSUS NEW SCHOOL LET’S SORT IT OUT

 

 

Old School Markets

 

1. Fed eases interest rates to halt a 2008 financial crash. Bonds go up lowering interest rates. Feds are forced to create Bond buying programs (QE) because house of representatives  won’t create a fiscal policy and instead obstruct fiscal stimulus. Bonds continue to rally further lowering interest rates .

 

2. The dollar falls and stays depressed due to the lower interest rates and the great recession.

 

3. Gold rallies as a monetary replacement hedge for the dollar.

 

4. Stock market responds positively to lower interest rates projected months and years into the future.

 

 

New School Markets

 

1. Fed brings Bond buying programs to a halt in Oct 2014. House of Representatives still do not have a fiscal program of stimulus for the economy and still obstructing. But oddly instead of Bonds falling in 2014 on expectations of rising interest rates, they rally and lower interest rates without Fed help reflecting one of the worst years on record for consumers who are facing severe attrition of assets and savings as the great recession  continues to drag on.

Double click on charts to enlarge, Then the back button to reduce

Weekly US 30 Year Bonds 04-08-15

Blame it on the weather…….Not.

 

2. Dollar rallies on projections for higher interest rates into the future based on a better US economy while the Euro gets crushed due to monetary stimulus bond buying programs in the Euro zone and globally.

 

3. Gold continues to weaken as dollar hedges are not required but still holding firm as the “late to the party” global economies begin slashing interest rates as the great recession deepens throughout the world.

 

4. Our Stock market begins to sputter without QE Bond buying programs and creates a volatile time correction generally moving sideways from December 2014 into current times while global commodities like copper and crude oil collapse reflecting the ongoing deflationary forces. Consumers binge buy for 2 months at a time, then get scared and clam up for 3 or 4 months at a time. Blame it on the weather………..Not.

Double click on charts to enlarge, Then the back button to reduce

Weekly E Mini S&P 04-08-15

 

 

SUMMARY

 

Old School is ……..

 

1. Bonds go up to lower interest rates and stimulate the economy as a replacement for fiscal stimulus.

 

2. Dollar moves down on lower interest rates.

 

3. Gold rallies as a replacement hedge for the dollar.

 

4. Our Stock market rallies on lower interest rates .

 

 

New School Should be………. 

 

1. Bonds sell off to raise interest rates to anticipate a stronger economy.

 

2. Dollar rallies along with higher interest rates and a stronger economy.

 

3. Gold falls as monetary replacement hedges for the dollar are not needed.

 

4. Our stock market returns to a normal standard of moving up on solid economic numbers and fighting with the head winds of higher interest rates keeping growth in check.

 

 

So What’s Wrong With the Current New School Picture?

 

The economy is not unified……It’s spotty out there

 

For one thing The Great Recession is not yet over.

 

Secondly the U.S. is immersed in generational power struggle wars between Old Yuppie Boomers, slightly nihilistic Generation Xers , and Millennials . These are ideological wars about lifestyle, social morals,  redefining the work place,  and the impending death of how 100 year old industries are structured such as Fossil Fuels, Health Care, Pharmaceuticals, the Industrial Military Complex, and Wall Street. Even how retail is structured is being coerced into change.

 

The older generation, the ones with the money and the power will fight to their death a futile ideological war to maintain what they know to be how the world is supposed to look. But in the end they will be gone and change will win out ….it always does as the younger generation assumes power and control.

 

 

Fear, Resistance to Change and ObstructionismLuael and Hardy 3

 

I don’t know why the older power brokers are so resistant to change other than it might put a temporary disruption on their money flow. They could instead be using their vast experience to help usher in an America that surpasses all of it’s benchmarks of excellence and achievement in it’s almost 240 years of existence. But fear not . Early candidates for the 2016 presidential elections have tossed their hats into the ring.

 

 

Gustav Mahler

The great composer Gustav Mahler b 1860- d 1911 despised the Machine Age and it’s rickety noisy machines as the world moved deeper into the Industrial Revolution. He mourned the loss of the Romantic Era.

 Gustav Mahler 04-08-15

 

But paradoxically his music became the bridge between the 19th century romanticism and the 20th century modernism. Interspersed into the sweetness and romanticism of the 19th century in his music you will hear grotesque and violent harmonies that sound out of place that then resolve into tender passages of pathos only to be disrupted again. It was his view that the machine age was harsh and frenetic.

 

And at this time the world is once again moving again thru another revolution out of the 20th century Industrial revolution and into the 21st century technology information age.

 

The Great Recession beginning 2007-2008 is much more than just a financial recession .Real inflation ended in 1979. Dis-inflation began in 1980 as the machine age began to unwind. Deflation began in 2000 and has yet to bottom out.

 

U.S. Bonds are the key

 

Keep your eyes peeled on the U.S. Bond Market. Bond traders will tell us when the economy will begin it’s real unified recovery. They will sell bonds to bring the rates up. And then perhaps we will see New School Markets in sync.

 

ATTENTION

For greater detail and analysis on the direction of the markets you are invited to attend a free on-line workshop

Saturday April 11 at 12:00 Noon EST and on Tuesday April 14 at 4:30 pm EST

I will be conducting a Free online workshop on day trading in the worlds most unloved bull market. You will be catching a glimpse of Novy Market Flow Momentum Charts amongst other subject matter. Long term charts will also be analyzed.

 

To Register for the Free Leonard Novy Webinar

for  Saturday April 11 at 12:00 noon EST or for                                              

Tuesday April 14 at 4:30 pm  EST

Email me at  info@trainingfortraders.com  and type “Webinar” for a registration link

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This information is for educational purposes only.  Trading with this information is done at your own risk. All concepts and writings including the Novy Training/Trading Method NTM© are proprietary and the sole ownership of Leonard A. Novy and may not be reproduced for profits without expressed written permission. Copyright 1995-2015 www.trainingfortraders.com

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