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I don't know. Does logic overcome chart patterns or does money flow
really
tell the story? If the last two years have been a deflationary
environment
with all the commodities going down, then your thesis is incorrect.
Both
stocks and bonds rallied. If you are a member of this society that pays
for
health care, prescriptions drugs, has a child going to college, goes to
a
sports event buys a car, needs auto or home owners insurance, plays golf
or
goes to a movie it is an inflationary society. In that case you are
wrong
because bonds are rallying with the stock market. So don't worry about
the
economy, it all depends where you are coming from that gives you
inflation
or deflation, what you are really interested in is " how do I make a
living
trading the current conditions shown on the charts". For that you need
a
plan and a system that works. I wish you luck. Ira
Bill Bancroft wrote:
> Is there a consensus on this forum regarding the US economy and
> deflation?
> Is our economy now deflationary vs. inflationary?
> Furthermore, if the economy is now deflationary, doesn't that change
the
> relationship between stocks and bonds?
>
> Here's why I ask: Compare the recent action in the daily chart of the
> Dow Jones Industrial Average to the daily chart of the yield on the 30
> yr treasury bond.
> They look the same! They both clearly show a bearish
head-and-shoulders
> pattern that is close to breaking the neckline!
>
> Isn't this relationship consistent with a deflationary economy rather
> than an inflationary one? Anyone familiar with Gibson's paradox? "In
a
> deflationary enviroment stock prices move inversely to bond prices."
> Are we there now?
>
> Bill Bancroft
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