The old adage “When interest rates are high, stocks will die. But, when interest rates are low, stocks will grow.” has held true enough over the decades to be a good gauge of the economy.

I’ve included a longer term chart of US BONDS to show this point.

Had anyone used the Excalibur trend and trading method, they would have detected this trend years ago.

Knowing the connection between interest rates and the stock market means one would not have been surprised by the recent ‘mysterious’ rise in stock prices that we’ve been experiencing.

Recently, there has been a shift in the downward momentum of interest rates which could possibly indicate a potential lifting in rates.

This is already starting to show up with some central banks overseas raising rates.

Money is a very competitive product and governments have to compete with each other to attract international funds.

The strength of the currency attracting the investment cash is also a factor.

As we can see in the next chart of the US Dollar Index, there is considerable momentum now to the upside for the US Dollar.

This means that with rising interest rates or at least stable interest rates that the US Dollar is a good place to park one’s cash as that is the place where it will grow in value.

Growing value currencies will continue to attract foreign money, even if interest rates aren’t rising at present.

Could this attraction also lead those investors out of the stock market and into the US Dollar instead?

The name of the game (in order of priority) is survival of assets, not income.

But, if you can find both, then it’s a double-win for the investor.

Now, let’s look at the stock market.

Could the stock market be showing signs that the  “stocks will die” part of that old saying I mentioned at the beginning is still operative?

First off, let’s remember that interest rates are not high by any means of historical perspective.

However, that being said, there has been a constant loss of momentum with each rising top in the Nasdaq 100 stock arena.

I believe we’re starting to  see a downtrend beginning in this market based on trends going back over many months.

A declining stock market would shift money into the US Dollar and out of the stock markets as assets seek new safer ground.

This kind of movement on a large enough scale could lead to some pretty violent downward moves in stock prices.

But, that’s not the most important thing here.

It’s the fact that we’ve already detected this shift that’s important. That tells us that the big money is way ahead of the mass investing curve like usual, but, we’re aware of the shift.

Are we seeing the very early stages of a similar action in the stock market too?

Let’s watch, but, be forewarned that something has been shifting over the last several months.

Less buying has been taking place and earlier selling from those who hold most of the inventory of stocks.

This seems to be indicated by the Excalibur interpretation of events and, speaking for myself only, I’ll pay attention to that interpretation for now. - George

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