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Attached are five charts of the Dow Industrials.
The chart labelled Figure 2 (file attachment named INDU-02-06-28(2).gif) is
the Dow from 1977 to the present.
The chart labelled Figure 3 (file attachment named INDU-02-06-28(3).gif) is
the Dow from 1999 to the present.
The chart labelled Figure 3.1 (file attachment named INDU-02-06-28(3.1).gif)
is the Dow from December 2001 to the present.
Those charts show the penetration over the second half of June 2002 of the
support trend line (labelled on some of the charts as the "Lower Bounds of 20
Year Channel") which is defined by the lows of 82-08-09 (769.979) and 94-11-23
(3,612.10), and which until shortly after 01-09-11 had not been penetrated.
On 02-06-14 those lower bounds were penetrated intra-day before closing in a
normally bullish Hanging Man or Hammer. The subsequent rally petered out after
two days. Since 02-06-21 the Dow although going sideways has failed to close
above those lower bounds.
Six trading days over 20 years and 400 points intra-day deviation from a line
at 9300 (in round figures) may not be statistically significant. Even so, the
action from 02-06-21 to the present is consistent with the hypothesis that the
20 year bull run is over and that the 2 year bear run (commencing at the initial
resistance point on 00-01-14) is now and for the next several years may be the
predominant influence.
The best case that can be made for the bulls is that the penetration shortly
after 01-09-11 was not so extraordinary a reaction to an extraordinary event to
be discounted as an anomaly but rather that the so-called Lower Bounds of 20
Year Channel should be based upon the intra-day low of 8,062.34 on 01-09-21.
Figures 4 and 5 (so labelled with accompanying file attachments named
INDU-02-06-28(4).gif and INDU-02-06-28(5).gif), show the implications of that
best case on a longer and shorter term perspective, respectively, with the trend
line slightly lower than the lower bounds of the channel drawn in red. An upper
resistance line drawn (also in red) through the intra-day highs of 87-08-25
(2,746.65) and 99-05-13 (11,130.70) is close enough to parallel to support that
best case.
Perhaps the jury is still out. On Monday the alternate long term support
trend line sits around 8,870.
FWIW.
Have a nice weekend.
Tony Pylypuk
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Attachment:
Description: "INDU-02-06-28(5).gif"
Attachment:
Description: "INDU-02-06-28(4).gif"
Attachment:
Description: "INDU-02-06-28(3.1).gif"
Attachment:
Description: "INDU-02-06-28(3).gif"
Attachment:
Description: "INDU-02-06-28(2).gif"
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