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The 75-Year Trendline Holding Stocks Back (For Now)

Tyler Durden's picture




 

Over 75 years ago a trendline was born. From the highs in 1937, the Dow Industrials have logarithmically oscillated around an inexorable drift. The current rally, as all asunder await the 14,000 level amid every boat being lifted non-stop, is testing this trendline for the fourth time in the last three years - and each time prior we have fallen back (unable to break above)... Yesterday saw us get close and this remains the longest trend to watch for more sustained strength.

75 years...

 

and Close-Up...

 

Source: Brad Wishak at NewEdge

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Wed, 01/30/2013 - 14:54 | 3199598 Glass Seagull
Glass Seagull's picture

 

Ben Bernanke:  "Haha!  Technical analysis doesn't work!!!"

[as his eyes nervously dart to the area on his bookshelf devoted to books about technical analysis]

Wed, 01/30/2013 - 15:02 | 3199635 machineh
machineh's picture

John Hussman: 'Haha! This is a "who's who" of WORST EVAH times to own stocks!"

[as his eyes nervously dart to the sea of red on his staggered-strike, leather-upholstered puts]

'Ring Prechter, pronto!' he orders his secretary. 'I need some old-time, tub-thumping bearish religion, even if it costs a thousand dollahs an hour!'

'Bob's locked himself in the bathroom and won't come out to talk,' reports Hussman's secretary. 'But Nouriel Roubini says he'll take your call.'

Wed, 01/30/2013 - 15:09 | 3199672 Thomas
Thomas's picture

If you inflation adjust that plot you will find a 1.7% per year return. Be interesting to see if that trendline fits. Key message: bulk of DOW's returns are dividends.

Wed, 01/30/2013 - 15:16 | 3199702 slightlyskeptical
slightlyskeptical's picture

If you really look at it, you will see that the chart doesn't even include dividends. Like so many analysis which only use the index levels. Any valid analysis will use total return metrics.

Wed, 01/30/2013 - 15:42 | 3199849 AlaricBalth
AlaricBalth's picture

Here is another long term stock trend chart with M1 added. Do stock prices effect the money supply or does the money supply effect stock prices?

http://research.stlouisfed.org/fred2/graph/fredgraph.png?height=480&log_...

Wed, 01/30/2013 - 16:30 | 3200064 tarsubil
tarsubil's picture

Nice chart. I'd say stocks go sideways then tank like in mid-70s. Money supply hits escape velocity and ultimately pulls the market back up into outer space.

Wed, 01/30/2013 - 15:37 | 3199816 Dr. Richard Head
Dr. Richard Head's picture

A 1.7% return per year means a loss every year, as that rate doesn't even beat the CPI measurement of inflation, let alone a true rate of inflation without hedonic adjustments.  This chart makes me verry happy to be out of that circus.  Now, if they could just end the US Dollar circus.

Wed, 01/30/2013 - 14:54 | 3199599 Ham-bone
Ham-bone's picture

so who's short?

Wed, 01/30/2013 - 14:57 | 3199613 firstdivision
firstdivision's picture

midgets

Wed, 01/30/2013 - 15:10 | 3199676 Thomas
Thomas's picture

Robert Reich. Also, many traders are long bonds/short brains.

Wed, 01/30/2013 - 16:07 | 3199952 resurger
resurger's picture

Dont worry, Investors are rotating to "Safety"

Wed, 01/30/2013 - 15:07 | 3199665 IamtheREALmario
IamtheREALmario's picture

Bernanke. It is why he does not shower at the club.

Wed, 01/30/2013 - 14:54 | 3199600 TrumpXVI
TrumpXVI's picture

So, that means BUY stocks, right?

Wed, 01/30/2013 - 15:08 | 3199668 CrashisOptimistic
CrashisOptimistic's picture
Despite a Lousy GDP Report, U.S. Economy is Primed to Expand

that's from Bloomberg

 

What monumental bullshit.  All the crap they lean on to claim it's all good internally was Sandy reconstruction that is utterly temporary.

I would never have believed that these fucking thieves could sprint to a microphone and bring themselves to say that a recession print of MINUS 0.1% was good news.  Have they no shame at all?

Wed, 01/30/2013 - 15:22 | 3199729 Spastica Rex
Spastica Rex's picture

Economically, all news is good news.

So is no news.

Wed, 01/30/2013 - 14:55 | 3199602 PUD
PUD's picture

TRENDS ARE ONLY VISIBLE WHEN THEY ARE HISTORY. THEY DON'T PREDICT

Wed, 01/30/2013 - 15:06 | 3199664 whotookmyalias
whotookmyalias's picture

As Ralph Kramden used to say, "To the Moon!"

Wed, 01/30/2013 - 15:09 | 3199669 Joe moneybags
Joe moneybags's picture

-1 for the pompous use of CAPS.

Wed, 01/30/2013 - 15:23 | 3199739 Spastica Rex
Spastica Rex's picture

-1 for the inaccurate use of "pompous."

Wed, 01/30/2013 - 15:32 | 3199797 Remington IV
Remington IV's picture

-1 for being a CHIMP

Wed, 01/30/2013 - 18:48 | 3200565 lasvegaspersona
lasvegaspersona's picture

-1 for failing to also criticize the use of BOLD

Wed, 01/30/2013 - 14:55 | 3199609 Cognitive Dissonance
Cognitive Dissonance's picture

It all depends on how thick you draw that trend line bro. Personally I use a big ass magic marker.

Wed, 01/30/2013 - 14:57 | 3199615 q99x2
q99x2's picture

I've got a trendline for ya.

Wed, 01/30/2013 - 17:51 | 3200372 mvsjcl
mvsjcl's picture

I see the trendline continuously expanding--oh wait, that's my waistline.

Wed, 01/30/2013 - 14:58 | 3199617 CharliePrince
CharliePrince's picture

trade  beans

Wed, 01/30/2013 - 14:58 | 3199623 AccreditedEYE
AccreditedEYE's picture

Difference between the past and now? Sound money policies were practiced up to the 1970's. BTFD

Wed, 01/30/2013 - 15:09 | 3199677 IamtheREALmario
IamtheREALmario's picture

Hmmm ... and what similarity is there between the make-up of the Dow in the 1930 and the Dow today? People act as if the chart means something when the abse changes year to year.

Wed, 01/30/2013 - 15:52 | 3199906 hannah
hannah's picture

it doesnt matter which companies because they are picked to reach a 'number'. the dow is just a number manipulated by the banks.

Wed, 01/30/2013 - 14:58 | 3199624 acdp
acdp's picture

Irving Kahn as next FED charman?

Wed, 01/30/2013 - 14:58 | 3199625 LongSoupLine
LongSoupLine's picture

Trendlines are for fucking rational analysis.

 

Bernanke has created a completely fucking illegal and corrupt fucking irrational system once known as a "market".

 

Fuck that fucker for what he's done and for what is going to happen due to his fucking actions.  May he fucking rot in fucking living hell before he sees the fucking business end of a fucking slow woodchipper.  fucker.

Wed, 01/30/2013 - 15:03 | 3199637 PeeramidIdeologies
PeeramidIdeologies's picture

I use the f-bomb a lot, but you sir, make me seem like a good Christian boy. Short much?

Wed, 01/30/2013 - 15:10 | 3199680 LongSoupLine
LongSoupLine's picture

Short much?

 

Not short one single fucking thing.  Long silver, physical.

That's what makes what I say genuine, and emotionally appropriate to the actions of those in power.

Wed, 01/30/2013 - 15:24 | 3199740 PeeramidIdeologies
PeeramidIdeologies's picture

Common old boy, I can think of a lot worse places to be. In fact I consider these to be good times. Maybe, just maybe, they will get this thing turned around and we can all step in the future without all these possible unpleasantries we're facing.

Wed, 01/30/2013 - 15:34 | 3199807 LongSoupLine
LongSoupLine's picture

WTF?

Wed, 01/30/2013 - 15:48 | 3199881 PeeramidIdeologies
PeeramidIdeologies's picture

I'm going to assume you live in North America, and if that's the case you should stop and take a minute to consider how good you have it. It's not perfect, no, but what is? If it wasn't for the Feds careful balance of liquidity and market purchases we would all be living in a very different world, with all the nasty deleveraging and whatnot. We're not out of the woods by a long shot but I, for one, do not want this thing to collapse. You don't like it go live in the woods and where you will actually have to work to survive. Otherwise STFU and enjoy the amenities you have.

Wed, 01/30/2013 - 16:18 | 3200006 Pure Evil
Pure Evil's picture

Is that you Berstanky?

Wed, 01/30/2013 - 16:18 | 3200012 PeeramidIdeologies
PeeramidIdeologies's picture

You silly down voting SOBs do you even know what your up against? This isn't going to a sporting weekend at Bernie's, where you get so show off your shiney AR, if this thing comes down. There isn't going to be a smiling face in town, whether you read ZH or not.

Wed, 01/30/2013 - 16:25 | 3200042 James_Cole
James_Cole's picture

"Otherwise STFU and enjoy the amenities you have."

Right on Peeramid! Everybody better enjoy these 'amenities' while the last, 'cause they sure as shit aren't going to be around after the circus leaves town. 

I always say to Greek folks complaining about minor details like their country being destroyed, "Yeah? But remember all the good times in early 2000? Remember when your books were cooked but nobody cared? Such great times!"

Who cares how this thing ends, Bernanke better give me dow 20k & spy 200, grandma be damned!!

Wed, 01/30/2013 - 16:26 | 3200050 Pure Evil
Pure Evil's picture

So, what's your point again?

Wed, 01/30/2013 - 19:36 | 3200723 LooseLee
LooseLee's picture

Spoken like a bonafide sheep; grateful for the crumbs they are thrown...

Wed, 01/30/2013 - 18:50 | 3200570 lasvegaspersona
lasvegaspersona's picture

I prefer to get my insane optimism from MDB.

Wed, 01/30/2013 - 15:15 | 3199696 DavidC
DavidC's picture

F-bomb?

DavidC

Wed, 01/30/2013 - 15:28 | 3199780 PeeramidIdeologies
PeeramidIdeologies's picture

I was going to say I fuck a lot myself but it seemed out of context..

Wed, 01/30/2013 - 15:43 | 3199855 DOT
DOT's picture

That's proletarian language as we once called it....er , rather "fucking proletarian language".

Wed, 01/30/2013 - 16:39 | 3200116 Sockeye
Sockeye's picture

You got a problem with haruspex?!
http://en.wikipedia.org/wiki/Haruspex

Wed, 01/30/2013 - 15:00 | 3199628 Uncle Zuzu
Uncle Zuzu's picture

And if you draw in a parrallel line the bottom part of the channel, connecting the lows of 1942 and 1982 and project to today, it gets us to about Dow 5,000.  Yikes.

Wed, 01/30/2013 - 15:05 | 3199655 whotookmyalias
whotookmyalias's picture

I'm a buyer at DOW 5000

Thu, 01/31/2013 - 06:55 | 3201853 Wraithlord
Wraithlord's picture

My charts show a strong technical support at 0. But beyond that I'm clueless.

Wed, 01/30/2013 - 15:06 | 3199656 Water Is Wet
Water Is Wet's picture

And if you draw a couple sinusoidal arcs separated by a few parabolas punctuated by a few dirac-delta functions, you get the flying batman formation.  YIKES!

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