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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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]

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.'

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.

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.

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_...

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.

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.

Ham-bone's picture

so who's short?

Thomas's picture

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

resurger's picture

Dont worry, Investors are rotating to "Safety"

IamtheREALmario's picture

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

TrumpXVI's picture

So, that means BUY stocks, right?

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?

Spastica Rex's picture

Economically, all news is good news.

So is no news.

PUD's picture

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

Cognitive Dissonance's picture

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

q99x2's picture

I've got a trendline for ya.

mvsjcl's picture

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

AccreditedEYE's picture

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

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.

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.

acdp's picture

Irving Kahn as next FED charman?

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.

PeeramidIdeologies's picture

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

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.

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.

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.

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.

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!!

LooseLee's picture

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

lasvegaspersona's picture

I prefer to get my insane optimism from MDB.

PeeramidIdeologies's picture

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

DOT's picture

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

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.

Wraithlord's picture

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

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!