Courtesy of Chris Kimble.
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The Dow has made numerous important highs and lows along rising channel (A) over the past 70-years.
The last two times channel line (A) was really important was at the 2002/03 lows and right before the big decline around the world in 2008.
The Dow hit channel (A) back in 2002/03 as support and it held, then the S&P proceed on a multi-year bull run.
The Dow hit channel (A) back in 2008 and once support gave way, the Dow proceeded to decline 40% in a matter of months.
The small decline over the past 7-months has the Dow testing rising channel (A) again at (3). At this time the channel comes into play as a test of support.
Think about the above stats, the Dow rallied 80% in the next 5-yeas after support held at (1). On the flip side, the financial crisis picked up speed once support gave way at (2). The support test at (3) friends looks to be an important one in our humble opinions.
In my humble opinion, this is NO small test! This is a HUGE test friends.
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