Courtesy of Chris Kimble
I’ve heard many times over the past 39-years I’ve been in the financial services business that charts have memories? Is it true they do? Is it possible that they have very long-term memories?
This theory looks to be put to a big test by the chart above, which looks at the Dow Jones Industrial Index since 1910.
The Dow has spent the majority of the past 77-years, inside of rising channel (1). While inside of this channel, it looks to have created two very long-term megaphone patterns.
It broke above the first megaphone pattern in the early 1980s, where it used old resistance as new support at (2). After support was tested and held, the Dow experienced a very strong rally for nearly 18-years.
It again broke above megaphone resistance and used it as support again at (3), and another strong rally is taking place. The rally off support point (3), has the Dow currently testing the top of the 77-year channel, which is created by connecting the 1929 and 2000 highs.
With the trend being strongly higher, will the Dow breakout and forget that it is testing the top of this long-term channel or will the Dow remember that the top of this channel is in play and take an important breather?
I will discuss this chart and many more in our Free Webinar this Wednesday. I would be honored if you could join us in discussing what key inflection points we fell are opportunities at this time.
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