Another interesting chart I’ve come across in the past few weeks looks at the Dow over the past 95 years. In particular, the chart focuses on the trend in the index over the past 70 years. Note that the index hasn’t broken the top or bottom lines of the channel. The Dow bounced along the bottom of the channel for much of the 70’s and early 80’s and then moved decisively higher throughout the remainder of the 80’s and 90’s until hitting the top of the channel at the turn of the century. The index ended up losing ground over the next 10 years and has since pressed higher to where we are today, at the top end of the channel.
We have no way to predict what is actually going to happen from here. For all we know, this could be similar to the 1990’s when the Dow broke through the top of the channel it was in at the time. Alternatively, we could experience another decade like the 2000’s where the index declined. Visuals like this provide good context on where we’ve come from and potential paths for where we’re going. As always, it will be quite interesting to see where we end up going.