Here's a post to get you thinking about both sides of the trade,
bull and bear, and the many different time dimensions investors
deal with...and how many unknowingly twist them to fit their bias.
(INDEXDJX:.DJI) long-term chart below, it is clear that time and
price are starting to align. Perhaps one can glean a Dow Jones
long-term outlook from the chart. But, more than likely this would
be accompanied by many other supporting factors and an
understanding that this chart offers a wide-angle perspective (and
margin for error).
Another more significant problem involves bias: Yep, our own bias.
Call it noise, call it the devil on our shoulder talking to us
while we contemplate market moves, but it's always something we
battle as active investors. Perhaps you are bearish and you applaud
the chart below (whether short- or long-term), or perhaps you are
bullish and you view the post/author as immediately biased because
of the resistance lines.
For these reasons, some may elect to not even read the post,
depending upon which market narrative they are aligning with.
But, let's break down the chart below. Perhaps the chart is saying
something like this (grain of salt):
1. Price has gotten volatile near the backtest of the '08 breakdown
and rising tops of the 2000s.
2. This point of intersection (squint and we'll call it 16,000 to
17,000) will likely produce a significant correction...which is
3. Or the rising consolidation will contain the correction and lead
to a breakout above this level. The Dow Jones long-term outlook is
4. A breakout is coming and a move above this level would be
All these seem plausible, yet different. So just what the heck is
the takeaway? Well, we all have opinions and narratives (hat tip
). It's virtually impossible to actively trade a long-term chart.
No doubt, it's
to be aware as a nugget of macro perspective. No issues there. I
use them at times, and even post them for a wide-angle risk
perspective -- good to keep an open mind. But, as active investors
it's best to trade what's in front of you, using appropriate time
frames for disciplined trading/investing.
Dow Jones Long-Term Chart
Editor's Note: Andrew Nyquist is an independent investor based
in the Minneapolis area. This article originally appeared on his
investing and economics site,