Last year I pointed out two trendline breakouts that got very little if any attention in the technical analysis community for the Qs. Both of those breakouts have proven to be very important with respect to the the long and intermediate term trends. In the top chart above, I am showing another trendline that has gotten very little press as well, and that is the Dow Industricals breakout from a downsloping trendline in December 2009. As bad as the recent correction feels to many, all that has happened is that we have retested the trendline for the second time. The first test came just a little too quickly for such a long trendline and the market got ahead of itself. I see little reason for believing that we could crash through that trendline after it has been tested 5 times. On the other hand we could test it or the recent lows again.
This view supports my larger hypothesis that we will see another leg up in this cyclical bull market. The next move up may not begin until later this year, but the probability that it will occur is increasing. After we slog through most of this year in difficult fashion, we should see a return to strongly trending markets that could provide exceptional upside returns before a return of the secular bear market.
1 comment:
Completely agree. I've been watching that trendline and was amazed (and grateful) it wasn't getting much press. Love your blog and read it daily.
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