Toying Around with the Charts
To be honest, at this point its anyone’s ball game for the future of the stock markets. Though, while shamelessly pressing the charts to see what I could squeeze out of them, I may have stumbled on what could be the market’s new trend.
Where We Begin
A quick glance at the chart below and it seems that we might be onto something. After the near 3 decade long advance in the price of equities, it seems as though we may be due for a breather. I have drawn two lower boundaries, both beginning near 1996 and an upper level resistance line that begins in year 2000. Also, there is strong resistance at 9900, though I did not draw it on this particular chart so as not to clutter it up.
Justifying the Chart
If we were to take this image and describe it in literary context, it might make more sense. Knowing that 2004 and 2008 were bubble years, that entire segment can be thrown out, adding to the validity of the trend. The lower boundaries require less imagination to explain; I think both trends are accurate as support lines with more than 2 touches to the trends.
A Scary Trend
Keep in mind that the chart above is purely experimental, we do not yet have enough confirmation of the trendlines nor is there enough to see in the present economic cycle to identify that this could be the new trend for stocks. However, the most damning part of all of this is that the trend would practically guide our own “lost decade” should government stimulus efforts go the way of Japan during the 1990s. It is still far too early to say “this is it!” but I think that this trend could certainly be in play while the economy regains its footings.