The Ten Year View

I remain confounded at the market's rise, but you can't argue with price action.

I would like for you to look at a view I usually don't show here - the ten year view - of these various markets. I'll say very little about these, relying on you to draw your own conclusions. Remember that clicking any image makes a larger one come up. These graphs were up-to-date as of the market's close March 15, 2006.

Here, first, is the Dow Jones Industrial Average. You can see an array of Fibonacci fans (which are actually coming all the way back from 1932) that help us see where prices are "clinging". The recent year's price action has been unusually strong, but you can still see the minor resistance line I've drawn.


Next is the Russell 2000, which has been especially stong lately. Prices are up against the limits of an ascending wedge.


Next is the S&P 500 which, like the Dow, has Fibonacci fans from very long ago shown on it as well as the more minor year-long resistance level.


Now just look at the Dow Transports. Does anyone besides me think these are just a touch pricey? That the graph is basically a hockey stick? Incredible. Notice, however, in spite of its rise, how it is already on the "wrong" side of its ascending trendline.


The Dow Utilities, mentioned here about a week ago, seem to be prone to breaking a head & shoulders formation; this index is already on the bearish side of its major ascending trendline.


And last but not least is the volatility index, the VIX. The sea change here is that the "fear" levels remained in a consistent range for years and years. But in the past couple of years, the VIX has plunged to never-before-seen lows, indicating a level of confidence (or complacency, if you prefer) never before witnessed.


My dread fear is that we poor bears are going to wind up with the mindset Abbie Hoffman was in when he wrote his suicide note: "It's too late. We can't win. They've gotten too powerful." Nooooooooooo!