Price Time Volume Investing

I posted this chart some time ago but I still find it interesting.  Starting after the crash of 1987, the market has moved along a trend line which is shown to be near 1100 today.  In 1995 the market took off to twice the slope of this trend and topped out in March 2000.  Price then retraced back to this trend line.  I would not be surprised to see a leg down into October that will pay respect to the long term slope.

Chart courtesy of Stockcharts.com

Just for fun, we can pretend that the bubble never occurred.  Let’s assume that the market continued to follow the  trend and even had a correction in 1997-1998.  If this happened, would people have the same perceptions of the current level of the market?  Price would be in the same place either way.  But my guess is that without the history of the crash following 2000, everyone (including the media) would be much more bullish for the  long term.  Again – price would be in the same place either way.

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Tags:   Slope · Square of RangeNo Comments