Courtesy of Doug Short.
I generally look at market charts in several periods: 5-minute, daily, weekly and monthly. Last week Todd Wagers, a reader in Seattle, sent me a couple of market charts based on quarterly data. He commented, “I think looking at a long term view of the markets is really important for people to see. Using a quarterly candlestick chart really gives an attractive chart to view for long term support, resistance, reversals and so on.”
Todd is absolutely right. In fact, his email was quite timely, arriving shortly before my presentation at the Retirement Income Industry Association (RIIA) conference in Boston earlier this week. I added slide to my presentation with a quarterly chart of the S&P 500 since January 1995. I introduced it with a question: “Does this look like a random walk?” Here is the slide.
Of course, this nearly seventeen-year period in market history has been one extreme trends. The bull market that began in 1982 had shifted in the high gear in the second half of the 1990s, the pattern since the Tech Bubble peak in 2000 has been one distance sequences of serial correlation.
We have now experienced two consecutive negative quarters, something that, since 1995, has only occurred during cyclical bear markets. Perhaps this time will be different. But global financial pressures will no doubt continue to weigh heavily on the direction of equities.
