The NYSE Composite And Long Cycles
Click on the chart for a larger view.
Ok, today I post a treat. It's not exactly secret but it's a chart that very, very, very few people have likely seen. Did I say very? I've never seen this chart any where else and likely there are only a handful of Andrews' Media Lines users across the globe who have ever seen this chart. That's because he did his work nearly a century ago and the use of his work is somewhat of a lost art. Consider it your Festivus treat.
The NYSE Index has always been considered the institutional index. It's where the smart money has historically done business. Above is a chart of the NYSE Index starting with the bull market of 1982 till today. Overlaid on the chart are Andrews' Median Lines.
Andrews' Median Lines are drawn by selecting three points on a chart. Not by drawing the lines themselves. In other words, there is no cheating. You start with a significant high or low, then pick a significant high and low at a later point in time. In other words, A, B and C points. From there, the charts are drawn from the three points.
I'm not going to go into details on how to use median lines but this is an after the fact use. Not the primary intent for their use. We start by selecting the low in 1982 (A) which is considered the start of the greatest bull market in history through 2000. We then select the price peak in 2000 (B) which was the end of the bull market. Finally, we select the price low in the post 2000 bear market (C). I've got software which then automatically draws the median lines but if you were to draw them manually like Andrews did eighty odd years ago, here's how you would do it: Connect lines B and C. Determine the midpoint of that line and draw a line from A through the midpoint. Then draw lines parallel to the that line from points B and C for the upper and lower median lines. There you have it.
This chart is really using median lines as linear regression lines. Therefore, we can draw some conclusions. Sure seems odd how we bounced off of support and resistance time and again. The crash in 1987? The May 2006 peak? The 1998 LTCM scare? Coincidence? Well, if that's coincidence, I'd like to have gone back in history and invested with coincidence. What conclusion would I draw from the October 2006 price shove north of the upper median line? Anyone calling a new bull market from here is buying at historically extreme price levels. In other words, they very likely wrong. Did I say very?
Dollar post later this week.
Ok, today I post a treat. It's not exactly secret but it's a chart that very, very, very few people have likely seen. Did I say very? I've never seen this chart any where else and likely there are only a handful of Andrews' Media Lines users across the globe who have ever seen this chart. That's because he did his work nearly a century ago and the use of his work is somewhat of a lost art. Consider it your Festivus treat.
The NYSE Index has always been considered the institutional index. It's where the smart money has historically done business. Above is a chart of the NYSE Index starting with the bull market of 1982 till today. Overlaid on the chart are Andrews' Median Lines.
Andrews' Median Lines are drawn by selecting three points on a chart. Not by drawing the lines themselves. In other words, there is no cheating. You start with a significant high or low, then pick a significant high and low at a later point in time. In other words, A, B and C points. From there, the charts are drawn from the three points.
I'm not going to go into details on how to use median lines but this is an after the fact use. Not the primary intent for their use. We start by selecting the low in 1982 (A) which is considered the start of the greatest bull market in history through 2000. We then select the price peak in 2000 (B) which was the end of the bull market. Finally, we select the price low in the post 2000 bear market (C). I've got software which then automatically draws the median lines but if you were to draw them manually like Andrews did eighty odd years ago, here's how you would do it: Connect lines B and C. Determine the midpoint of that line and draw a line from A through the midpoint. Then draw lines parallel to the that line from points B and C for the upper and lower median lines. There you have it.
This chart is really using median lines as linear regression lines. Therefore, we can draw some conclusions. Sure seems odd how we bounced off of support and resistance time and again. The crash in 1987? The May 2006 peak? The 1998 LTCM scare? Coincidence? Well, if that's coincidence, I'd like to have gone back in history and invested with coincidence. What conclusion would I draw from the October 2006 price shove north of the upper median line? Anyone calling a new bull market from here is buying at historically extreme price levels. In other words, they very likely wrong. Did I say very?
Dollar post later this week.
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