Five Insights Only Monthly Charts Can Reveal to You

Dec 30, 2014: 10:32 AM CST

We’re accustomed to seeing stocks at all-time highs but what about other markets?

And what do long-term charts – specifically back to the early 1980’s – show about stocks, the Dollar, Gold, Oil, and US Treasury Yields?

There’s only one way to find out these insights from the long-term frame:  Let’s see them!

We’ll highlight the main trends and put our current market action in context of the higher perspective.

Stocks continue in a primary bull market with two interruptions – the early and late 2000’s temporary bear markets.

It’s amazing how small these bear markets look on this time-frame.

The current multi-year bull market rally is in some ways similar to the 1996 to 2000 rally as the S&P 500 tripled in price from the 500 level to 1,600.

We’ve seen the current bull market run from 666 to the current 2,100 level, also tripling in index value.

If you’re focusing on low interest rates – Treasury Yields – then take a look at this chart:

Treasury Yields peaked near 16.0% at the start of the 1980s and then as inflation was “tamed,” yields continued a long-term downtrend that continues to this day.

The 10-Year US Treasury Yield (so far) bottomed in 2012 near the 1.0% Yield level, aided in part by the Federal Reserve buying trillions of dollars worth of bonds and mortgage-backed securities as part of their three intervention (Quantitative Easing) programs.

Yet even the intervention is a small blip on this timeframe that continues to reveal a triple-decade bear market for Treasury Yields.

At the same time yields have been falling and stocks have been rising, the Dollar has been declining:

The Dollar Index measures the value of the US Dollar against a basket of currencies.

The major trend has been down, falling from the 165 index level in the mid-1980s to the 2008 low (the ‘peak’ of the US equity market ahead of the recent recession) near the 70 index level.

The Dollar – like the 1990s – has recently been trading sideways and may yet be breaking higher above the 90 index level for another possible bullish rally.

For those who monitor commodities, Gold has enjoyed an interesting trend over the last three decades:

While gold peaked in the late 1970s and traded down (sideways) through the 1980s and 1990s, price bottomed and skyrocketed higher in parabolic movement from 2001 until the peak in 2011 near $1,900 per ounce.

Gold prices have retraced lower in a lower frame bear market ever since the 2011 high and now trade near the $1,150 per ounce level, a key reference point for current traders and investors.

What goes up must generally come down, and we see another example of this concept in Oil:

Like Gold, Oil remained relatively flat and tame during the 1980s and 1990s but broke into a strong bull market from the $15.00 per barrel level (imagine that) toward a peak 10 times higher near $150 at the beginning of the 2008 recession.

Oil prices collapsed horrendously from the $150 peak all the way back to the $35.00 per barrel level to end the sudden bear market.

Like stocks, this horrific price collapse is yet a short period when measured against the last 30 years.

After a rally during the recently economic recovery, we’re seeing oil prices collapse rapidly down away from the $110 peak.

Even if you are a short-term trader, give yourself liberty to view the longer-term trends of your stocks and markets and put your current trading environment in context of much longer-term perspectives.

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Corey Rosenbloom, CMT
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6 Responses to “Five Insights Only Monthly Charts Can Reveal to You”

  1. steve brophy Says:

    It’s amazing how small these bear markets look on this time-frame.
    Really Cory? They didin't look or act small to me. Or anybody else holding a long term stock portfolio!

  2. Corey Rosenbloom, CMT Says:

    Steve, Oh I totally agree – that was a fact that surprised me from the study. In real-time, they were terrible and seemed like they would last forever but the early 2000 bear market lasted about 2.5 years and the most recent end of 2000 bear market was roughly 1.5 years.

    Put in the light of a 30+ year trend chart, these are tiny fractions of time in the broader trend (which is why perspective is important).

  3. Are You Seeing this Stealth Move in Bonds TLT? | Afraid to Blog Says:

    […] For some additional perspective, take a moment to view my prior post “Five Insights Only Monthly Charts Can Reveal to You.” […]

  4. Jamshed Says:

    In my view charts can reveal everything we need to know if we are willing to put our head down and work but unfortunately most newbies like naked trading and not even check the charts. I always first see the charts and analysis and then only I start trading. It is so easy for me because of cTrader platform by OctaFX broker, it is an excellent platform where we get up dated charts so it is even better to review it and make analysis.

  5. Carter Says:

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  6. Hades - Ruler Of Underworld Says:

    Monthly charts show us the main force of an asset and are very useful to do long-term ratings.
    Thanks for sharing