Saturday, February 10, 2007

The Dow: Support and Resistance

As of late, most equity markets around the world have generated relatively strong returns. A question I often receive is what amount of ones portfolio should be invested in bonds versus stocks. The answer to this question varies for each investor depending on time horizon, risk tolerance, cash needs from a portfolio, etc. Later today, I will post a comment on the topic of stocks versus bonds.

In the interim, below is a recent chart from Chart of the Day going back to 2003 that graphs the the Dow with support and resistance lines. Chart of the Day notes:
Despite a host of concerns (weakening economy, softening housing market, geopolitical issues, etc.), the Dow continues to trade near record highs. However, it should be noted that the Dow is not yet in the clear as the Dow currently trades at the top of the three-year trading channel (see red line). Stay tuned...
(click on chart for larger image)

Dow Jones Index Chart: 2003-2007Source: Chart of the Day, Dow Jones

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