An interesting breach has occurred on a
stochastic chart for the DOW and it has actually been great news for stocks of
late. I was looking at a weekly chart of the DOW, 14 on %K, 3 on %D and a
smoothing of 3. I have a chart so you can see what I am talking about – Click Here . This of course doesn’t mean the DOW will
go up, but I will tell you what I found and let you decide. Going back to
September of 2005, 20 has only been penetrated 4 times and was extremely close
to braking it a 5th time when another rally took place.
- 10/16/05 – We had a 7 month rally after hitting 18.39
- 3/11/07 – We had a 3 month rally after hitting 19.57
- First 3 weeks in January of this year we were below 20(18.29, 5.00 and
11.47) – This was the weakest of the rallies and was only a 4 week rally. The
market was very volatile for 2 of the weeks, but it did go higher.
- 3/9/08 – We had a 2 month rally after hitting 18.77 in March
The other time we almost broke below 20 was back on July 16th of 2006 when we
hit 21.09 and had a great 7 month rally. We, as of 6/24, are sitting at 17.67
which in the past has been great news for the stock market. We will see what
happens in the next few weeks, but at least the stochastic chart is giving us
something to smile at.