Technical Review of Dow Jones Industrial Average (INDU)
INDU has recorded another new all-time high as 2020 ended. On the yearly INDU chart, another positive outside year pattern occurred.
An outside year is a rare yearly reversal pattern that signals a structural trend change. Since 1900 there have been 7 outside years - 3 negative outside years (1937, 1966, and 1973) and 4 positive outside years (1949, 1980, 1982, and 2016). It is uncanny that a few of these reversal patterns have led to the end of a structural trend and the start of a new structural trend.
For instance, a positive outside year in 1949 ended the 1929-1949 structural bear trend and the start of the 1949-1965 structural bull. The 1980 and 1982 positive outside years occurred near the end of the 1965-1982 structural bear.
In fact, it coincided with the 1980-1982 double-dip recession period leading to the 1982-2000 structural bull. An outside year occurred during 2016. By the end of 2020, another positive outside year has occurred. The 2016 and the 2020 positive outside year patterns reaffirm the May 2013 structural bull.
RRG study suggests stock selective. INDU stocks reside within Leading Quadrant: HON, DIS, BA, JPM, TRV, GS, AXP, UNH, and KO. Improving Quadrant: INTC, CVX, CSCO, WBA, IBM, JNJ, and V.
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