Wednesday, December 9, 2009

The Beauty of Weekly Charts

The beauty of using weekly chart is to eliminate the frustration of a single day or a few consecutive days of market volatile price movement. As the Dow dropped 104 points and S&P500 dropped more than 11 points yesterday, the weekly chart did not react as bad as it sounds. I would worry if it continued to drop in a few consecutive weeks as it did in early 2008. But until then, I would not do anything yet. As the chart shows below, the blue dots located at the top the price bars representing the 52-week closing high. There are more blue-dot bars than the non blue-dot bars in the last 4 months. So I will let the trend run until it shows sign of reversing before I consider doing some adjustment of the portfolio.

                                (click the chart to enlarge)

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