Bespoke takes a multi-pronged approach to investing, and one of our preferred approaches is to look at recent price action in a name or index using six month charts. Â Take a look at the six charts below and see if you like or dislike any of the patterns.
Some of these charts look very bullish. Â Unfortunately, they are all actually inverted: the vertical axis goes from low at the top to high at the bottom. Â They are, in order, the S&P 500, the Nasdaq Composite, the Nasdaq Biotech Index, the Nasdaq Internet Index, the Dow Jones Industrial Average, and Netflix (NFLX). Â Below we've re-oriented the same charts with their vertical axis arranged in the traditional format. Â It's no surprise that the inverted charts for biotech and the internet group look so bullish, but it should be a concern for bulls that the inverted chart for the Nasdaq looks like a clear buy given that the downtrend has been broken. Â The Dow and S&P 500 inverted charts don't look too bullish yet, so that's a good sign for now.
In general, we think this is a good exercise to run from time to time just to change things up a little and help keep your perspective in check. Â If you really liked the look of the inverted charts, you shouldn't like the look of the actual charts.
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