The Dow Jones Industrials Index is the most known and oldest stock market index. The Dow Jones historical chart on 100 years has a breathtaking chart pattern. As part of our charts analysis, and our aspiration to host the coolest long term charts in the world we feature our analysis on the Dow Jones historical chart on 100 years in this article. To us, it suggests either a major top is being set in 2019 or a ‘new normal’ with moderate but continuous gains in U.S. stock markets. As November 2019 kicks off we also have a bullish forecast for the Dow Jones for both 2020 and 2021: A Dow Jones Forecast For 2020 And 2021.
[Ed. note: on October 27th 2019 our editorial team added an update in this article. Please scroll down to find the most up-to-date Dow Jones long term chart on 20 years.]
The Dow Jones Industrials Index was founded on February 16th, 1885, as per Wikipedia. The index tracks 30 large, publicly owned companies based in the United States.
The Dow Jones organisation grew over time and now has lots of financial media in its group, think of MarketWatch and Barron’s.
Dow Jones Chart On 100 Years
The longest timeframe of the Dow Jones chart is the quarterly chart on 100 years. This chart provides a breath taking picture with essentially one huge rising channel.
The one and only time that the Dow Jones index fell below its 100 year rising channel was in 1929-1933. No coincidence the Wall Street crash of 1929 resulted in the Dow Jones falling to levels so low even on a 100 year rising channel.
A rising channel is a common thing on any chart. However, it is really a beautiful setup on the Dow Jones 100 year chart.
Another important observation on the 100 year chart of the Dow Jones is what happens every time this index touches support as well as resistance.
Each and every time the top of this giant channel is tested it results in a long and/or exceptionally aggressive decline. The test of resistance took place only in 1928 and 2000. So any chartist with solid charting skills could have seen this market top coming way in advance. Similarly in 2007 the Dow Jones tested resistance of the upper band (right below resistance).
Dow Jones 100 Years Historical Chart: Distinct phases
Basically, between 1932 and 1966, the Dow Jones index has risen 10-fold.
Buying in 1966 would have been catastrophic for one’s portfolio. That is because the Dow was trading in the upper area of its long term channel. The Dow corrected combined with sideways trading during 2 decades only to test support levels multiple times. As of 1984, the Dow went in almost one straight line up until the year 2000.
Between 2000 and 2013 the Dow has traded in a wide range.
In 2013 a triple top breakout took place. Arguably, that’s the moment when the stock bull market started, not March 2009.
Right now, the Dow Jones Industrials Index is trading in its upper band of its long term rising channel. It does not trade at an extreme level though, it is some 25% to 30% below extreme levels.
Dow Jones 100 Years Chart: What’s next
It is tough to forecast future U.S. stock market direction solely based on the Dow Jones historical chart on 100 years.
For future directions we use our proprietary method as explained in our piece detailing 100 investing tips. Essentially, it is a combination of leading indicators like 10-year Yields, currencies, as well as indicator indexes like the Russell 2000 that help forecast future stock market directions.
However, there are 2 future scenarios we can potentially see in the Dow Jones historical chart on 100 years.
- The Dow Jones Industrials Index has reached the upper area / band in its very long term rising channel since 2017. This happened only twice before: in 1929 and 2000. Given that this happens so rarely it may suggest that this is a major top in the making which will resolve to the downside.
- However, we believe another scenario is more likely. The rise since 2009 happened from the median of this long term rising channel. It certainly does not compare with the rise between 1982 and 2000 (bottom to top of the channel). So the last 10 years saw a strong, but nowhere near an extreme rise. The thesis of this 2nd scenario is that the Dow Jones Industrials Index will continue to trade in its upper channel. This will deliver moderate but continuous gains in the next few years.
We continue to look to the currency and bond market for pointers whether we are in scenario 1 or scenario 2.
Stock market overvalued or not?
Many are talking about extreme valuations of stock markets. The Dow Jones historical chart on 100 years suggests that U.S. stocks are not valued at extreme levels. It suggests that this is momentum in stock markets.
It does not tell anything about a correction, or timing thereof. Many fear a stock market crash but a long term chart like the Dow Jones historical chart on 100 years is not necessarily going to confirm any of this.
Looking at the 100 year chart of the Dow Jones it becomes clear how strong the uptrend has been in recent decades. It also becomes clear that more upside is certainly in the cards before the peak of this 100 year channel is tested.