For example, I am now able to analyze price data for the Dow Jones Industrial Average going back to the year 1901. Obviously, this is a lot of data and it will take me a while to unpack it all, but for starters here is 112 years of data compressed into a single chart:
The chart above uses yearly candles (I've never seen a chart with yearly candles before), and goes back to the year 1901.
My interpretation of the chart is bullish. From my perspective, the Dow is an uptrend, rising 5 years in a row, within the context of breaking out of a decade long consolidation area.
Of course, it is possible to zoom in and examine any given year in particular. The chart below is a daily chart just covering one year way back in 1901:
One theory I have is that trend following not only works now, but has worked for decades and perhaps even centuries. For example, using a simple 20 and 50 day moving average (the same moving averages I use for all of my charts), we can see a profitable buy and sell signal generated.
How would trend followers have done during the roaring '20's or the Great Depression? How did buy and hold do during the forgotten market performance of the first half of the century?
