Charts have been far more useful than fundamentals in pointing the way forward for shares over the last 12 months.
This reinforces the significance of the fact that the US Dow Jones index is presently testing a crucial support level. If that level fails to hold and the Dow Jones drops below 10,000 that will be a warning sign not just for US investors but also for investors around the world.
In chart terms support comes from levels that have brought in buyers in the past and from key round numbers. The Dow is testing both: 10,000 proved a key level of support in 1999 and 2000 and again in 2004 and 2005. Indeed the Dow has probably spent more time trading around the 10,000 level than at any other level in its history. The last time 10,000 failed to hold, in 2001, the Dow fell to a low of 7197.
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