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ASX 200 trendline


Have you ever wondered where the stock market is compared to its long term trend? Right now, the S&P ASX200 is still just below its 20 year trendline.  This can be interpreted as shares being relatively cheap.  As you can see from the chart, before the global financial crisis in 2007/2008 the index was well above the trend line- this is a clear sign of a bubble and investors should exercise a greater degree of caution when markets are close to the green line (historically, there is a 90% probability of them being below the line).

20 year dynamic trend lines


The above chart shows 20 year dynamic trend lines as at December 2016.

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