Advisors often quote the Dow Jones. TV and other news quote the Dow Jones Industrial average, which is only the top 30 companies. Here we see a chart with 6,000 most active companies. This represents almost the entire stock market. The value of this chart is also at the bottom where there are green and red strips. That takes all of the guess work out of what the market is doing. The computer software does the calculations dispassionately. This is why we like software. It's a tool to help us.
This chart is from Jan 28, 2016. It's an aggregate of the prices for all those stocks. Each stock has the weight of one. Nothing tricky.
If you add Trend Lines to the chart (which the software can also do for you), it's easier to spot the times to get out of the market: knowing when the trend is over.
Here is a daily chart with the Trend Lines added: The idea is that when the stock breaks to the OTHER side of the trend line, the move in that direction is probably over. You can get out with a profit sooner than waiting for the move to fail
Here is the same chart as the first one, but has the Trend Lines drawn on it. The computer does it's best to draw them, and a little thought from the chart-gazer (us) we can see that the reversing moves are shallow and barely breaking the trend lines on this Weekly chart. The sharp and deep breaks need to be respected (such as the November Green break up and then down). That's telling us the market is not settled in a simple general direction. For investors, I'd be suspicious of a green move after a long red drop. It needs to be a long rounded bottom to show support for a stable market. We're not there yet in this chart. The short term (above) is good for swing traders, but not investors. A longer chart (weekly candles) for a full year is needed to see the long term perspective well.
If you would like a current chart this link is updated every day with new charts for the market.
Ed writes on investing principles. The Profit In Pajamas book explains his best ideas.
