An approaching level in a lesser-known stock index is, in our view, much more consequential than the widely anticipated Dow 20,000 mark.
With the Dow Jones Industrial Average (DJIA) nearing the 20,000 level, anticipation on the street has become palpable. At our firm, we’ve been putting in late nights all week, fielding calls from anxious clients. If you’re picking up on sarcasm, it’s because I’m laying it on pretty thick. The big, round 20K number means very little to us from an investment-decision standpoint. There is another, lesser-known index, however, that is approaching a level of major significance, in our view.
The Value Line Geometric Composite (VLG), as we have explained many times in these pages, is an unweighted average that tracks the median stock performance among a universe of approximately 1800 stocks. Thus, in our view, it serves as perhaps the best representation of the true state of the U.S. equity market. Additionally, it has historically been very true to technical analysis and charting techniques, which is quite remarkable considering there are no tradeable vehicles based on it. And, as noted, the VLG is testing a monumental level at the moment, going back several decades.