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Saturday, December 17, 2016

Forget 20k - This Is The Stock Market Level To Watch

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.


1 comment:

Anonymous said...

Through out the course of stock market history it has went up and down . The past 8 years it has been controlled by the obama administration . It is a false picture of our present financial situation in the country. It was created with a political stronghold on investment firms. We all know he printed money . We all know that the federal reserve should be call the false reserve . Yes it will tumble , that is a fact , how far , we just don't know. I do realize that many are nervous as always in the unpredictable market .
This is nothing more than a Las Vegas gamble . If you want to invest your money in a safe place , there are none at this point. 8 years of deception have caused a great deal of mistrust . Banks are no no , the market is a no no , land or houses is a no no , . Ah ,under your bed is as good as any place until a do away with cash.