Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Value Line Geometric Index Predicts Major Stock Market Top

Stock-Markets / Stock Markets 2012 Jun 18, 2012 - 02:09 AM GMT

By: Steven_Vincent

Stock-Markets

Best Financial Markets Analysis ArticleLast week I posted analysis showing that the monthly RSI divergence which formed at the 2011 and 2012 highs is a very reliable indicator of a stock market decline of almost 28% lasting 11 months. I continue to see many, many companion signals which confirm this.

The Value Line Geometric Index is showing a technical condition which has also been a strong indicator of major market tops.


The total number of companies in the Value Line Composite Index hovers near 1675, and is composed of the same companies as The Value Line Investment Survey®, excluding closed-end funds. The Value Line Composite Index has two forms, the Value Line Geometric Composite Index or the Value Line Arithmetic Composite Index...

Exchanges in The Value Line Composite Index are:

■American Stock Exchange
■NASDAQ
■New York Stock Exchange
■Toronto Stock Exchange

The Value Line Geometric Composite Index is the original index released, and launched on June 30, 1961. It is an equally weighted index using a geometric average.[1] Because it is based on a geometric average the daily change is closest to the median stock price change.

The daily price change of the Value Line Geometric Composite Index is found by multiplying the ratio of each stock's closing price to its previous closing price, and raising that result to the reciprocal of the total number of stocks.

Value Line Composite Index

The Value Line Geometric registered a divergence from SPX and INDU at the 2011 and 2012 highs:

Also note the bear cross of the 50 EMA below the 200 EMA. We can also see a clear multi-year Head and Shoulders topping pattern which has also formed on NYSE and numerous other world stock, commodity and indicator charts:

Have there been other instances of this technical condition heralding a significant bear market?

In 2007, we saw a virtually identical setup:

Comparing the two charts you will find remarkable similarities. The moment of the bear EMA cross marks about the halfway point of the right shoulder and also marks a period of a small rally and some volatility.

In the period leading up to and involving the top in 2000, $XVG also diverged from SPX:

In this case, since the 2000 top was the end to a multi-decade bull market, it took two years for the divergence to play out. There was something roughly akin to a Head and Shoulders formation involved as well.

In all three cases, major divergences and topping patterns formed over an extended period of time and clearly indicated a significant, underlying deterioration of market breadth leading to a major bear market. When taken in conjunction with the plethora of other similar data points that are present today, it would be wise for investors to consider the implications.

Need some help staying on the right side of the markets?  Join the BullBear Traders room at TheBullBear.com.  You'll get this kind of timely, incisive, unbiased stock and financial market trading, timing, forecasting and investment technical analysis and commentary daily.  It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month.

By Steve Vincent

http://www.thebullbear.com

Steven Vincent has been studying and trading the markets since 1998 and is a member of the Market Technicians Association. He is proprietor of BullBear Trading which provides market analysis, timing and guidance to subscribers. He focuses intermediate to long term swing trading. When he is not charting and analyzing the markets he teaches yoga and meditation in Los Angeles.

© 2011 Copyright Steven Vincent - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules