The Value Line Geometric Composite, which broke critical support in early January leading to an immediate 12% drop, has climbed all the way back to the breakdown level.
The Risk Model that orients our investment posture utilizes market inputs other than simply price in its construction. However, if we were to choose one price plot to guide our investment decisions, it would most certainly be the Value Line Geometric Composite (VLG). The VLG, as we have explained many times in these pages, is an unweighted average of approximately 1700 stocks. Thus, in our view, it serves as the best representation of the true state of the U. S. equity market. It has also historically been very true to technical analysis and charting techniques which is quite remarkable considering there are no tradeable vehicles based on it. And it has been remarkably accurate of late in offering guideposts for trading this market – something to keep in mind based the current level of the VLG.
Consider some of our posts this year focusing on the VLG:
This post was published at Zero Hedge on 03/06/2016.