The ValueLine Arithmetic Index (VLE) continues to show amazing strength as the rally moves beyond 200 calendar days from the March low. Price remains above the 2×1 angle of the 2007-2009 bear market and, in my opinion, should not be shorted. Eventually the buyers will run out of money. But that has not happened yet and betting against the big money is a losing effort. A break of the 2×1 angle should take price back to the 50% level at 1749. The 1×1 angle below should provide significant support if the 50% price level fails to hold.
The Nasdaq 100 (NDX) view is somewhat different than the VLE above as price bottomed in 2008. Price is below the 1×1 angle of the 2007-2008 range. But using the March low of the remainder of the market and sliding the fan of the shorter range to March shows price following the 1×1 angle which is tracking with the 50 day moving average. A break of these lines would signal the beginning of a correction that will be significant in time (90 days plus).
Both charts above show recent highs that do not touch a price, time, or price/time angle. I see room for a few percent more of upside to hit a natural angle of market geometry. Is this absolutely necessary? No. There are no absolutes in the market. But it would not surprise me to see the VLE move up to the 1×8 angle and the NDX move to the 5/8 price line.
The SP500 Index (SPX) chart below show the long term range of 1982-2000. The long term 1×2 angle is about 9% above Friday’s closing price. Most of the charts I see show a potential of a short term run up between 5-10% . This is just a guess and I am not betting any money on it. But I also will not be shorting anything with that potential movement in the charts.
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Tags: Market Outlook · Nasdaq Charts (IXIC) · Value Line Arithmetic Index (VLE)2 Comments
Andy, Would the lines crossings underneath the price be significant time turns? The VLE chart looked like it reacted to the lower crossing, NDX little early though.
Ray – Yes, the crossing of lines can cause big changes. I look at them as gravitational pulls on price. Sometimes the pull in the way of the trend is so strong that little happens. But as price and time change, the effects will become stronger.