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The
SPREAD pulled out of correction territory 18 weeks ago!
The SPREAD closed Friday 11/29/19, at 5,179.62 up +66.35 (+1.30%) this past week versus off -51.61 (-1.00%) the previous week. The current discount to the
52-week
high at off -4.24% and currently out of correction territory. One definition of a correction is a discount to the 52 week high
of 10%. A bear market is a discount to the 52 week high of 20%.
The
SPREAD set a new all-time high at 5,408.74 on 8/29/18 and the 52
week low is 4084.20
set on 12/24/18. The SPREAD is up +849.26 (+19.61%) for 2019. It finished 2016 up 23.93% and 2017 up 15.44% and 2018 off -12.99%.
We
are
watching the VL falling faster than the NY, making the markets weaker everyday. These two
indices are
basically the same market, it's just that one has a few
hundred large over-the-counter stocks and the other has no
over-the-counter
stocks. When both indices are climbing we get a
strong bullish sign for the near term markets, but when both indices
are falling we get a bearish sign for the weeks ahead. Its when the VL
climbs faster than the NY that we have a stronger market.
My
concern now is, since
they are the same markets, they should never be so far apart, but they
have been for quite some time now. It does mean when we do get a major
correction, it could be the one.
One
thing to note is the chart above covers over 20 years, therefore
changes take time, meaning there could still be several months left for
the bull.
The
distance between the two
(spread) continues to grow, if the VL is climbing faster than the NY,
or shrink, if the VL is falling faster than the NY. If we see the NY
climbing while VL starts falling we could be seeing the very first sign
of a sizable correction starting.
Since the big OTC stocks are part of
the VL index, when the big OTC stocks fall, the VL falls. If the VL is
losing ground faster than the NY, it means the big OTC stocks are
selling more than the NY stocks. If the VL is climbing faster than the
NY, it would mean more buying in the OTC stocks. The SPREAD climbs when
the VL is stronger and falls when the VL is weaker. A great way of
knowing what side of the market is doing the best.
Closing , off -51.61 (-1.00%) this
past week makes the broad
index Friday 11/29/19, at 5,179.62 up +.35 (+1.30%) this past week versus off -51.61 (-1.00%) the previous week. The current discount to the
52-week
high at off -4.24% and currently out of correction territory. One definition of a correction is a discount to the 52 week high
of 10%. A bear market is a discount to the 52 week high of 20%.
The
SPREAD set a new all-time high at 5,408.74 on 8/29/18 and the 52
week low is 4084.20
set on 12/24/18. The SPREAD is up +849.26 (+19.61%) for 2019. It finished 2016 up 23.93% and 2017 up 15.44% and 2018 off -12.99%. on
the year. The SPREAD
closed up
(+6.64%), year-end
2005, up (+14.04%),
year-end 2006, off (-
2.08%) ,
year-end 2007, off
- (34.52% ), year-end 2008, up
(+
81.74%) , year-end 2009,
up (
+33.27%) ,
year-end 2010, off
-123.73, or (-5.80%)
year-end
2011, up + 331.45, or (+ 16.50%) year-end
2012,
up + 1013.58, or (+ 42.48%) year-end
2013, up + 261.89, or (+ 7.67%) year-end
2014, off
-258.76, or (-7.04%) year-end
2015 and up 23.93% for 2016 and up 15.57% for 2017 and off -12.99% for 2018 .
The
SPREAD is unique to the Stocks in the Spotlight since we
designed it in 1090 by producing an "equal
value equation"
allowing a better view of the
longer term markets when comparing the big OTC stocks to the New York
Exchange listed stocks.
The SPREAD covers such a broad
market that it offers a look at the "big" picture. The idea behind the SPREAD is that if we see
the New York (NY) index rising faster than the
Value Line (VL) we know that the stocks traded on the NY are getting
more activity but stocks on the Over-The-Counter (OTC) are not getting
as much interest.
The
reason for this action is because none of the large OTC stocks trade on
the NY. No matter how many shares of Microsoft trade, or how many
dollars it may change, it will not show up on the NY. Companies such as
DELL, Yahoo!, Liz Claiborne, are just a few of the (OTC) stocks not on
the NY. Therefore, if the VL rises faster than the NY we know the
buying is coming into the big OTC stocks and if we see the VL fall
faster we know there is greater selling in the big (OTC)
stocks.
We
end up with a theory:
The MARKETS
are not able to move very far, in either direction, without
the SPREAD!
The SPREAD tells us the "real game" the whole market is playing.
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