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The SPREAD closed off -
14.15 percent from the 52 week high,
remaining back in correction territory for the 5th week, after spending 2 weeks back on bear ground.
The SPREAD
closed Friday, 6/26/09, at 1176.63, up + 2.72, or (+ 0.23%) this
past week vs off -44.05, or (- 3.62%) the previous week. The 52 week closing high is 1370.56 on 8/15/08. The all-time high
is 1560.89
set on 7/13/07. The 52 week low is is 619.74, set on 3/09/09.
The
SPREAD
is off - 193.94
(- 14.15%) points from 52 week high and off - 384.26
(- 24.62%) points from the all-time high.
We
are watching the VL & NY climbing, with the VL climbing faster, a bullish sign. When we see the VL increasing
faster than the NY, as is the case now, we would expect the rally to continue over the near term. Both are still
quite far under the trend line (chart above), that a continued rally would not be out of the question, but the
VL is climbing too fast compared to the NY and this recent slight correction was needed.
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.
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.
The
SPREAD
remained back in correction territory for the 5th week, after falling back to bear ground for 2 weeks, but still
in correction territory for week 39. The previous time, the SPREAD remained in correction territory for 40 straight
weeks.
Closing
up + 2.72, or (+ 0.23%),
on the week, makes the broad index up + 296.19, or (+ 33.64%), on the year. The SPREAD closed up (+
6.64%), year-end 2005, up + (14.04%), year-end 2006,
off (- 2.08%)
, year-end 2007, and off - (34.52%), year-end 2008.
The
30 day trend turned bearish this past week, after being bullish for 14 weeks, after remaining bearish for 8 weeks. The 90 day trend turned bullish 11 weeks ago, after staying bearish for 7 weeks, after staying bullish for 6 weeks. The 180 day trend turned bullish 10 weeks ago, after staying bearish for 28 weeks, after staying bullish for 6 weeks. The 1 year trend turned bearish 80 weeks ago after being bullish for 228 weeks.
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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