Monday, May 26, 2014

Tick Tock...The Value Line Geometric Index (XVG) clock is ticking for SPX

As SP500 (SPX) is moving towards new highs since mid 2013












, Value Line Geometric Index (XVG) (here is a definition of this index from wikipedia: http://en.wikipedia.org/wiki/Value_Line_Composite_Index) hit a long term resistance of previous highs (1998, 2007) and bounced.











The last time there was such a divergence between SPX and XVG was during 1998-2000 when XVG topped out in mid-1998 and SPX almost 2 years later in mid-2000.  



















Is XVG going to break out from this multiyear resistance and follow SPX or is XVG going far south dragging SPX with it?

We believe that XVG already topped out and the clock is ticking for the end of the SPX bull run from 2009.Though for how long will SPX diverge from XVG is difficult to tell...