Did Stocks Just 'Cross The Median'?

Via Dana Lyons' Tumblr,

A key broad market gauge is potentially breaking a major line of support.

If you’ve followed us for awhile, you probably know about our affinity for the Value Line Geometric Composite (VLG). The VLG is an equally-weighted index of approximately 1700 U.S. stocks. It’s unique in its construction as it essentially tracks the performance of the median stock in its universe. As such, its construction makes the index particularly useful in monitoring the health of the overall stock market in the U.S. And if that is indeed the case, the market may be showing the initial symptoms of getting sick.

We say this because of a troubling development on the VLG’s chart. Following the presidential election last fall, the VLG surged to a new 52-week high, challenging its all-time highs in the process. It would run out of steam in December, however, and subsequently entered into an 8-month sideways trading range.

In late July, the VLG was able to finally break out to new highs, along with a barrage of other indices. However, at least for the VLG and other small and broad market averages, the breakout proved short-lived. By the end of July, the VLG had lost its breakout position and had dropped back into the former trading range. Throughout the first half of August, if the VLG continue to slide lower within the range. During last week’s selloff, the VLG was able to hold the bottom of its trading range near 508. The index was not so lucky during yesterday’s decline.

As our Chart Of The Day shows, the VLG closed yesterday below the bottom of its 8-month trading range.

So what is the technical significance of this development? Is it the end of the road for the bull? First of all, it confirms the late-July false breakout and projects a move lower. Secondly, the loss of the range support opens the door for such a move. Just how much of a drop are we talking about? And can a recovery negate this breakdown?

Comments

Looney Sat, 08/19/2017 - 18:25 Permalink

  With all this madness, THIS might help y’all to relax and, hopefully, giggle? A 52-year-old tourist died today in UAE, after “popping a blue pill and having sex at least twelve times”, according to his female companion. I betcha his corpse maintained the erection for at least 4 hours.   ;-) Looney

translator zero JRobby Sat, 08/19/2017 - 21:12 Permalink

In real dollars the market is not going up at all. Hasn't been for a decade and a half. This is just news of a "down" market for anyone who wasn't paying attention in ECON 101.Although, since this includes everybody who gets news from Lamestream Media, the crash even in nominal dollars will be significant. Look out below......!

In reply to by JRobby

adr Looney Sat, 08/19/2017 - 18:50 Permalink

If you're gonna go at least. Your heart can't take that kind of pumping without rest. There's a reason why you fall over exhausted for a little while when you finish past your 30s.Maybe he died from shock after she took off her hijab and he saw what he was fucking. 

In reply to by Looney

Crazy Or Not Sat, 08/19/2017 - 18:53 Permalink

Given some of the recent market specultion here, perhaps a rune stone consultaion on 3 days of darkness following the lunar eclipse is in order?Yeah, tip of the tip noted....

pizdowitz Sat, 08/19/2017 - 18:43 Permalink

If the markets tank - as I know they will - Trump will find himself leading the charge of the Great Change sweeping the entire "Western Civilization". Perhaps for all the wrong causes, as it usually happens when the gullible think they are in charge of great events. It is the end result that matters - end to the cockroach infestation.

rusty55 Mon T (not verified) Sat, 08/19/2017 - 21:06 Permalink

\lot of shepwave followers on here.  They are probably the only ones making money. most traders who discuss anything on here are losing.  But Zerohedge is not representative of the trading world. traders are not so emotional and a lot of the more successful ones on here have been with Shepwave for over 20 years under their old affiliations.

In reply to by Mon T (not verified)

Erwin643 Sun, 08/20/2017 - 13:36 Permalink

" potentially breaking a major line of support." What the hell is that supposed to mean? The S&P drops a whole 1 1/2 percent, staying above its 20-week MA. OMG!!!Volatility-short stocks (SVXY) are finding support at the 10-week moving average.