Value Line Geometric Composite (VALUG) Causing Worries — VALUG bereitet Sorgen

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A Post in German and English.

Der Value Line Geometric Composite (VALUG) hilft, die Breite des Markts, also die Richtung, in die er sich bewegt, zu bestimmen. In Indizes, die nach der Marktkapitalisierung der in ihnen abgebildeten Unternehmen gewichtet sind, können besonders stark gewichtete Titel einen falschen Eindruck über den Zustand des Marktes hinterlassen – z. B. wenn sich ein einzelner, in der Gewichtung dominanter Wert positiv entwickelt, wohingegen die meisten anderen Titel sich in einem Abwärtstrend befinden. Für das Jahr 2019 verheißt der VALUG, wie es scheint, nichts allzu Erfreuliches, jedenfalls sieht es diese Quelle so:

... our favorite stock average, the Value Line Geometric Composite (VALUG). Once again, the VALUG tracks the performance of the median stock within a universe of approximately 1700 stocks. Its status as an extensive measure of the broad equity market is the reason it is our favorite barometer of the health of the overall U.S. market.

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So how ominous is this “false breakout”? We don’t want to make any specific predictions or prognostications, but the implications of a multi-decade triple top false breakout can’t be overstated. And combined with the high-risk status of our longer-term “background” indicators, this 4th quarter may have only been the first lap in a long-term bear market run. 

So as we wish everyone a very Happy New Year, we must do so against the backdrop of a potentially very difficult market climate. We wish we had better news, but we cannot pick and choose what type of market we have. And the reality is that 2019 may well be a very prosperous year — for the bears. For the bulls — or those passive investors just along for the ride — you might want to consider charting a different course.