Time Frame: Long
Category: Momentum

Description

Investors seeking capital appreciation are most successful by staying with the main trend of the market. The Value Line composite index is a proxy for the broad market's trend. Historically, a five percent counter trend swing in the Value Line Index has indicated a longer-term change in trend. Long-term investors who follow the trend of the most recent five percent swing are assured of being on the right side of a major market move. In a choppy or non-trending market this indicator will generate false signals, however, the small losses generated by this model are more than offset by the returns of strongly trending markets.

Calculation & Significant Levels

Value Line Five Percent Model: Calculates the percentage move from the most recent swing high or low on a daily basis. A new swing high or low is created when the market's trend reverses by at least five percent. On the Market Gauge page a move greater than five percent is represented as +5% or -5% accordingly.

Formula: (Value Line current price) - (Most recent swing high or low)
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                       (Most recent swing high or low)

Gauge Elements: Magnitude
Updated: Daily

Strategy