{"id":191353,"date":"2023-06-04T18:05:42","date_gmt":"2023-06-04T22:05:42","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=191353"},"modified":"2024-01-24T12:13:32","modified_gmt":"2024-01-24T17:13:32","slug":"chart-advisor-one-base-to-rule-them-all","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-one-base-to-rule-them-all\/","title":{"rendered":"Chart Advisor: One Base to Rule Them All"},"content":{"rendered":"\n

By <\/strong><\/a>J.C. Parets<\/strong><\/a> & All Star Charts<\/strong><\/a><\/strong><\/strong><\/p>\n\n\n\n

Thursday, 1st June, 2023<\/h2>\n\n\n\n

1\/ One Base to Rule Them All<\/strong><\/p>\n\n\n\n

2\/ Bullish Streak for META<\/strong><\/h2>\n\n\n\n

3\/ Japan Stocks Reach New 33-Year Highs<\/strong><\/p>\n\n\n\n

4\/ Trends Persist<\/strong><\/p>\n\n\n\n

1\/ One Base to Rule Them All<\/strong><\/h2>\n\n\n\n

We\u2019ve spent a lot of time talking about big bases<\/a> this year. This is because a lot of stocks have endured nasty drawdowns over the past few years and have spent the past few quarters consolidating and trying to build bottoms.<\/p>\n\n\n\n

However, when we analyze the median stock price performance using the Value Line Geometric Index (VLG)<\/a>, there is a much different takeaway. The chart below shows us that the majority of the broader market has made no progress at all for about 25 years.<\/p>\n\n\n\n

Here is a monthly candlestick chart<\/a> of VLG dating back to the early 1990s:<\/p>\n\n\n\n

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Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n

As we prepare ourselves for an environment that could be characterized by some much-needed corrective action, our focus falls on the weakest groups and indexes. Because the Value Line is agnostic to the market cap-weight<\/a> issues of most indexes, it paints a more accurate picture of what the broader market is doing. And as you can see, the overall market hasn\u2019t performed anything like the S&P 500 and Nasdaq 100 in recent history.<\/p>\n\n\n\n

In fact, as illustrated by the chart above, the median stock has made no progress at all for about 25 years. While a violation of these prior-cycle highs would represent major downside risk for stocks, the very same level would make for a perfect starting point of a new bull market.<\/p>\n\n\n\n

2\/ Bullish Streak for META<\/strong><\/h2>\n\n\n\n

As big tech continues to lead, Meta Platforms (META<\/a>) keeps setting new highs and record bull run streaks.<\/p>\n\n\n\n

As you can see in the chart, META just closed higher for the seventh consecutive month, marking its largest consecutive win rate since it came public<\/a> in May 2012.<\/p>\n\n\n\n

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Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n

This comes after buyers stepped in and successfully reclaimed a critical shelf of former lows from 2018 and 2020. Since then, price has surged higher in a nearly vertical line.<\/p>\n\n\n\n

While the stock has more than earned some digestive and corrective action considering its recent run, it is undeniable that the primary trend<\/a> has once again turned higher. It appears that META has new all-time highs on its mind, and that\u2019s where we could see the next line of resistance<\/a>.<\/p>\n\n\n\n

3\/ Japan Stocks Reach New 33-Year Highs<\/strong><\/h2>\n\n\n\n

Looking outside the U.S., we are seeing more and more stock market indexes<\/a> reach new highs.<\/p>\n\n\n\n

The chart below shows the Nikkei 225<\/a> closing at its highest level since 1990.<\/p>\n\n\n\n

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Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n

After three decades of absolutely no progress, price is taking out the pivot<\/a> highs from 2021 to reach fresh 33-year highs. With that said, there isn’t much of a technical barrier preventing the price from testing its all-time highs from the late 1980s.<\/p>\n\n\n\n

Seeing stocks in Japan and other countries set new highs is yet another piece of evidence suggesting that global equities remain strong.<\/p>\n\n\n\n