The Most Important Chart In The Market

By Bennett Tindle August 4th, 2022

We don’t need Elliott Wave to see the significance of this chart…

In fact, while this is probably one of the most basic charts in the market, it is also one of the most important.

The Nasdaq 100 broke the first trendline resistance we discussed last Friday, with markets rapidly approaching the next key area of technical resistance.

Will we break to the upside, resuming the uptrend, or has this simply been a sharp ‘bear market’ rally?

If we take a look at the rotations below, we see the move back into growth has been met with a significant uptick in strength and momentum…

Growth vs Value Rotations

Looking to the daily RRG chart above, a tool that helps us visualize momentum and strength relative to a benchmark, we see positive rotation back into Growth.

The $IVE represents Value, and the $IVW represents Growth.

Going back to the end of May we see Value move rapidly to the southwest, indicating a loss of relative strength and momentum.

Simultaneously we see Growth move rapidly to the northeast, indicating increasing relative strength and momentum.

We now see clear hesitation as Growth stocks approach major overhead resistance.

Will the Nasdaq break resistance?

We think so.

In fact while many in the industry have been outright bearish, we’ve been very vocal about our belief that the 2022 decline is simply a garden-variety market pullback…

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