Fed is increasing their Balance Sheet by 300B quite recently in order to save the economy from banking crisis. The move effectively pumped in additional Net Liquidity to the financial system. As a result the volatility range from Nasdaq index has been moving upward form our previous prediction. The rainbow color indicator is Index Value Rainbow indicator which tracked the Net Liquidity level. Based on this we can roughly measure that the Nasdaq index will be traded upward within 11000-14250 range in the next couple months to go.
We are using Index Value Rainbow indicator to measure the value of stock market index across various major indexes. This indicator shows multiple value of base Money Supply or Net Liquidity. For US market Net Liquidity formula is as follow:
NL = FBS - ( TGA + RRP)
NL = Net Liquidity FBS = Fed Balance Sheet TGA = Treasury General Account RRP = Reverse Repo