Last month I discussed the Bullish Percent indicator, which at the time showed the
markets were oversold but should not be bought until it came out of its oversold
condition. I received a question regarding the Bullish Percent reading on the Nasdaq
100 (NDX) not being low enough, and here is my take on where we now stand.
The Bullish Percent indicator is an excellent tool to measure how much a given index
has to run. Bullish Percent is calculated by determining the percentage of stocks
within an index that are on buy signals, according to the Point & Figure methodology.
What I look for are turns out of overbought or oversold territory, as defined by a
Slow Stachitic indicator crossing above 20 (to indicate a buying opportunity as
stocks are just starting to recover from an oversold condition) or crossing under 80
(to indicate a selling opportunity). These charts can be obtained for free at
www.stockcharts.com with the symbol "$BP?" where the index symbol follows the $BP
root.
Look at the chart of the Dow Industrials Bullish Percent ($BPINDU) over the last two
years, you can see that we have just come out above the 20 zone on the Slow
Stochastics in the last several sessions. This implies that the market is now in
recovery mode, at least until we either go over and back under the 80 overbought
zone, or if the 59-day %K reading (in black) turns back under its 21-day %D reading
(in red). I've also included the often-discussed Parabolic Stop and Reverse (SAR)
indicator on the Bullish Percent chart (in dots in blue). This serves to trail the
big trends nicely, and once we break back under the Parabolic SAR on this up move, it
will raise questions about the continuing validity of the up move. But for now this
indicator says you should expect to see some more upside in the short term coming out
of this oversold condition. Notice here too that the Bullish Percent reading on the
Dow did get down to 10% this time, a typically very oversold level.
DJIA Bullish Percent ($BPINDU)
In contrast, the reader who asked me about the NDX Bullish Percent suggested out that
it needs to go much lower. Looking at the chart, the one issue I have with this is
that while the NDX Bullish Percent has clearly not hit its prior extreme lows, it is
showing the Slow Stochastic coming out of an oversold condition (see chart link
below). This implies we could go higher first. The other point to remember is that
the Nasdaq has been outperforming the Dow and S&P indexes for a while too, so the set
of higher lows in the Bullish Percent reading on the NDX is to be expected here. I've
also included the Bullish Percent for the S&P 500 below, which is also coming out of
its oversold condition here.
There are no guarantees here, but this indicator has one of the best
intermediate-term (1-3 month) track records of all the measures that I follow. You
should follow it closely to get a good reading on the market's trend.
Nasdaq 100 Bullish Percent ($BPNDX) Link
S&P 500 Bullish Percent ($BPSPX) Link
KEY SUPPORT AND RESISTANCE LEVELS
SUPPORT RESISTANCE
Nasdaq Composite 1370 1410
S&P 500 860 890
Dow Industrials 8180 8380
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
#forex4u - chat forex MIRC
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
