NYSE BULLISH PERCENT INDEX IS HOLDING AT SUPPORT, BUT HASN'T BOUNCED MUCH

THE NYSE BULLISH PERCENT INDEX... I've written about using the Bullish Percent Indexes with point & figure charts. As useful as that is, you can also produce line charts on the various Bullish Percent Indexes. And they can yield some interesting market information. Chart 1 shows the NYSE Bullish Percent Index for the last three years. [A BPI is determined by dividing the number of stocks on a point & figure buy signal by the number of stocks in an index]. There are three levels of importance on Chart 1: 30, 70, and 50. A BPI reading under 30 connotes an oversold market in a major buying zone (green line). The last time that happened was in the autumn of 2002. A move back above 30 is an early buy signal. That happened in the fourth quarter of 2002 (green arrow). The next key level is 50. A BPI move over 50 confirms that a bull market is in force. That bullish crossing took place in the spring of 2003 as the bull trend was starting. A bull market is still intact as long as the BPI stays over 50. A overbought market occurs with a BPI over 70 (red line). A drop below 70 is a signal to take some profits (red arrows). That occurred in the spring of 2004 and in March of this year.

Chart 1

Chart 2

BPI HOLDING OVER 50 LEVEL... The market decline that ended last summer bounced off the 50 level which was necessary to keep the bull trend intact. Just recently, it did the same. The good news is the bounce in the BPNYA kept the cyclical bull market intact. The bounce so far, however, hasn't been enough to signal an upturn in the BPI. Chart 3 shows that the BPI is still well below its 50-day moving average. The point & figure version of the BPNYA (which can be found on the Market Summary page) hit a recent low of 54. In order to achieve an upside three-box reversal, the BPI would have to hit 60 (each box is two points). It hasn't done that either. In other words, the Bullish Percent Index for the NYSE is holding at a key support level, but hasn't given a convincing sign yet of a turn to the upside.

Chart 3