BULLISH PERCENT NUMBERS ARE OVERBOUGHT BUT STILL IN P&F UPTRENDS -- ONLY THE NASDAQ 100 AND MATERIAL SECTOR ARE SHOWING SIGNS OF WEAKNESS -- BULLISH PERCENT FOR GOLD GROUP IS NEUTRAL

NYSE BULLISH PERCENT INDEX STILL IN UPTREND... Earlier in the week, I wrote about overbought readings in the Bullish Percent Indexes for the S&P 500 and the Nasdaq market. Today I'm showing the point & figure version of those two indexes. That's fitting since the BP reading is based on the percent of stocks that are in p&f uptrends. Readings over 50% are indicative of a bull market. However, readings over 80% warn of an overextended market. The S&P 500 and the Nasdaq market show BP readings of 80% and 90% respectively which are very overbought. An additional warning sign is given when the BP suffers a three-box reversal to the downside (a drop of 6 points). So far, the BPNYA hasn't done that. It would have to drop to 74 for that downside reversal to occur. Chart 2 shows, however, that the Nasdaq 100 BPI has suffered a three-box reversal. Given its unusually high reading, that suggests some profit-taking in that technology-dominated index.

Chart 1

Chart 2

MATERIALS BP WEAKENS ... I also wrote that three sector BPs were in overbought territory and vulnerable to some profit-taking. They included financials (86%), consumer discretionary (82%), and materials (80%). Charts 3 and 4 show the BP for financials and consumer discretionary sectors still in uptrends. Their BPs would have to suffer a six-point drop (three-box reversal) to warn of a weakening trend. Chart 5 shows, however, that the S&P Materials BPI has already done so. That's a warning that it may be time to start taking some material winnings off the table.

Chart 3

Chart 4

Chart 5

GOLD BP IN NEUTRAL GROUND ... Although the Bullish Percent number for the gold group isn't included in the Market Summary page, you can still access the numbers by using the $BPGDM symbol. The point & figure version of that index is shown in Chart 6. It shows the Bullish Percent reading for gold stocks peaking at 86 during March of this year. A profit-taking signal was given when it suffered a three-box reversal down to 80 during April (the red numbers mark the start of a new calendar month). An upside three-box reversal during July turned short-term momentum back to the upside. For a bona fide buy signal to be given in gold shares, however, the BPGDM needs to rise to 78 which would exceed the highest box reached during August at 76. [An actual buy signal requires that the latest X column exceeds a previous X column]. At the moment, the BPGDM trend is neutral.

Chart 6

ARTHUR HILL IS ON VACATION THIS WEEK ...