USING THE BULLISH PERCENT INDICES TO FIND THE MOVERS -- ENERGY BPI MAKES A BIG MOVE ON THE PERFCHART -- CONSUMER DISCRETIONARY BPI IS BEST PERFORMER YEAR-TO-DATE -- FINANCE BPI HOVERS ABOVE 90% -- CONSUMER STAPLES BPI HITS ULTIMATE EXTREME
USING THE BULLISH PERCENT INDICES TO FIND THE MOVERS... Link for todays video. Today I am going to look at the Bullish Percent Indices for the nine sector SPDRs and the S&P 500. First, I will give a little primer on these breadth indicators. Second, I will show how they can be used on PerfCharts. Third, I will show how to divide the sectors into three groups for SharpChart analysis. PerfCharts are good for finding the movers. SharpCharts are good for basic analysis of the BPI lines.
The BPI measures the percentage of stocks in an index or group that are on a P&F buy signal, which is a Double Top Breakout. Chart 1 shows Helmerich & Payne (HP) with a Double Top Breakout as the current X-Column exceeded the high of the prior X-Column. This signal is black or white because a stock is either on a P&F buy signal or a P&F sell signal (Double Bottom Breakdown). Chart 2 shows Juniper Networks (JNPR) with a Double Bottom Breakdown as the current O-Column exceeded the low of the prior O-Column. The BPI fluctuates between zero and a hundred. In general, the bias is bullish when above 50 and rising. The bias is bearish when below 50 and falling. Chartists can also apply basic technical analysis to the BPI line by looking for support/resistance breaks, overbought/oversold conditions and trend reversals.
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Chart 1
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Chart 2
ENERGY BPI MAKES A BIG MOVE ON THE PERFCHART... Chartists can find sector BPIs with big moves using a one month PerfChart. Keep in mind, however, that little moves from low levels are big in percentage terms. A BPI rise from 10 to 20 is a 100% increase, but a BPI decline from 80 to 70 is only a 12.5% decrease. Nevertheless, a sector BPI PerfChart can be used to determine which sectors are attracting buying interest. PerfChart 3 shows the Energy BPI ($BPENER) plunging at the beginning of April and then surging at the end of April. The reversal of fortune was quite stark as energy went from out-of-favor to in-favor in just a few weeks. The sharp move in the BPI could have alerted chartists to pay closer attention to the price chart. Also notice that the Materials BPI ($BPMATE) bottomed in mid April and began to advance as the materials sector attracted buying interest.
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Chart 3
CONSUMER DISCRETIONARY BPI IS BEST PERFORMER YEAR-TO-DATE... PerfChart 3 shows the year-to-date change for the nine sector Bullish Percent Indices and the S&P 500 BPI (red). Keep in mind that these lines show the percentage change in the BPI since January 1st. The Consumer Staples BPI (black), the Technology BPI (blue) and the Industrials BPI (light blue) are underperforming the S&P 500 BPI (red) because the percentage change is less. This does not mean the BPIs are weak, it just means they have risen less. The Consumer Staples BPI ($BPSTAP) is at 100% and the strongest on an absolute basis. However, $BPSTAP started the year at 87.8% and rose to 100%, which is a 13.89% rise. The Consumer Discretionary BPI (neon green) has seen the strongest rise throughout the year (+42%). Keep in mind that these PerfCharts should be used to find the big movers. Chartists should then look at the actual BPI line and analyze the price chart for the underlying security.
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Chart 4
FINANCE BPI HOVERS ABOVE 90%... Chartists can also group the Bullish Percent Indices on a SharpChart using the Price (same scale) overlay. Chart 4 shows the BPIs for the four offensive sectors (technology, finance, consumer discretionary and industrials). The Technology BPI (green) is the main symbol. The other three were added as price overlays. All four are comfortably above the 50% threshold and bullish overall. The Finance BPI (red) is the strongest at 92.59%. $BPFINA has been above 80% for most of 2013. The Industrials BPI (gray) was showing some weakness in April, but surged to 85% over the last three weeks. $BPINDY is the second strongest of the offensive sector BPIs. The Technology BPI ($BPINFO) is the weakest of the four and remains below 75%. Overall, I would consider these strong as long as they hold above 60% threshold.
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Chart 5
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Chart 6
CONSUMER STAPLES BPI HITS THE ULTIMATE EXTREME... Chart 7 shows the BPIs for the three defensive sectors (healthcare, utilities and consumer staples). The Consumer Staples BPI (green) is at 100% and cannot go any higher. Even though the BPI cannot go higher, the Consumer Staples SPDR (XLP) could continue higher even if only 90% of the components are on P&F buy signals. Notice that $BPSTAP has been above 85% the entire year. The Utilities BPI ($BPUTIL) also remains strong as it works its way north with a stair-step pattern. $BPUTIL started later than the other two because it did not surge until early February. The Healthcare BPI ($BPHEAL) fell at the end of April and looks like the most vulnerable of the defensive sectors.
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Chart 7
MATERIALS BPI BOUNCES OFF KEY LEVEL... Chart 8 shows the remaining sectors BPIs. The Energy BPI (green) and the Materials BPI (black) both surged over the last three weeks. $BPENER surged from 33% to 70%, which is more than double. $BPENER was the weakest of the nine sector BPIs, but not any more. The Materials BPI ($BPMATE) held the key 50% line in mid April and surged back above 60% the last few weeks. There is stillroom to run here and the BPI is bullish as long as it hold above 50%.
