Bullish Percent Indicator (BPI) data is only published when I feel there is critical information essential to readers of ITA Wealth Management. This is such a week as Friday’s selloff did not do as much damage to the U.S. Equities market as one might surmise. At least that is what the Point and Figure (PnF) graphs are telling us. Examine the following data tables and make your own decision.
This first data table breaks U.S. Equities into seven major indexes. Yes, there is overlap between the indexes and that is why I remind readers to rank them in importance. NYSE and NASDAQ are the most important as they are broad indicators. Next is the S&P 5oo followed by the DJIA. This week all indexes are bearish. The NASDAQ 100 took the biggest hit, but still contains more bullish stocks than it did back in early May. If you check the percentage of bullish stocks on the left side of the table, May was the time to back up the truck and begin to purchase stocks.
In the following table we break the large indexes into sectors of the market. While most sectors show lower percentages of bullish stocks, there are fewer sectors over-sold compared to May data. This week Health (VHT) is a Buy. Here is a suggestion as to how to handle this information.
- Assuming cash is available, set multiple limit orders to purchase shares of VHT at different price levels.
- If the limit orders are struck, hold on to those shares until VHT moves above the 70% bullish level or what is known as the over-bought zone.
- When the sector ETF reaches the bullish zone, set a tight (around 5% is a suggestion) Trailing Stop Loss Order so as to lock in profits.
- Wait until the market cycle repeats itself and do the same thing again.
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