Bullish Percent Indicators (BPI) as shown in the following two tables provides a broad behavioral view of the U.S. Equities market. The second table breaks the market into its eleven different sectors and it is that data we use to manage the Sector BPI portfolios. With a few portfolios we now have one year of data. There are indications the hypothesis behind the Sector BPI investment model is working as anticipated. However, we still need to go through a few more Buy/Sell cycles before any useful conclusions are drawn.
Eight of the eleven sectors are currently overbought and one of the eight just made the move on Friday. A Trailing Stop Loss Order (TSLO) will be placed on the ETF (VAW) that carries the torch for this overbought sector.
All seven major index are bullish as shown by the X’s in the right side of the following table. On the left side, when a cell has a red background the index is overbought and when it is green it is oversold. Last October was a buying opportunity and we took advantage of that situation when the market dipped. Now we are in a cautionary period with the market this high.
The fact that the two broad indexes, NYSE and NASDAQ, are still hovering around the 50% bullish zone tells us the small- and mid-cap stocks are not participating in this bull market at the same level as the large- and mega-cap stocks. It is the large-cap stocks found in indexes such as the S&P 500 that are doing well.
Now we come to the sectors of the U.S. Equities market. Three sectors joined the overbought group as Discretionary, Health, and Materials made the list. Check your portfolio(s) and if you are holding any of these ETFs, place your TSLOs.
If the ETFs are held with Schwab, decimal TSLOs are permitted. Here is my TSLO advice for the eight overbought sectors.
- Discretionary – 2.2%
- Financial – 1.4%
- Health – 2.3%
- Industrial – 1.5%
- Materials – 2.8%
- Technology – 1.2%
- Utilities – 2.3%
- Real Estate – 1.0%
If these TSLOs seem too “tight” then go with the standard 3.0% setting.