Bullish Percent Indicators: 15 July 2022

Rancher and Gracie

What impact did a nearly two percent gain on Friday have on the Bullish Percent Indicators? Not as much as I anticipated as readers will see in a moment. Once more, pay most attention to the NYSE and NASDAQ for a broad look at U.S. Equities. Sectors is where one might find over-sold ETFs that are available for purchase.

Index BPI

If I am interpreting the following data correctly small-cap stocks are not performing as well as large-cap stocks. Of the seven indexes listed, the NYSE and NASDAQ contain more small-cap companies than any of the other indexes. This holds true particularly for the S&P 100, NASDAQ 100 and DJIA as these three indexes hold large-cap stocks. Those three indexes in particular hold large-cap stocks and all are tilted toward the bullish side when one checks on the X’s and O’s. Forget for a moment the percentages. If we examine percentages (left side of table) we find more bearish stocks than bullish stocks in all but the NASDAQ 100.

Since the NYSE and NASDAQ are still showing O’s when we check the Point and Figure (PnF) graphs, this provides a clue that small-cap stocks are still lagging. When small- and mid-cap stocks begin to take off it is a signal the bear may be over for this economic cycle. I don’t think we are there based on current data.

Sector BPI

Breaking U.S. Equities down into ten sectors we find five are still over-sold. If cash is available and you are interested in opening up positions in sectors, then take a look at VDE, VFH, VIS, VAW and possibly VPU. Energy and Materials look particularly attractive and I either purchased or set limit orders for both in a few portfolios.

If you decide to invest in any of the sector ETFs, plan to hold them until the sector moves up into the over-bought zone (70% or higher) at which time set a TSLO at 3% or something close to that percentage so as to lock in profits.

If you have questions or comments, place them in the Comment section provided.