Before bringing up any of the Bullish Percent Indicators, also known as Point and Figure (PnF) graphs, I toggle my intuition meter. Is it going to be a bullish or bearish set of data? Friday’s bullish market likely influenced my thinking as I concluded it would be a bullish week in general. There are a few surprises or what I think of as contradictions when one compares the actual percentage of bullish stocks vs. what the PnF graphs show. More on this later.
The following table lays out the Bullish Percent Indicator data for the major indexes of U.S. Equities. In no way does any of this data cover International Equities. Think the U.S. Stock Market or U.S. Equities. Bonds are not involved in these tables of information.
For the broad view, cast your eyes to the right side of the table and look at the X’s and O’s. In the last row you will see all but the NASDAQ index are bullish. Of the seven indexes, pay most attention to the NYSE and NASDAQ.
Now move to the left side of the table were one can pick up the granular activities of the different indexes. As a reminder, red indicates the index is over-bought while green indicates the index is over-sold. When the percentage of bullish stocks hits 70% or higher the index is considered to be over-bought. When the percentage of bullish stocks drops to 30% or lower, the index is considered to be over-sold. The same holds true for sectors of the market.
Focus on the NYSE for a moment. As of 7/23/2021 the percentage of bullish stocks is 53.28% or rounded to 53%. Note the drop from last week as the percentage dipped about 3 percentage points. What happened and why do we see the NYSE is flashing a bullish signal of X’s. During the week the number of bullish stocks within the NYSE declined. Friday’s strong market flipped the PnF graph from O’s to X’s.
While the right side of the table gives one a quick visual view of what happened this week for the major indexes, the left side, or the percentages, provides a more detailed picture. Both the NYSE and NASDAQ declined in the percentage of bullish stocks so one can conclude this was not a particularly strong market this week despite six of the seven indexes showing up with X’s.
Now we break U.S. Equities into ten (10) sectors. Six of the ten are bullish when we check the right side of the table. However, when one examines the percentages on the left, only Health showed a percentage gain this week. All other sectors lost ground. In other words, the number of bullish stocks within the sectors declined. Health and Telecom are two sectors that are over-bought.
NYSE BPI Graph
To see what the NYSE BPI graph looks like, click on this link. Along the X-axis one does not see dates. For the graph to move to the right the data must switch from X’s to O’s or O’s to X’s. Scroll to the bottom of the graph and you will see that the slope is positive. This is likely a reflection of the New York Stock Exchange performance since the Covid-19 Crash.
NASDAQ BPI Graph
If interested in what the NASDAQ BPI graph looks like, click on this link. Note that technical stocks as a broad group are bearish. This runs counter to the Technology sector as you can see in the second screenshot. Technology is showing X’s in the right-hand column while the percentage of bullish stocks actually dropped from 71.62% down to 67.56%.
The red curves are known as Bollinger Bands and the purple curve shows the average value of the movement of the X’s and O’s. Once more, if you scroll to the bottom of the graph you will see the general trend of the X’s and O’s is positive. It will take quite a market correction to flip the slope of either the NYSE or NASDAQ.
When working with BPI tables, as shown in this blog post, use the X’s and O’s to provide a quick overview of what happened during the week. For more precise information, rely on the percentages or data contained within the left side of the tables.