Here is the current Bullish Percent Indicators for both the broad markets and U.S. equity market sectors. I have market data going back to 2005 and sector data back to 2012. The tables shown below provide approximately six months of information. For new ITA readers, the left side of the tables show the percentage of stocks with bullish trends while the right side indicates the latest bullish or bearish Point and Figure (PnF) positions. From time to time there are anomalies and at least one occurs this week, as I will point out later.
While I do not use this information to manage individual portfolios, I maintain PnF records as it gives one a broad overview of what is happening to U.S. Equities.
Of the seven major indexes, I pay most attention to the NYSE and NASDAQ as they provide the broadest view of market conditions. When the percentage is 70% or higher, you will see a red cells indicating the market is over-bought. When the percentage is 30% or lower, the market is considered to be over-sold. Right now several indexes show an over-bought market condition. Such is not the case for the NYSE and NASDAQ, although the NYSE is getting close to the 70% level.
All indexes are bullish with exception of the NASDAQ 100. If you follow the ETF QQQ, you are already aware of the decline.
Eight of the ten sectors are over-bought. This is why you find I am setting TSLOs at lower percentages in order to protect capital.
Earlier, I mentioned we see anomalies from time to time. This week we have an example in Technology. While the percentage moved from 64.78% bullish last week up to 73.23% this week, market action on Friday dropped the PnF graph to O’s. I do not show the PnF graphs from which I derive the X and O information. When the percentages and X’s and O’s don’t appear to match up, what occurred is that the overall percentage for the week is up, but Friday’s action was down for this sector. That is why we see the PnF chart in the camp of the defense. I think of O’s as defense and X’s as offense.
Keep the broad picture in mind. Right now, U.S. Equities are over-bought in general and it is wise to be cautious with purchases and set stop loss orders in order to protect capital.