Now that we experienced the first correction in many weeks, expect to see numerous O’s or bearish results in our Bullish Percent Indicators (BPIs). We call O’s in the right-hand column of our StockCharts Point and Figure graphs to be defensive. Intuition tells us the defense will be in control this week.
There are situations where there is a drop in the bullish percentage from last week to this week, but the offense-defense shows a move from O’s to X’s. This can be confusing. What happens is that the percentage drops for the entire week, but a snap back on the last day of the week can push the Bullish Percent Indicator back to X’s in the right-hand column. You are observing BPI conditions at the end of the week, not what happens during the week.
Index BPI: All major indicators with exception of the NASDAQ 100 are under the control of the defense. The NASDAQ is only showing an X due to the recovery on Friday. Of more importance is the drop from 37% bullish down to 24% bullish. Thirteen stocks in the NASDAQ 100 moved from bullish to bearish this week, and that is a huge decline.
Sector BPI: Pay attention to the six sectors that are over-sold. Energy took a beating and I don’t recall ever seeing so few bullish stocks in a sector as only 6.7% are bullish. Market sectors are reflecting the correction. As expected, Utilities continue to hold up as investors are seeking income from high yielding securities found in this sector.