Bullish Percent Indicators: 28 January 2022

Arches National Park

Bullish Percent Indicators provide a broad view of how U.S. Equities are behaving. The top table breaks the equities market into seven major indexes where the NYSE and NASDAQ are most important as they are the broadest indexes. The two most tracked by the press are the Dow Jones Industrial Average (DJIA) and the S&P 500.

The second table breaks the market down into ten (10) sectors. Some sector break-downs include eleven sectors where Real Estate is added to the ten listed below. I don’t include Real Estate as VNQ is a permanent ETF fixture in most of the portfolio investment quivers whereas the sector ETFs are not.

Index BPI

It has been sometime since the NASDAQ was oversold as is the case this week. Since the NASDAQ 100 makes up the largest companies within the NASDAQ proper, we can see that 81% of the largest companies are bearish.

Note the anomaly with the DJIA. While the percentage of bullish stocks dropped from 60% to 40%, the right side of the table indicates a bullish X. This frequently happens when the market snaps back at the end of the week. While the total move for the week is down, an uptick on Friday moves the BPI signal from O to X. We see this rather frequently, both with the indexes and sectors.

Sector BPI

Market sectors is where one might take advantage of Bullish Percent Indicators as we can identify specific tickers that represent specific sectors of the market. The three currently oversold are: Discretionary (VCR), Industrial (VIS), and Technology (VGT). Brokers other than Vanguard have sector products so the three I listed are not your only options.

If you subscribe to the logic of mean reversion, then it makes sense to purchase or add shares of VCR, VIS, and VGT to your current holdings. Just an idea to consider while these three sectors are in the oversold zone.