Bullish Percent Indicators are designed to give investors a broad overview of what is happening to the U.S. Equities market from week to week. Before filling in the numbers, I think back over the week in an effort to see if my general impressions match the actual data. Impressions for this week were that we should see some gradual rise in the markets. Is this what happened? Check the following data tables.
Of the major indexes, I pay most attention to the NYSE and NASDAQ as they are the broadest indicators covering the largest number of companies.
The X’s and O’s on the right side of the tables are the end of week Point and Figure (PnF) positions. While the NYSE and NASDAQ are bullish, note that the NASDAQ declined in the percentage of bullish stocks. The drop is minor and was likely due to a net of one or two stocks changing from bullish to bearish.
It is not unusual to see an anomaly such as the S&P 500 where the percentage of bullish stocks increased this past week, but the PnF graph remained bearish. This generally happens when the last day of the week is weaker than the overall movement for the entire week. Or the uptick was of insufficient percentage to flip the PnF indicator.
Another important bit of information to extract from the table relates to the color coding of the percentages. Of the seven major indexes, six are over-bought. This indicates the market is quite high and we need to pay close attention protecting capital. One way to do this is to use Stop-Loss Orders or to set TSLO percentages. Others may use options.
In the following table we break the broad U.S. Equities market down into ten sectors. Seven of the ten are bearish (right-hand section) while five of the ten are over-bought (left-hand section). There is a high probability there will be a pull-back in any sector that currently exceeds 90% bullish. Discretionary and Industrial are two such sectors. Staples and Materials are also at the high end of the bullish-bearish spectrum.
Below is the movement of the NYSE in graphical form. This index has been above the warning 70% line for three weeks. While there is nothing to say it won’t remain there for several more weeks, the probability is that we will see a pull-back before the end of Fall. Check the history to see what I mean.
It is rare to see the NASDAQ breech the 70% bullish line. Contrary to the NYSE, the NASDAQ is tilting down as tech stocks are not holding up as well as other equity companies.
Over this next week, watch to see if the Kipling spreadsheet continues to recommend QQQ as a buy as this ETF is loaded with tech companies.
Monday is the last business day of the month and as such the Carson trio is up for review. Check back Monday morning to see how the three different Kipling models are performing with respect to each other. The Carson trio is a long blog, so I am beginning to prepare the data in advance of Monday’s post.
Stay safe and wear a mask.