The Edward Hopper look.
Bullish Percent Indicator (BPI) data takes on new meaning with the advent of the Carson and Franklin portfolios. Data from the sector data table (second screenshot below) is used as a buy-sell guide for the Carson and Franklin where the investment quiver is made up of eleven different sector ETFs. The Sell rules are simple and straight forward while the Buy decisions are a tad more complex. Over the next few months readers will see how investment decisions are made with the Carson and Franklin portfolios.
The transactions for the Carson, if any, are made each Monday morning while the Franklin transactions take place on Wednesday or Thursday.
Index BPI
Checking the right side of the following table we conclude this was a poor week for U.S. Equities. All the major indexes are bearish. This is quite a change from the prior week where all indexes were bullish. Two of the seven indexes are still over-bought while three dropped out of the >70% zone.
Now move down to the sector data table where we use this information to manage the Carson and Franklin.
Sector BPI
All sectors but Staples are bearish when we check the right side of the following table. Of more importance, to those following either the Carson or Franklin, is what is going on within the individual sector percentages. The left side of the table measures what percentage of the stocks within a particular sector are bullish or bearish when using Point and Figure (PnF) data. If you have questions about PnF graphs, post a comment in the Comment section provided below.
How to handle the following information if you are working with the BPI Model.
- If you are holding VDC, VFH, VHT, or VIS, place Trailing Stop Loss Orders for your holdings. I use 3% TSLOs for those in the 70% range and 2% TSLOs for those in the 80% range. Example: If either VHT or VIS are holding shares in either the Carson or Franklin, I’ll set a 2% TSLO for all shares. Once the TSLO is set for a particular sector ETF, do nothing until it is sold. Then invest the cash in SCHP or leave it in Cash.
- On the Buy side, only Energy (VDE) is a buy. Regardless of the amount of cash available, I will limit holdings in VDE to 25% of the total portfolio. On Monday I’ll post what is happening within the Carson so check back before the market closes on Monday to see the decisions or transactions for the Carson.
Comments are missing so this is a test.
Lowell
OK. It looks like comments are back as one setting was fouling up this part of the blog. If you posted a comment and it did not show up, try again. I think I have the problem fixed.
Lowell
Lowell,
I had a comment on the BPI Guidelines that presumably was lost so here goes again. How did you settle on the Max % theory, experience or gut? And what happens if so many sectors qualify that you get to more than 100%. For example a month or so back we had almost all sectors qualifying. I took the simple way out and divided them equally but I can foresee a situation when they don’t all hit at once and one has to stepwise add them. I’m sure with experience we’ll work this out but what are your thoughts?
Bob W
Bob,
The Max % comes from both gut and experience. Telecom and Utilities are more stable than the other sectors.
If more sectors show up as a buy and add to more than 100%, I will use the Ranking found within the Tranche worksheet of the Kipling as a guideline for filling up the various sectors.
In addition, I’ll cross that bridge when we get there. I suspect this will happen early in 2023.
Lowell