Wednesday, August 22, 2007

Bullish Percentage Charts

I like to keep tabs on the Bullish Percentage charts. I know many of you are familiar with my 5th year scenario. All that amounts to is that normally bull markets can't make it passed a fifth year without a large decline. One of the things I was going to be looking for to indicate that the fifth year decline was playing out was an oversold reading on the Bullish percentage chart. Something in the 30 or lower range. Well the NYSE so far has bottomed at 30.99 and has now turned up and is back above 40. All this means is that only 30% of the stocks on the NYSE were in bullish trends on the point and figure charts. That's an incredibly small amount of stocks in bullish trends. If this rises back above 50 it will be just another positive sign for the market. Now notice the second chart of the Nasdaq 100. It was much stronger than the rest of the market and never even came close to oversold. That should not be happening in any serious decline. The Nasdaq should be leading the charge lower. Notice how it lead last year. It is entirely possible that we just got the 5th year decline and the pitiful 10% is all the market is going to give back. This seems hard for me to believe but a great many indicators other than just the BPNYA also signaled extreme oversold levels rarely seen and usually only at very important lows. Of course we still have the fact that the commercials are at historic long positions. Oh and in case anyone hasn't noticed the current long signal is still profitable so far. As a matter of fact everyone just got a second chance to get in at a lower level than the original signal and you still have a chance to get in at a level very close to the original even at today's close. Ah but after experiencing what we just went through will you now be able to pull the trigger? Buffett did. Lambert did. Gates did. Soros did. Altucher did. Ah what the hell do they know anyway.

BTW if you do pull the trigger here will you immediately sell for a loss if the market drops to test the lows?