Minyan Mailbag - Bullish Percent Indicators
Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next email from Kevin Depew of Dorsey Wright & Associates with that very intent.
While true that both the bullish percent indicators for the NYSE and Nasdaq were down yesterday in an up, though oversold, market, I would not characterize the down movements (-.75% for NYSE BP and -.46% for Nasdaq BP) as noteworthy in terms of intensity.
As recently as March 29, for example, the Nasdaq BP was down 1.4%, and on March 23 the NYSE Bullish Percent was down 1.6%. Moreover, since these indicators are simply measures of the percentage of point & figure buy/sell signals, and not measures of pure price movement in percentage terms, it is dangerous to draw conclusions as to the intensity of their movements. For example, at any given point in time a stock will be X% away from a new point & figure buy signal or and X% away from a new sell signal. That X% could be small or large depending on the chart pattern involved.
A large percentage of buy/sell signals has no relationship to intensity in this indicator. Rather, we think of the bullish percent indicators risk definers. In those terms, risk is high. In fact, going all the way back to the summer of 2003, risk has been elevated in the financial markets. That is an important point to keep in mind.
Presently, according to the point & figure indicators, risk is higher now than it has been at any point since the 2003 lows. But there is a difference between risk being high, and risk being realized.
Minyan Kevin Depew
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