Point & Go Figure: NYSE Bullish Percent Bearish Catapult
More songs about buildings and foods!
Don't you miss it, don't you miss it.
Some a you people just about missed it!
Last time to make plans!
-Talking Heads "Remain in Light"
Recently on the Buzz and Banter you mentioned a "bearish catapult" pattern on the NYSE Bullish Percent. Your interpretation carries serious implications since the "bearish catapult" pattern is supposedly a powerful sell signal, yet I've read where another "talking head" says patterns are insignificant with this indicator. What's your take?
The reality is that no one knows. There has not been a prior bearish catapult pattern in the NYSE BP going back to 1955, and in general, because it is a 0-100% breadth indicator, patterns do not typically develop.
A bearish catapult on a price trend chart says something important about the power of the bearish conditions that create it. A bullish percent chart is not a price trend chart, but my interpretation is that the pattern does say something important about the seriousness of the deterioration in breadth we have seen and the subsequent risk aversion now entering the market. Beyond that, whether one calls it a "bearish catapult" or assigns some other arbitrary risk nomenclature to it, is anyone's guess.
As you know, I use PnF with a number of other indicators, DeMark price exhaustion techniques for example. (That's just the way I approach markets, and I wouldn't be arrogant enough to state that the way I approach markets is better than any other approach; a whole lot of people make a whole lot of money using a whole lot of other methodologies.) A wide variety of other methodologies are all painting the same negative long-term technical picture as the NYSE Bullish Percent, suggesting this is indeed a special time for financial markets. But perhaps the alignment is simply coincidental.
Regardless, I use PnF indicators only for very basic contextual guidance, so while the pattern is interesting it does not materially affect how I trade, say, the S&P E-Minis, for example, the way DeMark price exhaustion techniques do.
NYSE Bullish Percent
(Chart courtsy StockCharts.com)
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