Defintion of the NYSE bullish percentage:
" NYSE Bullish Percent:
We use the Bullish Percent indices to assess risk in the market.
The concept began in the 1940's but it wasn't until 1955 that A.W. Cohen actually created the NYSE Bullish Percent. We often refer to this indicator as our main coach for NYSE stocks. It tells us whether to have the offensive or defensive team on the field. X's mean offense and O's mean defense. This indicator tells you who has the ball. Based on a University of Chicago study 80% of the risk in any stock is based in the market and the sector. However, they found that most people spent 80% of their time on stock selection. The NYSE Bullish Percent provides the insight needed in determining the risk in the market. The more you learn about this indicator, the more confidence you will have in your day to day operations in the market.
If the overall market is not supporting higher prices, very few stocks you own , if any, will do well. In a football game, two sides operate on the field at any one time, offense and defense. The same forces act in the marketplace. There are times when the market is supporting higher prices. When the market is supporting higher prices, we can say that you have possession of the ball. You have the offensive team on the field. When you have the ball, your job is to take as much money away from the market as possible; this is the time you must try to score. During times when the market is not supporting higher prices, you have in essence lost the ball and must put the defensive team on the field. During such periods, the job of the market is to take as much money away from you as possible. Think for a moment about your favorite football team. How would they do if they operated only with the offensive team in every game? They might do well when they had possession of the ball, but when the opposing team had the ball, your team would be scored on at will. The net result is your season would be lackluster at best.
This is the problem most investors have: They don't know which team is on the field, much less where the game is being played. The NYSE Bullish Percent clearly signals when the environment is ripe for offense or defense.
The NYSE BP is simply a compilation of the percent of stocks that trade on the NYSE that are on Point and Figure buy signals. If you simply thumbed through all the Point and Figure chart patterns of the stocks on the NYSE and counted the ones that were on buy signals, then divided by the total number of stocks evaluated, you would have the NYSE Bullish Percent reading. DWA calculates all of this in our database and displays the charts for you, however, it is important to know how they are calculated.
Let's say for instance, there were 2,000 stocks on the NYSE and 1,000 of them were on Point and Figure buy signals. The Bullish Percent would be at 50% (1,000/2,000 = 50 percent). We use the same three-box reversal to shift columns in this index as we do in the normal Point and Figure chart. Each box constitutes 2 percent, and the vertical axis runs from 0 to 100 percent. It will take a 6% change in order to reverse this chart.
When the index is rising in a column of X's, more stocks are going on buy signals. Changes in the index can only come from first signals that are given by a stock, not subsequent signals. Let's say that XYZ stock bottoms out after declining and then gives that first buy signal off the bottom. That signal turns the stock from bearish to bullish. It is this first buy signal that is recorded. All subsequent buy signals are not counted.
The Bullish Percent concept is unique from most market indicators because it is a one stock - one vote indicator. The reason this is so important is that most people's portfolios are managed on an equal dollar weighted basis, much like a one stock - one vote. Therefore, the Bullish Percent index is a better indicator to manage risk than a capitalization weighted index like the S&P 500. In other words, you are getting an apples to apples comparison.
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oxlive.dorseywright.com
BPNDX would be similar.
PnF sell signal definition:
mullooly.net
A definition of a 3 box reversal:
" A three-box reversal alone is not sufficient to generate a sell signal on a point and figure chart. A sell signal typically requires a specific pattern formation in addition to the reversal. The most common sell signal on a point and figure chart is a double bottom. This occurs when: - A column of Os (representing price declines) falls below the lowest point of the previous O column
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. - This movement must be at least three boxes in magnitude for a 3-box reversal chart
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For example, on a 3-box reversal chart: - The current column is Xs (upward movement).
- Price reverses by at least 3 boxes, creating a new column of Os.
- This new O column must fall at least one box below the previous O column to generate a sell signal
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It's important to note that while a 3-box reversal initiates a new column in the opposite direction, it doesn't automatically create a sell signal. The sell signal depends on the relationship between the new column and previous columns of the same type
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If you are waiting for a break of a double or triple bottom to trigger a sell signal technically INTC and ASML would still be on buy signals.
I don't use it that was and I did not learn it that way but it does conform to that stricter definition above. |
