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Strategies & Market Trends : Tech Stock Options
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To: donald sew who wrote (53485)9/22/1998 4:10:00 PM
From: Jorj X Mckie  Read Replies (1) of 58727
 
Hello Donald,
Unfortunately you have only seen part of P&F story and therefore, perhaps a misconception about what the signals may mean.

1. The indicator that reversed up last week was the NYSE Bullish Percent. It is based on the number of stocks (using a pool of 5000+ from NYSE and NAZ) that have either given a P&F "BUY" or "SELL" signal. So that 6% that you mention has nothing to do with the DJIA directly and everything to do with the percentage of stocks that are giving buy and sell signals.

2. The reversal up of the NYSE BP means that the general market direction is expected to be positive. This does not preclude down days or corrections within the overall expected uptrend.

3. To reverse the NYSE BP it would be necessary for a 6% change in the number stocks that are giving new sell signals (note it must be a new sell signal).

4. A reversal of the DJIA would not necessarily change the NYSE BP direction. However the specific reversal that you mentioned would give a very clear sell signal on the DJIA components. As a matter of fact, the P&F chart for the DJIA very closely mirrors your support and resistance levels.

Again, the NYSE BP is a general forward looking indicator. It indicates to take a general bullish stance (implying that the bottom has been found). It doesn't mean that individual stocks or sectors won't have their down days.

Tom

EDIT: I am not the most experienced P&F person, so I may have a minor mistake or two in this message. However, the main message is accurate.
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