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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (53562)	9/22/1998 7:53:00 PM
From: Dennis J.	Read Replies (2) \| Respond to of 58727

NYSEBP, a supplement to Tom Dietz note. I view the NYSEBP with a little more caution. Historically, it has turned near the bottom of many major market corrections, and thus, may be a "predictor" of an up-market ahead. But, consider this. The NYSEBP is a point-&-figure 3-box reversal plot of the ratio of stocks on any p&f buy signal (2-point breakout, 3-point breakout, etc.), divided by the number of stocks on the NYSE. This includes many stocks we might call defensive or contrary, such as precious metals and major oils. It would seem hard to get the bullish percentage as low as the teens or single digits. Once down there, if only a few sectors reverse up (a 3-box or 6% reversal, with 2% per box), we say the NYSEBP has "reversed up". But a reversal from say 6% to 12% still leaves the other 88% on sell signals or no signals. Now this condition could persist for a long time, with say stocks that turn back down again being replaced by others that have recently tumbled to new lows and then "reversed up". So, the Dow could march lower for a long time after this first NYSEBP reversal. We have seen primarily corrections in bull markets going back for decades, and the bottoms of these bull market corrections have had a strong correlation with the NYSEBP reversals. So it has been a good indicator. So good, that it has to-date never given a false signal. But its behavior in a long drawn-out bear market has never been tested. As the above discussion suggests, I believe a bear market could continue long after the NYSEBP reversal has "signaled an all-clear". So my only caution is to beware of reversals up from a very low percentage. A good confirmation would be to let the reversal plot some more X's, until some other TA's confirm that the market is truly changing direction. Tom Dorsey's book, Point & Figure Charting has an entire chapter on the NYSE bullish percent index. We on the Point and Figure Charting thread refer to it as "the book". Check it out. dorseywright.com FWIW, this is my understanding. Dennis