Welcome to EV's point and figures. This blog is dedicated to the use of point and figure charts in technical analysis.

Although P&F first appeared in charts in the 1930's, it is an often overlooked techique for analysing stocks and charts. A poor relation compared to line and bar charts and their range of momentum indicators. Yet few charts provide a clearer picture of the daily battle between bulls and bears for market control.

Like most methods, it should not be used in isolation. It should form part of an analysts 'tool box' and be used with other techniques to help form an overall view.

The charts that appear on this blog and any accompanying comments are purely for information purposes only - my own personal take on where the prices may be heading. They do not constitute investment advice.

Wednesday, July 10, 2013

NYSE and NYSE Bullish Percent Index

This index is calculated weekly and (on a PF basis) is a compilation of the percentage of stocks on NYSE giving a first time PF buy signal. Each box constitutes 2% and the vertical axis runs from 0-100%.  So in general terms, the higher the percentage, the more 'strength' in the index. Or new highs in the index are being supported by an increasing number of stocks moving to P&F buy signals.

Eg: 100 stocks in an index, 50 on new PF buy signals, bullish percent = 50%.

Changes in the index up and down can only come from the FIRST buy signal given off the bottom. That's what is recorded and all subseqent buy signals are not counted.

Eg: 100 stocks in an index, index at 50%
Over the next week 12 stocks give new PF buy signals, 10 give new PF sell signals
= a net 2% more stocks on buy signal
As each box represents 2%, a net 2% change allows the chart to rise one box.

You use the same 3 box reversal methodology as for normal PF charts, so here it takes a (3x2%) 6% net buy/sell signal to reverse a column upwards/downwards. As a general rule, areas above 70% and below 30% are the two extremes. Above 70% is overbought and below 30% is oversold.

This is worth keeping half an eye on. Note the recent recovery in the NYSE Index....

...is not currently being supported by any reversal to the upside in the bullish percent index, which has reversed from a recent high of 78%.
The active target of 8,350 remains in play (for now).  A move above 9,550 will kill it.