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Strategies & Market Trends : Point and Figure Charting

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To: J.B.C. who wrote (34384)8/31/2022 10:58:16 AM
From: J.B.C.4 Recommendations

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A Closer Look at the Latest BPNYSE Reversal
Following Monday’s action, the bullish percent for NYSE Stocks [^BPNYSE] reversed down into Os to 50%. This comes after the indicator reversed up into Xs on June 28th at 26% and moved up to 58% by the close on August 16th. Since August 17th, the reading for BPNYSE has dialed back as stocks have moved back to sell signals. Fortunately, the BP still indicates that more than half the stocks in the NYSE universe are trading on point and figure buy signals. But while that is a bit of a silver lining, we did want to address what DWA Sectors contributed most to the reversal into Os for the BPNYSE. Most of the sell signals have come within the past weeks’ worth of action, and the bulk of those have come within the past two days of trading. The sectors where stocks have shifted to sell signals recently have been from laggard sectors that have shown notable rallies since mid-June. When we see reversals such as this on indicators, we must evaluate our positions. If there are holdings that have moved to a sell signal and/or violated near-term support, these are the ones we would look to address.

In addition to the BPNYSE reversing down into Os, there was also an intriguing development for the All-Equity Funds group on the Asset Class Group Scores page. As of Monday’s close, the All-Equity Funds group had a current score of 2.5 after having hit a near-term score high of 2.64 on August 16th. In a prior report, we had noted the group moving back above the 2.5 score line earlier this month for a second time this year. Historically, the All-Equity Funds group moving back above 2.5 has been a decent indicator for equities improving, but there have only been two rolling 12-month periods in which the group fell below the score of 2.5 on two separate occasions. In the most recent 12-month roll, All Equity Funds first scored below 2.5 from May 9th to May 26th and from June 10th to August 5th. The only other time during a 12-month roll that the score fell below 2.5 twice was from 9/4/2015 to 10/7/2015 and 1/7/2016 to 3/16/2016. As it stands today, if the All-Equity Funds group were to fall below the 2.5 score threshold again it would mark the third time in a 12-month rolling period – which has never happened before.

Looking back to the 2015/2016 “double-dip” the most notable observation is the 3- and 6-month returns following the first dip as this performance period also fell within the All-Equity Funds group falling below 2.5 the second time. Near- to intermediate-term returns following this 2015/2016 double dip are mixed – although the returns following the second dip are improved over the first. While one-year out does look positive, that doesn’t mean we may not experience volatility on our way there.
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