NYSE Bullish Percent

NYSE Bullish Percent

Trying to time the stock market can be a futile exercise, but understanding the risk dynamics is paramount.

The New York Stock Exchange Bullish Percent Index (NYSE BPI) is an intermediate-term risk barometer that tells us whether supply or demand is in control of the stock market.

How does it do this? By telling us what percentage of stocks on the NYSE are on “point and figure” buy signals versus sell signals.

The NYSE BPI is a stock market “risk barometer” illustrating risk in two ways:

  1. It tells us if the stock market is overbought or oversold on a long-term basis. When it’s above 70 the stock market is considered overbought, and when it’s below 30 it’s considered oversold. When markets are overbought, but with demand (bulls) in control, you want to be cautious but remain bullish. Don’t be defensive until supply takes control. Overbought doesn’t mean over.
  2. The most recent column is on the far right side. Demand (bulls) is in control of the stock market when the most recent column is in Xs. Supply (bears) is in control when the most recent column is in Os.

This chart is powerful because it’s not noisy with frequent changes, and therefore it’s not prone to false signals.

For the chart to add a new X or O column, there has to be net change in the percentage of stocks on point and figure “Buy” signals vs. “Sell” signals greater than 6%. That’s a huge change in supply/demand dynamics in the stock market.