BULLISH PERCENT NUMBERS ARE OVERBOUGHT BUT STILL IN P&F UPTRENDS
Chart 1
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MATERIALS BP WEAKENS … I also wrote that three sector BPs were in overbought territory and vulnerable to some profit-taking. They included financials (86%), consumer discretionary (82%), and materials (80%). Charts 3 and 4 show the BP for financials and consumer discretionary sectors still in uptrends. Their BPs would have to suffer a six-point drop (three-box reversal) to warn of a weakening trend. Chart 5 shows, however, that the S&P Materials BPI has already done so. That’s a warning that it may be time to start taking some material winnings off the table.
Chart 3
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Chart 5
GOLD BP IN NEUTRAL GROUND … Although the Bullish Percent number for the gold group isn’t included in the Market Summary page, you can still access the numbers by using the $BPGDM symbol. The point & figure version of that index is shown in Chart 6. It shows the Bullish Percent reading for gold stocks peaking at 86 during March of this year. A profit-taking signal was given when it suffered a three-box reversal down to 80 during April (the red numbers mark the start of a new calendar month). An upside three-box reversal during July turned short-term momentum back to the upside. For a bona fide buy signal to be given in gold shares, however, the BPGDM needs to rise to 78 which would exceed the highest box reached during August at 76. [An actual buy signal requires that the latest X column exceeds a previous X column]. At the moment, the BPGDM trend is neutral.
Chart 6
[John Murphy]
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