Market Analysis

A tool to help confirm the overall market trend is the Bullish Percent Index (BPI). The Bullish Index is a popular market “breadth” indicator used to gauge the internal strength/weakness of the market. Like many of the technical market internal indicators, it is used both to confirm a move in the market and as a non-confirmation and therefore divergence indication. Over the past eighteen months Nasdaq stock have led market direction. Last week we stated “…current BPCOMPQ chart is disconcerting…BPCOMPQ BPI reversed course into a downtrend. It is reasonable not to expect the major equity indexes to return to their highs until the BPCOMPQ breaks out into a sustained uptrend…” The orange line in the current chart below shows the BPCOMPQ remains in a downtrend.