NYSE Bullish Percentage Index ($BPNYA)

One of my favorite market timing tools is the NYSE bullish percentage index, Stockcharts.com symbol $BPNYA. This indicator shows the percentage of stocks in the NYSE Composite Index (NYA) which are currently exhibiting buy signals on point and figure charts on any given day. It is an objective market barometer. Interpretation is simple: If the index is above 50%, we are in an uptrend; if it is below 50% we are in a downtrend. If it is above 70% the market is overbought and unlikely to go much higher. If it is below 30% the market is oversold and it is feeding time for alligator investors. Like any other technical indicator, $BPNYA can give false signals, but it is usually right. Historical charts and information regarding interpretation and use of the NYSE Bullish Percentage Index are available on the internet.

This chart shows $BPNYA plotted against its underlying index for the last three years. Note that peaks of $BPNYA over 70% have coincided with peaks in the market, and have often preceded them. During this time frame, we have not had a correction of sufficient magnitude to bring the $BPNYA below 30%. However, valleys in the index have coincided with dips in the market. The $BPNYA often trends. It is often possible to identify trend turning points as they occur with the use of technical analysis tools.

The important thing is to recognize major selling opportunities when $BPNYA is above 70% and major buying opportunities when $BPNYA below 30%. This is timely because $BPNYA could reach 70% this week.


14 Responses to “NYSE Bullish Percentage Index ($BPNYA)”

  1. Umagumm Says:

    To play the devil’s advocate, I note that S&P rallied from 1000 to 1365 in the the chart you show. During this time, $BPNYA peaked to give 6 or 7 sell signals and no buy signals. Presuming an investor, did get in the rally with a buy signal that pre-dated the chart, they would have been forced out in early ’04. Then they would have been stuck waiting for 3 years (while the market rallied 30%) buy signal.

    Maybe a $BPNYA reading of 70 is actually a good buy indicator 🙂

  2. Alligator Investor Says:

    You have a good point! I have seen a trading system based on going long when RSI was “overbought” that looked like it worked pretty well.

    Looking for sell signals in a market which has been in an uptrend for generations is probably a fool’s pursuit. Playing with technical tools can be fun, but in the U.S. stock market the real money has been made with a buy-and-hold strategy and by dollar cost averaging.

    All oscillators with fixed trigger points that I have studied “misbehave” in strongly trending markets and they cannot be used mechanically. In up markets they will repeatedly give sell signals and fail to give buy signals, and the opposite in down markets. Some people compensate for this by adjusting the trigger parameters based on the strength of the trend, or simply by looking for trend reversals when the oscillator has been moving in one direction for a while. I think the latter works well with $BPNYA.

    Of course, not all stocks or sectors are moving in the same direction at any given time. Indicators which purport to forecast the direction of the whole market have little value unless you are trading the whole market!

    The importance of $BPNYA is that it objectively identifies low-risk buying opportunities when they occur, and gives warnings when the market is has become overextended on the upside.

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  4. Mark R Says:

    This is very interesting. I plotted this forward from Oct 1 2006 to Jan 12 2009 and added a 150-day moving average as an additional buy/sell trigger, giving me the following buys and sells: In 2006 Oct 2 Buy, Dec 15 Sell, In 2007 Mar 1 June 11, June 20, July 16, Aug 27, Oct 15. In 2008 Jan 25 June 25, Aug 1 Sept 2 Sept 22 Oct 1 Oct 10 Nov 3 Nov 25. in 2009 Jan 12 (sell). Using SPY and starting with $10,000 those buy/sell points would have turned the $10,000 into over $13,000 whereas a buy and hold over the same period dropped to about $6,800. There were 8 winning trades and only 1 losing trade over the period.

    Is there any way to get daily information on $BYNYA for as far back as possible? (I’d like to go back to at least the early 90’s). If the same process holds up, there may be a real predictive value to this.

  5. Mark R Says:

    E-mail me if you have any daily back data or can tell me where to get it. I’m having a hard time finding it on the web.

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  7. Jane Goody Says:

    The style of writing is quite familiar . Did you write guest posts for other bloggers?

  8. Juan Jannsen Says:

    Hey, nice blog with good info. I really like coming back here often. There?s only one thing that annoys me and that is the misfunctioning of comment posting. I usually get to 500 error page, and have to do the post twice. – The real danger is not that computers will begin to think like men, but that men will begin to think like computers. Attributed to Sydney Harris

  9. Jeffrey Jeppesen Says:

    Interesting point of view.Thanks for the post. – Most of the time I don’t have much fun. The rest of the time I don’t have any fun at all. – Woody Allen Born 1935

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  12. Mark R Says:

    I’d still like to analyze this indicator more. Is there any place to get the back data in spreadsheet form so that it can be analyzed in greater depth?

  13. Mark A. Rogers Says:

    Mark R – don’t believe there is any spreadsheet data on the matter online. In the two years since your post, BPNYA has identified at least three or four useful market cycles for investors (I use the Weekly Chart and 20 week MA, peaks, troughs and trends). Check out my blog for a variety of different posts on the topic, truly one of the most interesting indicators around, and with several uses. Like yourself, I’m trying to backtest to see how much applies in each different type of market – I use StockCharts.com and do each three year block at a time. Good luck! (from one Mark R to another)

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