New service trial and the Bullish Percent Index

I signed up for an information service yesterday, Investors Intelligence. This was one of the gems that was mentioned in the program that I mentioned in the last post.

While it does not replace a decent charting package, too bad, it gives great information on ETFs and stocks with regard to some of the things that I am likely to need for my CTP-O plan.

I had hoped that they might have free access to some of this but they really don't. I could generate my own studies as long as I could find the index charts that I would need. I can do a relative performance comparison on a list of ETFs through Esignal to find performers based on MTD, QTD and YTD as well as last 12 months within the sectors to determine which one has been a best performer for those periods. Running the sectors against each other for the same comparison would point to the one that should be looked at.

Using the CTP approach (Counter Trend Positioning) I could just enter the best performing ETF for the sector in the most over sold position... but that would be too simple.

Some time ago I was looking at the Bullish Percent Index for the overall market and comparing that against the performance of the market. It was not hard to notice the correlation between the two.

The S&P500 chart for the last 3 years:

The Bullish Percent Index for the S&P 500 for the past three years:

Looking at the correlations I noted that during the downtrend the BP index peaks closely matched the rally peaks in the SPX. The meltdown in latter 2008 is out of synch and can hardly be used for any meaningful study as everything went out the window for a couple of months.

Even before the uptrend was established the BP index troughs were corresponding to the pullbacks in the SPX. These COULD have been traded profitably based solely on this and using the SPY as a proxy for the index but I tried to tie it into trading sector stocks and it got too complicated...that was one reason why I dropped the study and never got to really trying it out.

The reason I go over this is due to a very useful tool at Investors Intelligence which is a sector bell curve of Bullish Percent Indices. This shows where each is with respect to the index percent value so it is easy to tell where the sector is with respect to the underlying stocks.

I should mention that the index is made up of the percentage of stocks assigned to the sector that are in a bullish phase based solely upon the P&F charting. This is dead simple and ties the P&F charts into the plan nicely and makes a good point to end this post...in the interest of trying to keep these a little shorter for easier back referencing for me.

Jeff.