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Bullish Percent Charts

NYSE Percent Above 10-Week Average

Investors with short-term trading objectives should use this as one of their main timing indicators. We define short-term as 1 – 2 months, not day trading. This chart records the percent of stocks on the NYSE that are above their 10-week moving average.

To calculate a 10-week moving average you would add up the weekly closing prices for a stock for the last 10 weeks and divide it by ten. For example, if a stocks closing price for each of the last 10 weeks was $45.50, $51.24, $50.91, $48.73, $51.12, $50.52, $47.98, $46.76, $43.85 and $41.98, it adds up to $478.59. Divide this number by 10 and the result is $47.859. That is the 10-Week Average price for the stock. At the end of the next week you would drop off the oldest week and replace it with the recent week. Let’s say it closed the next week at $44.48. We would replace the $41.98 with the new close of $44.48. The new total would be $481.09 making the ten week moving average $48.109.

If the last week’s closing price is above the 10 week average, then it counts as one stock that is above the 10-week moving average. If more stocks are above their 10-week moving averages, the short-term momentum of the market is up. If more are below their 10-week moving average, the short-term momentum of the market is down.

Important buy signals develop on this chart when the percentage above their 10-week average drops below 30% then begins moving higher. This indicates that a lot of stocks on the NYSE have declined below their 10-week average and are now beginning to move above it changing the momentum of the market from down to up. At these times, short-term investors should take aggressive positions to profit from an advancing overall market.

Important sell signals develop on this chart when the percentage above their 10-week average rises above 70% then begins moving lower. This indicates that a lot of stocks on the NYSE have advanced above their 10-week average and are now beginning to fall below it changing the momentum of the market from up to down. At these times, short-term investors should sell their long positions. Those so inclined, can sell short to profit from the expected decline in the overall market.

This indicator chart is recorded and interpreted the same way as the other bullish percent charts.

There are two levels of analysis on the NYSE BPI.

Direction
Position

DIRECTION

A rising percentage is recorded with Xs
Xs indicate more issues rising above their 10-week averages on the NYSE
Your short-term approach toward the NYSE is aggressive, attempting to grow your portfolio
A declining percentage is recorded with Os
Os indicate more issues dropping below their 10-week averages on the NYSE
Our short-term approach toward the NYSE is defensive, protecting your portfolio

POSITION

Extremes readings are 70% and 30%
Reversals from the extreme levels indicate short-term turning points for the NYSE
70% indicates on a short-term basis there is a high-risk level for the NYSE
A reversal down from 70% is a short-term sell signal for the NYSE
Short-term investors should manage their portfolios defensively in this market (risk management)
Aggressive investors should apply a short selling strategy to profit from the expected decline in the NYSE.
30% indicates the short-term risk level is low for the NYSE
A reversal up from below 30% is a short-term buy signal for the NYSE
Short-term investors should manage their portfolios aggressively in this market
Any short sales should be covered in this market on the NYSE

Although this indicator is most helpful to short-term oriented investors, long-term investors also should use this to help guide their decisions. When this index is at a high-risk level, even a long-term investor would want to become a little less aggressive as the NYSE is likely to decline over coming weeks, providing better prices to buy most stocks.

Ideally, the use of this indicator is best used in conjunction with the NYSE Percent Above 10-Week Average to get an accurate assessment of the short-term conditions in the NYSE.