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Bullish Percent Charts

Recording Sector Bullish Percent Charts

There are times in which a sector is conducive for asset growth and there are times it is not. Sector BP charts helps guide your overall approach toward the sector being charted.
It helps identify the risk level of the sector being charted.
It charts the percent of stocks in the sector that are on a buy signal on their point & figure charts, thereby giving you a snapshot picture of the number of issues being controlled by demand relative to those being controlled by supply.
Each box on the chart constitutes 2% of issues in the sector.
Xs are used to record an increasing percentage. Os are used to record a declining percentage.
We use the 3-box reversal method to reverse columns.
Hypothetically, let’s assume there are 100 issues in the sector. 50 are on buy signals meaning the sector BP chart is 50%. Let’s also assume the percentage is increasing, so we are in a column of Xs at 50%.
The next day, there are 8 stocks in the sector that give new buy signals, while 6 gave new sell signals. We now have 52 out of 100 issues on buy signals, or 52%. We would then put an X at the 52% level in the current column of Xs.
The next day 5 give new buy signals, while 4 give new sell signals. The percentage moves up to 53%, but that is not enough to put another X in that column because we are recording every 2% move.
The next day 2 more give new buy signals in the sector and none give new sells. The percentage is 55%. Record an X in the 54% box in the current column.
As long as the percentage on buy signals within the sector continues to increase we will continue to record Xs in this column. If it begins to decline, we would look for a 6% change (3-boxes X 2% per box) to reverse to a column of Os.
Anything less than a 6% change is considered a minor and irrelevant fluctuation within the sector and not a turning point. A 6 percent change is considered significant enough to indicate a change is beginning in the supply and demand relationship and, therefore, we should change our overall market approach.