Technically Speaking Archives
Technical Indicators & Overlays
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Bullish Percent Index
March 21, 2015
In January, I wrote about point & figure charting, a personal favorite of mine when it comes to chart analysis. This unique chart type ignores the “noise” of the market that is most responsible for short-term price movements and instead focuses on “meaningful” price activity. Beyond discussing the basic principles of point & figure charting, including how to create them by hand if you so choose, I also covered how you can use point & figure charts to identity trendlines and areas of support and resistance. For those interested in learning more about point & figure charting, the January article is a good starting point.
In this installment of Technically Speaking, I examine the Bullish Percent Index (BPI). This breadth indicator is based on point & figure charts, specifically the number of stocks on point & figure buy signals (more on this in a moment) within an index. The BPI was developed in the 1950s by the then-editor of ChartCraft, which later became Investor’s Intelligence. Originally applied to the NYSE Composite Index, the BPI can be used for virtually any group of stocks—an index, sector, industry, etc.
As mentioned earlier, the Bullish Percent Index is based on the number of stocks on point & figure (P&F) signals within a given index, such that:
The stochastic oscillator is a momentum indicator useful for identifying potential price reversals. Like all oscillators, the stochastic oscillator is best suited for trading ranges or prolonged trends where prices periodically deviate from the prevailing trend.