BPSPX Bullish Percent Index Daily Chart

Wonders never cease. Lo and behold. The BPSPX finally placed a peak at 82. It looked like it would never end.  For the BPSPX chart, the six percentage point reversal is a sell or buy signal, and the move across 70% and 30% is important. Obviously, 70% is applicable over the last few months and the lower side of the chart is not in play.  Recapping the action since the September 2012 top, price printed 80, thus, 80-6 = 74, so if price hits 74, which it did, a sell signal is triggered for the broad indexes.  Then as the BPSPX fell and dropped thru the 70% level this provides additional downside oomph and intensifies the sell signal. This action verified the October-November selloff.

Then when the BPSPX bottomed in November at 58, the 64 is key (58+6), and that gave way as the December winds arrived to announce the market buy signal. Then, once price punched up thru the 70% level, the sky was the limit. From 82, the 76 level is key. The bears need to see 76 to receive a market sell signal that will point to lower markets moving forward. The 70% will come into play again as well. The question is how the BPSPX comes off the top. The red lines show firm negative divergence so the indicators are happy with price dropping in earnest from here.  The RSI, however, may want to bring price back up for another high at 82 or so before rolling over. The indicators are into the ceiling for the stochastics and RSI unable to move any higher. The uber bullish euphoria is truly remarkable. At least the markets now show they may be mortal after all.  Watch the 76 level. If the BPSPX moves higher tomorrow, say, to 83, then you will watch the 77 level for the broad market sell signal. BPSPX is a lagging verification-style signal so the broad markets would sell off for a couple or few days before the six percentage-point reversal typically occurs. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.