BPSPX S&P 500 Bullish Percent Index Daily Chart

The BPSPX reverses six percentage-points off the bottom a few days ago which is a stock market buy signal. The 35 level is key. As stocks sell off and the BPSPX drops below 35, that is wash-out territory. That is where you would typically expect a recovery. The drop to an 11-handle is epic and astounding; it had nowhere to go except up.

If the BPSPX crosses above 35 that will be a double-whammy buy signal for the stock market and the relief rally will have sustainable legs. The bears need to reverse the BPSPX by six percentage-points, to 27.20, to growl strongly again with a sell signal. Since we are down in this rare sub-35 region, the bulls have an advantage. Down here stocks are like a beach ball you are trying to keep under water, you can hold them for a little while but they are buoyant and want to float higher.

That said, the BPSPX may retreat from 1 to 5 percentage-points reflecting a near-term pullback in stocks but then will likely recover again, maintaining the buy signal, and then popping up through 35 for the double-whammy buy.

The NYMO is off the charts with a 3-year high and the CPC and CPCE put/call ratios are uber low reflecting complacency. The NYMO, an oscillator, has nowhere to go except down. So a near-term pullback may be sharp, quick and fast, a flush lower then immediate recovery and on to the multi-week recovery rally. Stocks are receiving buoyancy for 2-1/2 days on the Whitehouse and President Trump hype that the US-China trade talks are going very well. The president's Oval Office address last night was more of the same; it was political dinner theater. The president ties himself to the immigration mast. 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.