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What are Bullish and Bearish percentages and how are they calculated (What are the formulae)?
Andrew
Mudit Wahal wrote:
> Hello Group,
>
> I've been a silent lurker for sometime. I use P&F exclusively for trading purposes,
> from 1 min to yearly. I like P&F because of its simplicity. P&F charts solely look
> at the prices and the patterns stand out ! Also, the support and resistance trendlines
> are easy to plot, always at 45 deg angle :-) P&F formations sometime can predict the
> probable price point where a stock/index/future will move.
>
> The signals from P&F charts are binary in nature. The stock is either bullish (when it
> gives its first double top confirm signal) and it remains bullish till it gives its
> first bearish signal (first double bottom confirm signal). And at all the times, you
> know at what price points new signals will be given. So, its easy to put stop losses.
> If you take an index and find out all the stocks with bullish signal and divide them
> by total stocks in the index, you get the Bullish Percentage. This BP usually fluctuate
> between 20 and 80. At 20, it means only 20% of the stocks are bullish, at 80, it means
> 80% stocks are bullish. Buying can take place when the BP goes below 30 and comes back up.
> At this point, since stocks have started coming up slowly, the risk is low. At BP above 70,
> almost every stock has been bought and the risk is very high and great
> care must be taken. The BP is quite uncanny in predicting turning points.
>
> P&F was used by Richard Wyckoff. BTW, Richard's "Studies in Tape Reading" is a must read
> book for any day trader. A. W. Cohen wrote a book under Chart Craft. Its the best one.
> Recently Tom Dorsey of http://www.dorseywright.com has written a book. His website has
> P&F university where one can learn more about P&F. (I'm in no way affliated with Dorsey.)
>
> I run various screens to calculate Bullish Percentages for various indices and sectors.
> Then filter the stocks which are bullish and have promising chart patterns.
>
> I'm attaching few charts. The first one is NDX100 for last 20 days 1 min period with boxsize
> of 5. The second chart is for last 3 years, with a boxsize of 25. Third chart is NDX100 since
> July'99.
>
> Yahoo has limitation of 3 files attachment. I'll send another two charts showing
> NDX100 since Jan 1, and the Bullish Percentage since Jan 1, in the next email.
>
> Thanks
>
> Mudit
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