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BPCOMPQ or NASDAQ Bullish Percent Index

The BPCOMPQ or NASDAQ Bullish Percent Index measures the breadth of the NASDAQ. Investors who use technical analysis use the BPCOMPQ to identify potential interim high and low points of the NASDAQ. If you use stockcharts.com be sure to add a $ to the beginning of the symbol ($BPCOMPQ).

For those who wish to understand the Bullish Percent Index Calculation please see the end of this article.

How to Use the BPCOMPQ

As a popular indicator investors use the BPCOMPQ to identify changes in the trend for the period being evaluated. When the NASDAQ Bullish Percent Index gives a reading above 70%, it is considered overbought. Even stronger overbought signals are given when the BPI Index rises above 80. When the index reverses course and turns down, it considered an indication the trend is also turning down.

A reading on the BPCOMPQ below 30% is considered oversold, with a reading of 20% considered a better signal of an oversold condition. In this case, when the NASDAQ Bullish Percent Index turns up, it is a sign the market will also turn up, reversing its trend.

Technicians use various indicators to help signal trend reversals, including a moving average, the Parabolic Sar, the Moving Average Convergence Divergence (MACD) indicator, the Relative Strength Indicator (RSI) and the Slow Stochastic.

The direction of the BPCOMPQ is most important, as it is proportional to the direction of the market. When the NASDAQ Bullish Percent Index is trending up, so is the market. The same holds when the NASDAQ Bullish Percent Index is trending down. This makes reversals in the BPCOMPQ important events, as they indicate the market is reversing its trend. The NASDAQ Bullish Percent Index seems to work best for daily, weekly and monthly periods.

BPCOMPQ Example

The chart of the NASDAQ Bullish Percent Index below uses the 20-day moving average as the signal line. When the BPCOMPQ crosses down through the 20-day moving average it signals the trend is reversing from up to down. A crossing up by the BPCOMPQ through the 20-day moving average gives a signal that the trend in the NASDAQ is changing from down to up.

While it is preferable for the NASDAQ Bullish Percent Index to rise above 70 before turning down, there are times you adjust adjust your perspective as shown in the chart. This does not invalidate the index from telling you of trend changes. Rather, you must adjust your perspective. In this case, much of the time the index turned down before reaching 70, as we were in a bear market.

In addition, the MACD, the RSI and the Slow Stochastic are some of the indicators that investors use to help identify buy and sell signals.

When the MACD turns down through its 9-day moving average on the daily chart, it is giving a signal that the BPCOMPQ is about to turn down. Moreover, when the MACD shows negative divergence it is a good indication the NASDAQ Bullish Percent Index is about to reverse course and trend down.

A rise by the MACD through the 9-day moving average is a signal the BPCOMPQ is about to turn up. Positive divergence on the MACD is also a good indication the NASDAQ Bullish Percent Index will rise in the near future.

The Relative Strength Indicator (RSI) is also useful to identify turning points of the BPCOMPQ. When the RSI rises above 70 it is an indication that the BPCOMPQ is reaching high levels where it will eventually turn down. When it does fall through 70 the RSI gives a sell signal.

An RSI below 30 warns investors that the BPCOMPQ is at a low point. When it turns up through 30 it gives a buy signal.

BPCOMPQ or Bullish Percent Index Calculation

The BPCOMPQ or NASDAQ Bullish Percent Index is calculated by taking each component stock of the index or exchange and charting it using the point and figure system. The stocks that have a point and figure buy signal are added together. This number is divided by the total number of stocks in the index or exchange. Theoretically, a bullish percent chart can span from 0% to 100% where no stock in the index has a  point and figure buy signal or where they all do. this rarely happens, as it tends to oscillate between 70% and 30%.

Stockcharts.com performs the BPCOMPQ or NASDAQ Bullish Percent calculation for you for the BPCOMPQ. You can create custom versions of the BP Index is you one of the premium members of Stockcharts.com. Some of the other charting services also provide this service.


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