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BPSPX or S&P 500 Bullish Percent Index

The BPSPX or S&P 500 Bullish Percent Index measures the breadth of the Standard & Poor's 500. Investors use the BPSPX to identify high and low levels of the S&P 500 index. If you use stockcharts.com be sure to add a $ to the beginning of the symbol ($BPSPX).

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

Using the BPSPX

Many technical analysts use the BPXPS to identify changes in the trend of the S&P 500. A reading above 70% is considered overbought with 80 considered an extremely overbought situation. When the BPSPX falls through the 70 level a sell signal is given.

Oversold signals are given when the BPSPX gives a reading below 30%, while 20% is considered a better oversold indication. The BPXPX Index gives buy signals when it turns up through the 30% threshold, reversing its downtrend.

The BPSPX is most useful in identifying trends and trend reversals of the S&P 500, since it is proportional to the direction of the S&P 500 Index. When the BPSPX is trending up, the S&P 500 is as well. On the other hand when the BPSPX is trending down the the S&P 500 will be trending down as well.

One of the best uses of the BPSPX is to signal a reversal of the trend. When the indicator changes course from an overbought or oversold condition it indicates the S&P 500 is changing its trend. you can use the BPSPX for any time period, though most chartists like the daily, weekly and the monthly view as these period give them bigger picture trend.

BPSPX Example

The chart below is from our Weekly Stock Market Commentary for our Premier Members. As a weekly chart, it helps to identify longer-term trend changes.

The first place to look is the absolute level of the BPSPX. If it is above the 70 level it is an indication the market id overbought, though it can remain that way for a while. A reading below 30 indicates an oversold condition.

The reading on the chart shows that the BPSPX is well above 70 indicating there is an overbought situation in the market at that time. Investors should expect a move down in the next several weeks.

For the weekly chart we use a 6 week moving average as the signal line of a change in the trend to compliment the overbought/oversold condition. When the BPSPX crosses the 6-week moving average, it is a sign of a change in the trend of the S&P 500.

When the BPSPX crosses down through the 6-week moving average, it signals the trend is changing from up to down. A crossing by the BPSPX up through the 6-week moving average gives a signal that the trend in the S&P 500 is shifting from down to up.

In addition to the moving average signals, other indicators such as the RSI Indicator and the MACD are useful to identify trend turning points.

When the Relative Strength Indicator (RSI) rises above 70 it is an indication that the BPSPX is reaching high levels where it will eventually turn down. When it does fall through 70 the RSI gives a sell signal.

An RSI reading below 30 warns investors that the BPSPX is at a low point. A buy signal is delivered when it turns up through 30.

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

When the MACD rises through the 9-week moving average, it is a signal the BPSPX is turning up. Positive divergence on the MACD is also a good indication the BPSPX will rise in the near future.

BPSPX or Bullish Percent Index Calculation

To calculate the BPSPX Index take each stock that comprises the S&P 500 Index and chart 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 Standard & Poor's Index.

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%.

Fortunately, Stockcharts.com performs the calculations for the BPSPX Index for you. 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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