[True Trader's Sunday School] The Most Important Charts You’ll Ever See

In the most powerful style. [Logo]( [True Trader's Sunday School] The Most Important Charts You’ll Ever See Dear Reader, Last week, we continued our discussion of "breadth" by talking about "participation." We said that the market condition should be considered favorable when advances in the major averages are confirmed by positive readings on breadth indicators. Chris Rowe Founder True Market Insiders The market should be considered unfavorable when the major indices are advancing higher while breadth readings are negative. Today we'll begin covering our first – and most important – breadth indicator. Meet the Bullish Percent Index (BPI) Talk about using an indicator to eliminate emotion from your trading decisions! The Bullish Percent Index (BPI) is the best intermediate/long-term breadth indicator ever created. It's widely recognized and used by the most sophisticated investors. Learning about the Bullish Percent Index changed my life, my confidence, my perception, and especially my bank account. This indicator is so critical because markets tend to look the most bullish at the top and most bearish at the bottom. So it can be difficult to take the right stance at the right time. And as we saw over the past two Sundays, the popular market indices like the Dow Jones and the S&P don't always give an accurate picture of whether the market is moving up or down. Three Basic Functions The "bullish percent index" will give you a clear picture of: - The risk of the market (overbought or oversold). Therefore, we know whether to be aggressive or conservative and cautious. - The direction of the internal market (and therefore, whether we should be playing offense or defense with much less concern for what popular indices are doing). - The breadth of the market, and therefore, any positive or negative divergences which prepares us for change in direction. What is the BPI? The bullish percent index is a number ranging from 0-100 reflecting the percentage of stocks in a group that are on "point-and-figure Buy signals" on their own respective price charts. Example: The S&P 500 represents 500 stocks. If 250 of those stocks were on point-and-figure buy signals, then the S&P 500 Bullish Percent index would be at 50% (250 Buy signals divided by 500 stocks in S&P 500 = 0.5, or 50%). Another example: If an index has 1,000 stocks in it, and 420 of those stocks are on point and figure Buy signals, then the sector's Bullish Percent Index will be at 42% (420 Buy signals divided by 1,000 total stocks in the index = 0.42 or 42%). If on the following day, that same index has 60 stocks move to Buy signals and 10 stocks move to Sell signals, then the net change would be 50 new stocks on Buy signals (60 – 10 = 50). Therefore, the reading on the bullish percent index would move five percentage points higher from 42% to 47%, and so on. You can have a BPI chart for any universe of stocks. On our Sector Prophets Pro sector research and data platform, you can see the BPI charts for six of the most popular market averages. Here they are, along with their BPI charts as of the close of trading on Tuesday, August 15. In each of the charts below I've highlighted the most recent column on the right. And on each chart a purple points to the "index" – the precise number showing the percentage of stocks within that particular group currently on Buy signals. The New York Stock Exchange The S&P 500 The Nasdaq Composite The S&P 400 (mid-cap stocks) The S&P 600 (small-cap stocks)     The Russell 2000 (also small-cap stocks) We also have BPI charts for each of the 45 sectors we track – 41 "industry groups" and 4 "international groups. Here are recent BPI charts for three sectors, chosen at random. The Oil Service sector The Healthcare sector The International - Latin America sector All of the BPIs we just looked at are shown in "point-and-figure (PnF)" style. Point-and-figure charts are easily recognized by their unique structure – columns of boxes – and by their unique way of presenting data – X's and O's within the columns. You don't have to show any BPIs in this way. We show them in PnF style because that is the most powerful way to present the information contained on the charts. Next week we'll take a short detour when we discuss some important features and benefits of this particular style of charting. For now, just know that BPI charts are the most powerful breadth indicators out there, and that we will be talking a lot more about them. Also, understand that out of all BPI charts, the most important (in my opinion) is the New York Stock Exchange BPI. We consider this indicator to be so central to our way of seeing the stock market, [we've created a special free page to track its every important move – bullish or bearish](. (In an upcoming "Sunday School" we will really go into this indispensable indicator.) Check back next week when we'll talk about some important point-and-figure basics, and dive deeper into the BPIs. See you then!   [Here’s 2 Ways to Find Great Small Stocks]( [Here’s How to Play the Next Trillion-Dollar Company]( [This Building Stock Looks Set to Double]( [YouTube]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( DISCLAIMER ©2023 by True Market Insiders, LLC, Protected by copyright laws of the United States and international treaties. 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