Zeev's Turnips Patch-No Politics (ZEEV)

[jetlag]

Godfrey,
I'm not sure I understand the logic behind $BPNDX study and NDX/Nasdaq future evolution.

As far as I can tell BP Index says which is the percentage of stocks (part of an index, NDX here) giving the P&F buy signal, divided by the sum of all stocks in that group.

Over 70% of NDX stocks giving Buy signal is saying the INDEX is overbought while under 30% oversold.
Not that market can't stay in overbought teritory for long (look at past 3 months...)

First - I don't discuss here P&F as how reliable indication of buy signals (if I remember well there's no volume indication with P&F and that buy signal on XO chart is purely based on absolute price evolution intra-day). So I assume at this point that it is reliable.

But secondly - what is the logical link between BPNDX crossing down the EMA_x and stocks getting weaker in the future?

Following the definition of EMEA_x, BPNDX crossing EMEA_x would mean the % of NDX stocks giving buy signals is less than the their average measured on previous x days. As the NDX goes from overbought into "neutral" teritory (above 30%) I thought this is supposed to be bullish (less stocks giving buy signals, index getting out of the overbought teritory).

* I looked at NDX evolution compared to BPNDX on the past 3 years or even smaller periods, could not see any correlation. At some points the BPNDX plunges, yet the index rises, and the other way around. The only thing I can tell looking bpndx chart is that whenever is close to 100 the bpndx puts in a TOP. Too bad we can't trade this one, it is fairly predictable after all


Thanks,/jet