Replies to post #124001 on Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

You need some real mettle to keep your conviction with a day like today, but I don't disagree with you short term looks week. The new lows actually had a major bump (14 from an average of 8 to 10 in the last few weeks), but not enough to turn the medium term negative yet (we need expansion to around 40 to 50 new lows or so). If you are right and we are going to get very weak in July (and August) the medium term (6 to 12 weeks) may turn negative as well. Got to see how this thing evolves here....

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