Jim asked: Zat right?
Close. The top row is the average of all dates from the first signal to the present day. It is the basis of the coloring I use to show whether the forward returns exceed that average or not. Of course, the coloring doesn’t show on this site.
Lintness asked: I don’t get this table, Zee. Appreciate the work, but can you explain?
Clear now?
Update
For $BPNYA the low was 6/17 at 19.97. This means it has to hit 25.97 for a signal to issue. Just to be clear, this can literally happen with one day of significant gains.
https://stockcharts.com/h-sc/ui?s=%24BPNYA&p=D&yr=1&…
We’ve seen two signals so far in 2022 - 5/17 and 5/26.
For $BPNDX there have been three signals in 2022 - 1/31, 2/25 and 5/13. The previous five signal dates are:
8/25/2011
8/27/2015
12/28/2018
3/17/2020
3/25/2020
I consider the $BPNYA signals to be the better of the two.
For $BPNYA the low was 6/17 at 19.97. This means it has to hit 25.97 for a signal to issue. Just to be clear, this can literally happen with one day of significant gains.
I am so glad you posted this. I was thinking the signal had to increase 6% off the low, meaning 19.97 * 1.06 = 21.17.
It is actually very easy to also use this index for identifying points to turn bearish. In my experience, however, you really need to have a repertoire of long and intermediate term indicators that are also saying a bearish reality may be upon this. The purpose of this indicator would just be to identify points to exit. I use 5% for that purpose instead of 6% but I doubt it makes all that much difference.
It gave a bearish signal on 11/19/2021 - the Nasdaq 100’s highest high was the next day - 11/22/2022.
It has fired multiple times since: 1/10, 2/17, 4/6 and 6/10.
Zee,
Your recent bearish signal dates for the Nasdaq 100 seem to correspond well with MACD bearish crossings, so should this relation continue over a longer time frame an easier way (for me, anyway) to follow this would just be to follow $NDX MACD at stockcharts.com.
rrjjgg
rrjjgg wrote: Your recent bearish signal dates for the Nasdaq 100 seem to correspond well with MACD bearish crossings, so should this relation continue over a longer time frame an easier way (for me, anyway) to follow this would just be to follow $NDX MACD at stockcharts.com.
You can. These are the differences between the two for the last three signals. For these three dates $BPNDX wins, and my guess is that this will consistently be the case, but only a thorough backtest can say with certainty.
**Date MACD Diff Date $BPNDX Diff**
1/5/2022 15771.78 1.01% 1/10/2022 15614.43 -1.00%
2/18/2022 14009.54 -1.14% 2/17/2022 14171.74 1.16%
4/8/2022 14327.26 -1.18% 4/6/2022 14498.89 1.20%
**-1.32% 1.36%**
For $BPNYA the low was 6/17 at 19.97. This means it has to hit 25.97 for a signal to issue. Just to be clear, this can literally happen with one day of significant gains.
I am so glad you posted this. I was thinking the signal had to increase 6% off the low, meaning 19.97 * 1.06 = 21.17.
Oh you’re not the only one who was thinking that! I’m glad you posted this as I was thinking the same thing i.e. the buy algorithm was was a single 6% rise off the low below 30. Fascinating detector.
ecbyahoo
I was thinking the signal had to increase 6% off the low, meaning 19.97 * 1.06 = 21.17.
I believe that is in fact the correct interpretation of Zeelotes’ signal as described.
Read the formula he uses in post 211410.
Column C …B20/MIN(B15:B20)-1
Column D …C20>=6%
Note the division, not subtraction.
That’s not the way I would have tried it, but he’s the one who has the data and created and tested the signal.
The upshot of this construction is that it requires only a tiny upswing if the signal is extremely bearish.
The more bearish the reading, the smaller the turnaround required.
The worse the sell-off, the quicker it is to call a bottom on any sign of strength.
Which I guess makes some sense.
Jim
The $BPNYA is a percentage scale.
So is >6% not just 6 points higher rather than 6% higher than the percent it’s at?
So is >6% not just 6 points higher rather than 6% higher than the percent it’s at?
No.
Look at the first buy signal in Zee’s post 211410. It’s up less than 4 points, but because it is up 20.35% (>6%) it issues a buy signal.
1/22/2008 15.92 0.00%
1/23/2008 19.16 20.35% BUY
I think Zee made a typo in post 283700 when he said, “For $BPNYA the low was 6/17 at 19.97. This means it has to hit 25.97 for a signal to issue.”
It just hit 21.17
Since it’s daily candles, you’re probably at least looking for a close north of the indicator, but that’s just a guess.
I’ve been reading the thread from 14 years ago that mungofitch referenced:
https://discussion.fool.com/nyse-bullish-percent-index-26277326…
The link to the introduction to point and figure charting is out of date.
Here is the current URL on stockcharts.com:
https://school.stockcharts.com/doku.php?id=chart_analysis:pn…
Considering how old point and figure charts actually are, and how they were apparently
designed to be easily done with a newspaper I’m pretty sure the bullish point and figure
indicators are designed for closing day prices! 
ecbyahoo
Jim wrote: I believe that is in fact the correct interpretation of Zeelotes’ signal as described.
Sorry for the confusion. I’ve actually presented two distinct methods. I calculate both. This image from my original spreadsheet should clarify.
https://zeelotes.org/$BPNYA_Method.PNG
It goes without saying that the six percent change in the value will fire first. The 6.00 rise in the value itself will fire later.
I see the one as the initial signal and the other as the confirming signal.
Hi Zeelotes,
You mentioned “It goes without saying that the six percent change in the value will fire first. The 6.00 rise in the value itself will fire later. I see the one as the initial signal and the other as the confirming signal.”
So, would you wait for the confirmatory signal (The 6.00 rise in the value itself will fire later) before acting on this short term bottom signal?
And if you did buy after the 2nd confirmatory signal fires, when would you sell them, since you mentioned this was a short term signal.
Please note that I am asking purely from a desire to learn and understand these things, and not questioning it.
Thank you,
Charlie
Inspired asked: So, would you wait for the confirmatory signal (The 6.00 rise in the value itself will fire later) before acting on this short term bottom signal? And if you did buy after the 2nd confirmatory signal fires, when would you sell them, since you mentioned this was a short term signal.
I’m never inclined to rely on a single indicator. What I’m looking for is consensus among many high confidence indicators.
So in answer to your question, typically indicators that are best at pinpointing a bottom show up first. The initial signal from this indicator would follow those. And finally, the confirming indicator from this method would add to other confirming signals.
Right now there are a few factors that play a large role in setting an overall bearish bias.
When the overall bias is bearish signals such as discussed in this thread are acted upon completely differently than when the bias is not so strongly bearish. Just my two cents!
Zee: Recessionary bear markets produce drops that are historically close to double non-recessionary bear markets
Quote from
https://www.economist.com/finance-and-economics/2022/06/21/h…
“History suggests that in recessions American share prices fall even more sharply than they have this year.”
“History suggests that in recessions American share prices fall even more sharply than they have this year.”
Heretical thought of the day:
Since recessions and bear markets are both normal and reasonably frequent occurrences,
why would you buy stocks that you wouldn’t want to hold during one?
It’s like buying a house with no roof because it wasn’t raining at the time.
To torture the metaphor:
It starts raining. All the folks with no-roof houses scramble to sell their houses.
Amid the panic, the people owning houses WITH roofs start scrambling to sell their houses: clearly something serious must be wrong.
That’s the best time to be a buyer of a nice house with a roof.
There’s an old saying I really like: you make most of your money during bear markets; you just don’t realize it at the time.
The easiest and most predictable big money to be made in the markets is to buy good stuff when it’s temporarily really cheap.
(And of course not sell it if it gets even cheaper for a while, which it probably will)
Arguably the best way to spend your time during the early parts of a bear market is to pick in advance the stuff that you’d buy if it were on sale at half price.
Those could be picked with quant methods, or not.
Suggested homework:
Take the time to check out the prices of some specific things during the 2009 or even 2020 market bottoms.
Think about the money you could have made if you’d bought those things at those prices.
Pick anything you like…GOOG at under $1050, say, 2.25 years ago. Year to date average price is $2560.
Next time there’s a panic, let that greed suffuse you, not the panic that you will be tempted to feel.
Jim
Thanks a lot Zeelotes…You mentioned “When the overall bias is bearish signals such as discussed in this thread are acted upon completely differently than when the bias is not so strongly bearish. Just my two cents!”
I am guessing that means there is still more pain to come, and relying on just this one indicator may not be the right thing to do.
Thanks again,
Charlie
Thanks a lot Jim! Your suggested homework is exactly what I have been doing for the past few days…How I wish I had started in 2020, rather than 2021…But yes, I take solace from what you mentioned…if recessions and bear markets do come and go… and the market overall goes up over an extended period of time, then waiting for opportune times to buy “good” companies at “reasonable” prices would be excellent…
Thanks again,
Charlie
