I have considered a number of market breadth indicators in recent posts in order to gauge how the bulls and the bears are exerting themselves. The Bullish Percent Index is another useful tool in this regard and shows the percentage of stocks currently in bullish mode as a result of point-and-figure buy signals.
Analyzing the benchmark US indices, it is interesting to note that more than 61% of the stocks comprising these indices are still in buy mode according to point-and-figure signals.
Source: StockCharts.com
Zeroing in on the underlying economic sectors, a similar picture emerges, with Telecoms (58.8%) the least bullish.
Source: StockCharts.com
While the short-term indicators are flashing correction, the longer-term measures such as the Bullish Percent Index and 200-day moving averages are still in bullish mode. Until the primary trend indicators break down it looks like a correction in a bear market, but the uncertainty nevertheless warrants a great deal of caution.
