What information can we glean from the Bullish Percent Indicators (BPI) this week? Pay attention to our primary index, the NYSE. When we examine the performance of individual sector ETFs with respect to the broad market (VTI) not many are outperforming the broad U.S. Equities ETF.
BPI of Indexes: Our primary BPI index, the NYSE, actually increased in the number of stocks showing a bullish Point and Figure graph. Only the DJIA dropped in value and that was likely only one or two stocks due to the small number of holdings in that index. All of the indexes remain in the hands of offensive teams and we now see every index positioned in the over-bought zone. When investors see every index above the 70% line it is time to be cautious in our buying. Patience and caution is what I am taking away from this market.
Sector BPI: There were no significant changes this week that move the ball either to the offensive team in the case of Utilities, or over to the defensive team in the case of all other sectors. What I take away from the following data table is the number of sectors that are over-bought. I keep waiting for that ten to fifteen percent correction. We could well make it through the summer without such a correction.
Early next week I will run a new ranking of sector ETFs to see how they compare with the broad U.S. Equity ETF, VTI. Only three ETFs, VCR, VFH, and VHT, recently matched the performance of VTI.