{"id":19726,"date":"2022-05-16T07:30:53","date_gmt":"2022-05-16T11:30:53","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19726"},"modified":"2022-05-16T07:30:53","modified_gmt":"2022-05-16T11:30:53","slug":"this-critical-indicator-looks-hopeful","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/this-critical-indicator-looks-hopeful\/","title":{"rendered":"This Critical Indicator Looks Hopeful"},"content":{"rendered":"

Amid last week’s chaos, a little bit of hope showed up in a critical chart.<\/p>\n

The Bullish Percent Index for the financial sector (BPFINA) just turned higher from oversold conditions.<\/p>\n

Meaning that we now have a buy signal for the banking stocks.<\/p>\n

And, since the action in the banks tends to lead the action in the broad stock market, a BPFINA buy signal could mean we’ve seen the worst of the recent stock market decline…<\/p>\n

Take a look at this chart of the BPFINA…<\/p>\n

\"\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

Long-time readers know that a bullish percent index<\/strong><\/a> (BPI) shows the percentage of stocks in a sector that are trading in bullish<\/strong><\/a> technical patterns. It’s an easy way to measure overbought and oversold conditions for a sector.<\/p>\n

Typically, a reading above 80 – meaning 80% of the stocks are trading in bullish technical patterns – indicates a sector is overbought. Readings below 30 indicate oversold conditions.<\/p>\n

Buy and sell signals occur when a BPI reaches extreme levels and then reverses.<\/p>\n

For example, when a BPI rallies above 80 and then turns lower, it generates a sell signal. When a BPI dips below 30 and then turns higher, that’s usually time to buy. At least… those are the general rules.<\/p>\n

But it’s not a perfect indicator.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The BPFINA turned higher from oversold conditions earlier this month. That buy signal was negated a few days later when the BPFINA dropped to a lower low. That led to a deeper decline in the banking sector and continued selling pressure in the broad stock market.<\/p>\n

However, last week, the BPFINA dropped to its lowest level of the year (right blue arrow) – meaning the financial sector was more oversold than at any time in the past twelve months.<\/p>\n

It turned higher on Friday… so, we have another buy signal.<\/p>\n

Of course, there’s no guarantee this one will play out. But it’s rare to get two failed signals in a row. So, I like the odds.<\/p>\n

The BPFINA buy signal back in March<\/a> led to a 10% rally in the KBW Bank Index (BKX) in just two weeks. And that move went along with a 10% rally in the S&P 500 during the same time frame.<\/p>\n

The BPFINA is more oversold today than it was in March.<\/p>\n

So, I suspect whatever rally or bounce we get from this setup will be even stronger than what we saw in March.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

In today’s mailbag, Jeff Clark Trader<\/em> member Frank shares his thoughts…<\/p>\n

\n

Jeff, I always thought that a naked put is a very dangerous strategy that can result in a big loss of capital or (if I’m lucky) maybe a big profit! <\/p>\n

Nice to be back with you again. I’ve been losing money trading in this volatile market. I was lured in by your great price of $19.95 and hope you can get me back on the winning trail.<\/p>\n

– Frank S.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming \u2013 and send us any questions \u2013 at feedback@jeffclarktrader.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s a good setup for a buy signal…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-19726","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19726"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19726\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19726"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19726"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19726"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19726"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}