Brandon, I'm confused a little. After I read this and went to stock charts myself and put in $BPNYA, I came up with a Bull Confirmed on July 20th chart.
[url]http://stockcharts.com/def/servlet/SC.pnf?chart=$BPNYA,PLUADANRBO[PA][D][F1!3!2.0!!2!20]&pref=G[/url]

same chart....you see how it topped out at 80? That is historically high...and it followed some historic lows...the chart typically is not this volatile and seldom reaches much higher than 70 or below 30...

here's the thing....typically when it does go over 70 and reverses below 70 it is a clear sell signal....likewise a move below 30 to above 30 is a buy signal...In this case it hit 80 and stands at 77....just saying to watch carefully here as the risk reward situation has changed dramatically, which is why I'm suggesting hedging positions at this time..

This is not an active chart...it could stay at this level for years...or not....but it warrants attention now that it has reversed...

Just remember that 70 indicates more risk and lower reward, and 30 indicates less risk and higher reward...This indicator is the one indicator that Tom Dorsey said he would use if he had access to nothing else...it is THAT important...

Thanks for the explanation Brandon. I guess what I'm questioning really is the fact that the chart just gave it a bullish reading on July 20th. That wasn't long ago in the whole big picture. Just seems to early to go bearish after just going bulish less than 2 months ago.

Thanks for the heads up, and I'll be sure to pay attention...

Sheree, I know it is subject to interpretation, but the Dow Theory has been pointing to a reversal for 3 weeks now. We have seen it start in the financials in my opinion and the rest of the market usually follows.

the future is clear:

Here is the S&P 500 Bullish Percent Index (EOD) ($BPSPX). It's at an all time high! Be careful here people - the risk/reward ratio is historically not in your favor here.



S&P 500 Percent of Stocks Above 50 Day Moving Average (EOD) ($SPXA50R)

Interesting chart. Shows the volitility over the last couple of years. This shows it's over cooked big time now. Thanks for the heads up. I now understand why some are now calling that a correction is do.

This is crazy, this is crazy, this is crazy....

Stock Sentiment Falls Worldwide as Valuations Hit Six-Year High

Sept. 16 (Bloomberg) -- Investor sentiment deteriorated from Tokyo to Paris and New York on speculation a six-month rally in stocks has outstripped the prospects for earnings as indexes trade at the most expensive valuations since 2003.

Optimism for equities fell in seven of 10 countries in the Bloomberg Professional Confidence Survey. Users expect stocks to drop during the next six months in the U.S., Japan and Spain, while investors in Brazil and the U.K. were the most bullish. Sentiment had improved in all 10 nations in August.

The MSCI World Index has surged 64 percent since March 9 on signs the global economy is recovering from its first recession since World War II, driving valuations on the gauge of 23 developed countries to 27.3 times the earnings of its 1,659 companies, weekly data compiled by Bloomberg show. The measure of global stocks was trading at 10.8 times profit when the advance began, close to the lowest level since at least 1995.

“We would not be surprised to see a short-term pause in the rally,” said Lawrence Peterman, who participated in the survey and is the London-based investment director at Eden Financial Ltd. “Everyone is looking at the next earnings season in the U.S. at the start of October for the next indicator of what’s going on. If earnings don’t come through, then the market will look expensive.”

Earnings Slump

Profits for companies in the MSCI World tumbled 40 percent last quarter on average, Bloomberg data show. Earnings at U.S. companies in the Standard & Poor’s 500 Index slid 30 percent in the April-to-June period and will decrease 22 percent this quarter before rebounding in the last three months of the year, analysts’ estimates compiled by Bloomberg indicate.

Japan was the only country where sentiment turned from bullish to bearish by sliding below 50 in September, indicating users expect prices to fall in the next six months. Investors grew less certain that stocks will gain in France, Italy, Switzerland and Mexico, while respondents in Spain and the U.S. were more convinced of a drop, the data show.

The outlook for the U.S. slipped to 46.2 after climbing within 1 point of 50 in August, the survey conducted from Sept. 7 to Sept. 11 showed. The S&P 500 has surged 56 percent since March 9 to an 11-month high as reports on manufacturing and home sales indicated the longest American recession since the Great Depression may be over. The proportion of companies that beat analysts’ profit predictions matched a record, according to data compiled by Bloomberg.

G-20, Lehman

The gains pushed the S&P 500’s price to 19.3 times operating earnings from the past 12 months, the most expensive level since June 2004, weekly data compiled by Bloomberg show.

Valuations climbed as the Group of 20 countries committed $12 trillion to help end the recession, while the Federal Reserve has held its target rate for overnight lending between banks at near zero to unlock credit markets after the bankruptcy of New York-based Lehman Brothers Holdings Inc. last September.

“I would have thought we’d have some sort of a pullback by now because of the pace of this rally so far,” said Jason Cooper, who oversees about $2.5 billion at 1st Source Investment Advisors in South Bend, Indiana. “A lot of that rally has to do with the fact that our government and other governments outside of the U.S. have put a lot of fuel in the fire.”

The confidence gauge for Japan slid 12 percent to 47.3. The country’s Nikkei 225 Stock Average trades at 43.4 times the estimated earnings of its companies, the most expensive level among the world’s 20 biggest stock markets, data compiled by Bloomberg show.

Yen Strengthens

Japan’s economy expanded at a slower pace than economists projected in the second quarter, government data showed this month. The yen strengthened to the highest level since February against the dollar today, reducing the value of overseas sales at Japanese companies when converted into the home currency.

Spain was the only country besides the U.S. and Japan where respondents predicted declines for stocks, with the survey’s gauge slipping 1.9 percent to 39.3. Sentiment deteriorated the most among French investors, as the nation’s measure tumbled 12 percent to 50.8.

The U.K. had the biggest advance in the survey for the second straight month, climbing 5.3 percent to 63.8. The FTSE 100 Index has surged to the highest in almost a year as data showed British service industries expanded at the fastest pace in almost two years in August and house prices rose for a second month. The Bank of England said last week it plans to keep buying as much as 175 billion pounds ($288 billion) of assets to cement the economy’s recovery.

Recession’s End

Confidence in Germany’s DAX Index increased 1.1 percent to 50, after government data last month showed that the country unexpectedly exited a recession in the second quarter. Sentiment in Switzerland slipped 2.9 percent to 52 and Italy’s reading fell 4 percent to 60.4.

The measure for Brazil climbed 5.1 percent to 71.5, the highest of the 10 countries. The nation’s Bovespa Index has jumped 58 percent in 2009 on speculation a rebound in commodity prices and record-low interest rates will fuel growth in Latin America’s largest economy. Confidence in Mexico slipped 2.9 percent to 52.3.

http://www.bloomberg.com/apps/news?pid= ... zX3WQti4mg