Trader’s Narrative

I’ve never seen the bullish percent for so many sectors hit extreme oversold levels as now. Refer to my previous post for a review of how I use to time the market with bullish percent charts.

Lets start out with the bullish percent chart for the S&P 500 index:

The broad market proxy is now lower than it has ever been during the most recent bull market. The same can be said of the NYSE bullish percent and the Nasdaq bullish percent indices. With the former hitting the low 30%, a level it had only reached 6 other times since the early 1990’s. Each time we’ve seen this level, a significant market bottom formed.

I mentioned that the transports were approaching oversold bullish percent levels around 30%. Last week it hit its low of 15%. And now I hear that Buffett has been nibbling in the sector.

I was surprised to see the materials sector index so low:

But there it is, signalling an extremely oversold condition. The industrials sector bullish percent is just a tad lower to 13%:

And finally, one of the strongest sectors during this bull market, the energy sector, didn’t get away unscathed:

Looking through these sectors it is easy to spot that we are at an inflection point here. And with so many sectors oversold, it is convincing also that the general market has reached an exhaustion point in selling.

I left out one area of the market because it should be obvious, especially if you’ve been a regular reader: the financial sector. As I suggested before, the financial stocks has borne the brunt of the selling during this decline and their bullish percent chart as well as other technical indicators point to an amazing buy opportunity.