Many investors make
the mistake of trying to follow too many indicators. The more
you follow, the more confused you will become. Our most important
concept is the Bullish Percent discussed in the first part of
this Lesson. DWA also follows an OTC Bullish Percent Index because
of the plethora of high-tech, over-the-counter stocks we deal
with each day.
The OTC Bullish Percent Index
is a compilation of the percentage of over-the-counter stocks
that are on Point and Figure buy signals. The chart is read the
same way as the NYSE Bullish Percent Index. When the index is
rising in a column of X's, you have the football. Conversely,
when it is in a column of O's, the OTC market has the ball. The
same two lines of demarcation exist at the 70% and 30% level.
Like the NYSE Bullish Percent, it isn't often the
Index reaches below the 30% level except in extreme market conditions.
It is more often that it bases around the higher 30's or lower
40's. This is also true near the 70% level. Most often the OTC
Bullish Percent tops out in the 60's. When learning the risk
levels you must understand, as with all of PnF charts, that this
is an art, not a science. The NYSE and OTC Bullish Percents often move together
but not always. This is why it is important to evaluate them separately
for the markets they represent.
Optionable
Bullish Percent The Optionable Bullish
Percent is a shorter to intermediate term indicator comprised
of bigger name/cap stocks in the NYSE and OTC that have options listed against them. There are more than
2500 stocks in this index.
It works just like the NYSE BP
and often changes in the Optionable Bullish Percent will be followed
by a change in the NYSE Bullish Percent. That is to say if the
"OPTI" turns negative we watch the NYSE BP closely to
see if it is going to turn negative and vice versa. The same overbought level begins at 70% (Red Zone)
and the oversold level begins at 30% (Green Zone).
