Investing during a bear market can be a lot like taking a road trip with young children. Just as the children seem to continually yell “Are we there yet?” from the back seat during a road trip, investors seem to continually ask “Have we reached the bottom yet?” during a bear market.
Trying to identify the bottom of a market downturn seems to be a favorite activity among investors and analysts—especially in this day and age when we have 24-hour news channels constantly telling us how bad things are. Unfortunately, the truth is there is no sure-fire way to guarantee an accurate prediction of when the bottom is going to arrive until after it has arrived.
However, there are a few tools you can use to help you put the odds in your favor in your analysis. The S&P 500 Bullish Percent Index is one of those tools.
The S&P 500 Bullish Percent Index is a point-and-figure chart that derives its value from the point-and-figure charts of the 500 stocks that comprise the S&P 500. Here’s how it works:
– If an increasing number of those 500 stocks are showing buy signals on their point-and-figure charts, the S&P 500 Bullish Percent Index will be moving higher.
– If an increasing number of those 500 stocks are showing sell signals on their point-and-figure charts, the S&P 500 Bullish Percent Index will be moving lower.
S&P 500 Bullish Percent Index