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Stock futures in the red

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Stock futures are lower this morning as S&P futures (sp01z) are down 7 points to 1,036. NASDAQ futures (nd01z) are lower by 20 points to 1,155 and Dow futures (dj01z) are down 76 points to 8,765. Fair value for the S&P 500 today is $2.92. HL Camp and Company has their computers set for program buying at $4.11 and set for program selling at $1.14. Fair value for the NASDAQ-100 today is $6.74

NASDAQ-100 Bullish percent in X's

Last week, the bullish percent indicator for the NASDAQ-100 ($BPNDX) reversed back into a column of X's from the 0% level and currently reads 13%. In brief, at one point "0" of the stocks comprising the NASDAQ-100 were showing point and figure buy signals and this week we begin with 13 stocks showing a supply/demand buy signal.

NASDAQ-100 Bullish % Chart - 2% box scale

Friday's close had the bullish % for the NASDAQ-100 reading 13%. This indicator ($BPNDX) is often times the first to reverse higher and lower, giving traders a "heads up" to some strengthening taking place for the internals of the market. At current levels, it's more important for traders/investors that are short some stocks in this market to be lowering their stops, especially on stocks that have moved significantly lower, where profits are at risk.

For bullish traders, they still want to be cautious and using some relatively tight stops on any positions at this time. The 3-box reversal higher to the 6% level created the status of "bull alert" and it would take a reading of 52% at this time to see a market status of "bull confirmed." I think we could eventually see this indicator get back near the 24% level, then possibly get a reversal back lower (in O's), and then get a reversal back into X's once again after a pullback. For now, the best strategy is to "dip your toe" in the water with one or two bullish trades, keep a tight stop. If the short-term bullishness turns into a longer-term move, then profits will grow. Traders that will use a tight stop or move that stop up under an advancing stocks should be positioned to profit should the stock their trading pull back. While the 13% reading is a sign that there is some internal repair taking place, the 13% reading is also an indication of just how weak this part of the market is.

Jeff Bailey
Senior Market Technician

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