On the financial website TheStreet.com, Jim Cramer mentions he watches two technical indicators. One technical indicator that is not mentioned that often is the Bull-Bear Ratio.
According to publicradio.org, "The bull-bear ratio is a weekly indicator that gets info from Wall Street insiders. Ratio analysts pull financial advisers to see what they're telling their clients. Bull if advisers think the market's on an upswing, bear if it's on a downturn."
Typically, there are two numbers. The Bull Percentage and the Bear Percentage. Some people like to use the Bull-Bear Ratio by taking the Bull Percentage (such as 41.6%) and the Bear Percentage (33.7%) to come up with a ratio such as 1.23.
The idea behind the Bull-Bear Ratio is that as the Bull Percentage (or Bull-Bear Ratio) goes down to a very low level, this means that the Bears (those who think the market will go down) outnumber the Bulls (those who think the market will go up). Too many bears means that a lot of money is already on the sideline, and the contrarian says that the money will go back in the market. So the Bull-Bear Ratio is used as a contrarian indicator.
Jim Cramer says the Bull Percentage is now at 36%, which is a buy signal in his book.
Finding Bull-Bear Ratio on the Web
Investors Intelligence publishes the data, and here is some recent information from Market Harmonics.
Bullish Percentage on S&P 500
Besides the Bull-Bear Ratio, alternatively, one could use the Bullish Percentage on the S&P 500 ($BPSPX) provided by stockcharts.com.
In the chart above, when the Bullish Percentage of the S&P 500 goes below 50%, start looking for an intermediate bottom. Notice, that the $BPSPX can go down much more below 50%. Today, the $BHSPX is at a low 32.80% (look at the top window of the chart above, right hand side).
Stockcharts.com Definition of Bullish Percentage
According to Stockcharts.com, "The Bullish Percent Index (BPI) is a popular market breadth indicator that is calculated by dividing the number of stocks in a given group (an exchange, an industry, etc.) that are currently trading with Point and Figure buy signals, by the total number of stocks in that group. Bullish Percent levels that are above 70% are considered overbought, whereas levels below 30% are considered oversold. Strong buy signals occur when the Bullish Percent Index falls below 30% and then reverses up by at least 6%. Conversely, promising sell signals occur when it goes above 70%, and then reverses down by at least 6%. "
Other Bottom Indicators
The Bullish Percentage of the S&P 500 is just one of a collection of bottom indicators. Other bottom indicators include:
- Stocks Above 50 and 200 Day Moving Average
- Put-Call Ratio
- New High-Low Ratio
- Ratio of stocks above 200 day moving average to stocks above 50 day moving average.
There is also more information here on overbought, oversold, including the other technical indicator that Jim Cramer mentions, the S&P Oscillator.
Today's Chart with Information Above