{"id":43,"date":"2025-04-16T13:43:12","date_gmt":"2025-04-16T13:43:12","guid":{"rendered":"https:\/\/thetradingdictionary.com\/index.php\/2025\/04\/16\/bullish-percent-index-confirms-short-term-rebound\/"},"modified":"2025-04-16T13:43:12","modified_gmt":"2025-04-16T13:43:12","slug":"bullish-percent-index-confirms-short-term-rebound","status":"publish","type":"post","link":"https:\/\/thetradingdictionary.com\/index.php\/2025\/04\/16\/bullish-percent-index-confirms-short-term-rebound\/","title":{"rendered":"Bullish Percent Index Confirms Short-Term Rebound"},"content":{"rendered":"
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One of my favorite market breadth indicators remained in an extreme bearish reading through the end of last week, standing in stark contrast to growing optimism after last Wednesday’s sudden spike higher.\u00a0 Monday’s session saw the Bullish Percent Indexes cross above the crucial 30% level for both the S&P 500 and Nasdaq 100.\u00a0 While I remain skeptical of meaningful upside without further confirmation, this bullish rotation does seem to confirm a short-term tactical rally for stocks.<\/p>\n

Bullish Percent Index Shows Improved Breadth for S&P 500<\/h2>\n

The Bullish Percent Index uses point & figure charts to analyze the percentage of stocks in a universe that are in uptrends.\u00a0 By looking at the most recent buy or sell signal on each individual point & figure chart, the indicator can help validate when a critical mass of stocks have rotated from a bearish phase to a bullish phase.<\/p>\n<\/p>\n

At the end of September 2024, the S&P 500 Bullish Percent Index showed a reading just above 80%.\u00a0 By early December, the indicator was down to around 70%, and at the February 2025 high had reached 55%.\u00a0 Last week, the S&P 500 Bullish Percent Index was just above 10%.\u00a0 Indeed, almost all of the S&P 500 members were in confirmed point & figure downtrends.<\/p>\n

Breadth Surge Similar to Previous Lows<\/h2>\n

The Bullish Percent Index for the Nasdaq 100 as well as the S&P 500 both spiked higher by the end of last week following the latest changes to US tariff policy.\u00a0 As of Monday’s close the Nasdaq 100 Bullish Percent Index had reached 39%, up from 6% a week earlier.\u00a0<\/p>\n<\/p>\n

We can see four other times in the last two years where the Bullish Percent Index has touched the 30% level, and in three of the four times this reversal marked a significant low for the Nasdaq 100.\u00a0 The most recent observation was last month, which saw a brief upswing before the latest downturn for the major equity averages.<\/p>\n

So for both the Nasdaq 100 as well as the S&P 500, a move back above the 30% threshold appears to indicate a decent chance at a tradable move higher.\u00a0 But will that upswing necessarily lead to sustainable gains?<\/p>\n

Long-Term Review Yields Mixed Results<\/h2>\n

Let’s take a longer look back to the year 2000 and see what has happened following a move below the 30% level for the S&P 500 Bullish Percent Index.\u00a0 Now we can see that while major lows often coincide with the indicator moving back above 30%, we can also see plenty of times where an initial bounce higher was eventually met with further selling.<\/p>\n<\/p>\n

Note the extreme low readings in June 2022, August 2015, and January 2009.\u00a0 Even though there was an initial swing higher in all three cases, the market made a new swing low before achieving an eventual bottom for the bear cycle.<\/p>\n

With the Bullish Percent Indexes rotating back to a more neutral reading this week, we are seeing plenty of signs of a tactical rally.\u00a0 We may even see our Market Trend Model<\/a> turn bullish on the short-term time frame as early as this Friday.\u00a0 But with the major averages still making a clear pattern of lower lows and lower highs, we feel further confirmation is necessary before declaring any sort of “all clear” for US stocks.<\/span><\/p>\n