THE SIX KEY P&F SIGNALS YOU NEED TO KNOW
There are more than a dozen P&F signals, but we'll only cover the six basic ones here. The three general types of basic signal are called: Alert, Correction, and Confirmed.
You'll sometimes see these signals referred to as "pairings". This is because, for every bullish manifestation of a signal you'll find a bearish counterpart.
The six P&F signals we're going to describe are:
1. Bull Alert and Bear Alert...
2. Bull Confirmed and Bear Confirmed...
3. Bull Correction and Bear Correction.
These signals are a bit more sophisticated than Buy or Sell signals. That's because they're generated based on a combination of circumstances -- such as, what "region" of the chart are we in... what type of column did the chart "flip to"... and was the chart on a Buy or a Sell signal at the time of the reversal.
A Bull Alert is generated when a BPI chart in oversold territory (below 30%) flips to a column of X's. You can see this "status" on the BPI chart for the Restaurants sector (one of the 45 sectors we track at True Market Insiders).
This signals that the market may be forming a bottom. (In this case, it clearly was).
It's a bullish indication because, for this P&F chart to flip to X's, an additional 6% of stocks in the S&P would have had to have gone on Buy signals while the chart was oversold (washed out). The chart is not yet on a Buy signal. but the smart investor should be "alert" to the possibility that one may be coming.
The Bull Alert's bearish cousin, the Bear Alert signal, forms when the chart is in "overbought" territory (above 70%, shaded in red) and then flips to a column of O's.
Here's an example of a Bear Alert from the Sector BPI of the Real Estate sector.
Again, this is not a Sell signal, but a movement that could be foreshadowing further significant declines.
We see a Bull Confirmed signal when the chart is already on a P&F Buy signal and also in a rising column of X's. Not surprisingly, the Bull Confirmed signal is considered the strongest status designation.
We can spot a Bull Confirmed signal on this BPI of the Electronics sector:
If Bull Confirmed is the strongest designation, Bear Confirmed is, as you might expect, the weakest designation.
We see a Bear Confirmed signal when a BPI chart is on a P&F Sell signal while in a falling column of O's.
Like in this BPI of the Drugs sector...
A Bull Correction signal occurs when the BPI is on a Buy signal, but the chart itself is in a column of O's, that is, declining. Of course, the chart will stay on its Buy signal until (if) the current column of O's falls below the previous column of O's. The reversal into O's is considered a correction within the larger, bullish trend.
In the BPI of the Biomedics Genetics sector, below, you can easily see that the chart is on a Buy signal and that the most recent column, at the far right, is in O's.
Finally, we come to the sixth BPI signal.
If you've been following along, you'll almost definitely be able to say what a Bear Correction signal looks like. It's a chart in a column of X's while on a P&F Sell signal.
Here's an example, from the Leisure sector.
Again, these are the basic BPI signals.
We'll look at some of the others in the in the future.
Until then, here's some excellent news...
If you missed Chris Rowe's investor briefing this past Tuesday -- where he shows how you can "reset" your retirement...
We've posted a replay of it online.
We've also had the event transcribed (charts and all!) in case you'd rather read what Chris had to say.
Either way, just click here now to access the recording and the written play-by-play.
Thanks as always for reading.
It's good to be back!
Bill Spencer
Editor-In-Chief, True Market Insiders
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