The last few weeks Mr. Market has been on its heels as sellers overwhelmed buyers putting supply in control of the market.

Nowhere can this be seen more clearly than in the NYSE Bullish Percent Index (BPI) – an oscillating technical market indicator that uses X’s and O’s as a means to illustrate market breadth and participation.

The indicator moves between buy or sell signals – acting as a great tool to identify market strength or weakness in a way that can’t be seen in the DOW or S&P 500 Index.

When the chart is in a column of “X’s” it’s a signal that more and more stocks that trade on the NYSE are moving higher and are in uptrends.

Conversely when the chart flips to a column of “O’s”, supply is in control, with more stocks selling off and falling through key support levels on their individual charts.

Here at RWM, we’re keeping a close eye on the NYSE BPI, because for the first time since February’s market rout, the indicator just flipped back to a sell signal – flashing a warning signal for market participants.

However, Monday’s strong rebound in small, mid and large cap stocks may be signaling a short term bottom for stocks.

So, while our longer term NYSE BPI is signaling a cautious tone, shorter term indicators, such as the NYSE %10 week and the NYSE %30 week charts (often used in conjunction with the NYSE BPI) both show strong demand for stocks returning . This is important, because we often see reversals in the 10week and 30week prior to changes in the longer term NYSE BPI.

So the question is do market participants have enough conviction in the current investment climate to push the major NYSE BPI back into a column of “X’s” and ultimately give the “all clear” signal – returning the NYSE to a buy signal. Or, will the short term uptick in demand fade away, sending the %10week and %30week oscillators lower, joining the longer term chart.

Only time will tell. We will be keeping an eye on these three indicators for an insider’s view of what is happening in the market.