Market comments, such as the ones on this page, usually quote brokers saying something like 'stocks rose on expectations the Federal Reserve would leave US interest rates on hold' or 'the market was down on fears inflation is picking up'. Occasionally, however, a broker tells the truth. Asked by a reporter why the market rose, a tetchy dealer will snap back 'because there were more buyers then sellers.' This is no help to the poor reporter, who has to satisfy his editor with a plausible account of the day's trading. But it is a far more accurate explanation than the outlook for interest rates or inflation. It is the tension between buyers and sellers that moves markets, which is why so many traders rely on technical analysis, which tries to gauge buying and selling interest by detecting recurring patterns in the way prices change. The trouble with most types of technical analysis, however, is that they follow trends slavishly and so tend to give buy signals when the market is at its peak and sell signals when it is in a trough. Happily, there is an exception: an adaptation of point and figure charting, the oldest type of technical analysis. Point and figure analysis was devised more than 100 years ago by Charles Dow, who lent his name to the Dow Jones Industrial Average. As a stock rose by each unit of price, he marked an 'X' in a column of graph paper. If it reversed direction and fell three units, he moved to the next column and started marking 'O's. Whenever a column of 'X's rose above the top of the previous column of 'X's, he took it as a buy signal. If a column of 'O's dropped below the previous one, he sold. The technique was simple, straightforward - and very often it worked. Over the years, the method was refined, notably to give an indicator known as the bullish per cent index. This is simply the ratio of stocks in a market displaying point and figure buy signals. The idea behind the bullish per cent is elegant and powerful. If the index exceeds 70, that is, if 70 per cent of stocks are showing buy signals, then the market is looking dangerously overbought. Most of the potential buyers are already long, and the market may be primed for a fall. Equally, if the index is below 30, the market is oversold and may be due for a rally. With the Hang Seng Index now trading at its highest for more than 6? years, it is interesting to see what the bullish per cent index tells us about the Hong Kong market. Right now, only 16 out of the Hang Seng's 34 constituents are showing buy signals, which gives a bullish per cent of 47, indicating that the market is a very long way from being overbought. Alas, there are some weaknesses in this measure. For example, it only covers index constituents, not the whole market, and it does not account for the unequal weightings of individual stocks in the index. The main flaw is that this quick reading is only a snapshot. It tells us where the bullish per cent is now but not where it has just been. For example, it does not tell us whether the bullish per cent has just rolled over and dived from overbought territory, which would be the biggest and loudest sell signal an investor could hope for. Nevertheless, some comfort can be derived from looking at the equivalent charts for the US stock market, which Hong Kong's generally tracks. At the moment, the bullish per cent index for the New York Stock Exchange is at 66 and showing a clear buy signal. In other words, although the index is approaching levels at which investors should be getting nervous, it is not there yet and the market still has room to rise. It may be stretching a point to extrapolate the same reading to Hong Kong. But at least it shows there are still more equity buyers out there than sellers, which means the bulls may have further to run yet.