IDTI has given a high pole sell signal at 12.5. This is a trade sell signal. What it is is a long pole of X's (18 boxes) and then a three box reversal from there. We consider it a sell because it has moved up so much without any pullbacks. We find many high poles decline 50% or more from their top - not always, but most.
It also could reverse up setting a close stop which should be used with the sector negative.
My humble advice would be to stop up your positions during this rally. Don't get too greedy.
Congrats on the percentage by the way, that is excellent!
PnF is one of if not the easiest TA to learn. Anyone here would back me up on that. Tom's book is excellent (We call it the Bible here or THE Book) and is an easy read that walks you through step by step. After reading the book you will have a good grasp of the concept. Hang with this thread you will too.
What is most beneficial is to understand market risk and sector rotation. You have already gotten a good lesson today and if you understand even a little bit the concept of what I discussed, you have an example of how easy PnF is. It makes sense and once you read THE Book a light will come on and you will "get" it. Understanding how the market, how supply and demand works, answers 90% of your questions. Then when you look at the charts you know what the risk is and how to play the positions.
For instance, knowing what you know now. Would you buy AMAT at market price if you knew the sector had reversed down at 80% into Bear Alert and the market indicators were negative?
I bet you said "no" to yourself. See, you already have it.
How about this. Would you buy AMAT at market if the sector had just reversed up from over sold area of 8% and the market indicators just turned positive?
I bet you said "yes".
And you didn't even have to look at the chart.
Of course one would analyse the AMAT chart but I think you get the point.
PnF saves you from buying when things are just starting to fall apart which coincidentally is when things look the best, and gets you into the market when things are starting to turn positive - which also coincidentally is when things look the worse.
I hope you get the book, the best price is at Buy.com. Point and Figure Charting by Tom Dorsey.
After reading and if you like it, sign up for the free two week trial. Also ask questions here. The cool thing is those wanting to learn PnF, Piffing we call it, have this tutorial right here on SI.
Love to have you on board. Good luck with your studies.
Jan I am |
