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Non-Tech : Dorsey Wright & Associates. Point and Figure
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To: Ms. X who wrote (2784)12/10/1999 12:05:00 PM
From: Ms. X  Read Replies (1) of 9427
 
DWA Reference Manual continued...

Chart Patterns

Chart patterns are the backbone of point and figure charting. The
formations accurately record the battle between supply and demand. A
study done by Professor Earl Davis of Purdue University concerns the
profitability associated with different chart patterns. The tables
are reproduced from A.W. Cohen's book, Three Point Reversal Method of
Point & Figure Technical Analysis. As you will see, the probabilities
are in your favor if you wait for a chart pattern to form before
making a stock commitment. Keep in mind that past performance is not
a guarentee of future results.

Bull Market Results
% OF TIME AVERAGE AVERAGE
FORMATION PROFITABLE GAIN TIME OF TRADE

DOUBLE TOP 80.3 % 38.7 % 11.5 MONTHS
TRIPLE TOP 87.9 28.7 6.8 MONTHS
SPREAD TRIPLE TOP 85.7 22.9 7.7 MONTHS
BULLISH TRIANGLE 71.4 30.9 5.4 MONTHS
BULLISH SIGNAL 80.4 26.5 8.6 MONTHS
BEARISH SIGNAL REVERSED 92.0 23.2 2.5 MONTHS
COMBINATIONS 79.5 36.0 8.0 MONTHS

Bear Market Results

% OF TIME AVERAGE AVERAGE
FORMATION PROFITABLE GAIN TIME OF TRADE
DOUBLE BOTTOM 82.1 % 22.7 % 4.7 MONTHS
TRIPLE BOTTOM 93.5 23.0 3.4 MONTHS
SPREAD TRIPLE BOTTOM 86.5 24.9 4.6 MONTHS
BEARISH TRIANGLE 87.5 33.3 2.5 MONTHS
BEARISH SIGNAL 88.6 21.9 4.9 MONTHS
COMBINATIONS 83.3 22.9 3.4 MONTHS


Chart Patterns

Double Top Triple Top Bullish Catapult

An X (up) column exceeds An X column exceeds two Combination of triple top
previous X (up) column. previous columns or buy signal followed by the
levels of resistance. double top buy signal.

45 45 X 45
X
X
X
X
40 40 X 40 X
X X
X X
X X B
X X X X
35 B 35 B 35 X O X
X X X X X X X X O X
X O X X O X O X X O X O X O
X O X X O X O X X O X O X
X O X O O X O O
30 30 30

Shakeout Bullish Triangle Bearish Signal Reversal

Stock makes two tops, Series of lower tops Series of lower tops and
then breaks a double and higher bottoms. bottoms. Quick reversal
bottom. This rids the Chart breaks one way up and stock breaks out.
stock of weak holders. or other. Take action No accumulation occurs.
Can buy on 3 box rever- on the breakout. 5 7 columns needed.
sal up. Shakeout is columns needed.
completed when the
triple top is broken.

45 45 45 X
X X
X X X
X X X
X X X X
40 X 40 X 40 X O X
X X X X X O X X
X O X O X X X O X O B
X O X O X X O B O X O X X
X O X O B X O X X O O X O X
35 X O O X 35 X O X O X 35 O X O X
X O X X O X O X O O X
X O X O X O O X
X X O X O X
X X O O
30 X 30 X 30

Double Bottom Triple Bottom Bearish Catapult

An O (down) column An O column exceeds Combination of the triple
exceeds a previous two previous columns, bottom sell signal followed
O (down) column The or levels of support. by double bottom.
simplest of all sell
signals.

45 45 45

X X X X
40 X 40 O X O X O 40 O X O X O
O X O O X O X O O X O X O X
O X O O O O O O O X O
O O S O X O
S O O O
35 O 35 O 35 S
O O O
O
O

30 30 30

Bearish Triangle Bullish Signal Reversal

Series of lower tops Series of higher tops and
and higher bottoms. bottoms. Quick reversal
Chart breaks one way down and stock breaks down.
or other. Take action No accumulation occurs.
on the breakout. 5 7 columns needed.
columns needed.

45 45

O X
O X X O
40 O X O 40 X X O
O X O X X O X O
O X O X O X X O X O
O X O X O X O X O X O
O X O O X O X O O
35 O X S 35 X X O X S
O O X O X O O
O X O X O
O X O O
O X O
30 30
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