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Non-Tech : Dorsey Wright & Associates. Point and Figure

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To: Ms. X who wrote ()	1/26/2000 9:39:00 AM
From: Tommy Dorsey	Read Replies (7) of 9427

I posted this on the QCOM thread today. I'm generally found on Dorsey, Wright P&F thread. This morning I had a conference call with a brokerage firm and covered QCOM. On our charts we have a bell curve for each stock depicting its normal distribution. Think back to stat 101 in college. Three standard deviations above trend we would call 100% overbought and visa versa. Center of the curve we would consider normal. QCOM was 100% overbought at $198 and the stock will open today dead on the center of its curve. In other words I would consider QCOM very normal at this price. It's a regression to mean situation. Statistically what is under evaluation will stay within one standard deviation above or below trend 68% of the time. Since each standard deviation in QCOM is 22 this means the probability is the stock will remain within a range of 158 and 108. These levels have obvious option considerations. This discussion was for intermediate consideration. For trading considerations we shorten the time frame and the 100% oversold level is $121 which would be a strong call buying level. Tom Dorsey

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