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

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To: Tulvio Durand who wrote (8358)	6/12/2000 1:04:00 PM
From: Ms. X	Read Replies (1) of 9427

Hi Tulvio... I'm late on the BRL question regarding FLC. The stock did break the BSL but then reversed back up quickly to a buy signal above where the BRL would have resided. Also, the top column of X's that would have started the BRL isn't really defined it seems. There have been many charts where a BSL is broken but the stock continues to trade within a "base", support areas etc and then reverses back up. This reversal back up creates a buy signal and exceeding the level where a BRL would be drawn. 24 See, the line can't really X x 23 be drawn X O x 22 * <-- 5 O x 21 4 * <-- X 6 20 -----------------------X O X --X ------X 19.5 X X O X O X O X X 19.0 ----------X ------X O X O X O X O X O X -------- 18.5 X X O X O X O X O O X O X * 18.0 ------X O X O X --X O --O ----* O X O * ------- 17.5 X O X O X O X * O X * 17.0 ------X O --O X O X base area O * ------------ 16.5 X O O X * * 16.0 ------3 --------O X --* ------------------------ At the bolded X the * can't be placed and the BRL runs right into the current columns. So, being that it continued in a solid support area and immediately reversed up - and the BRL didn't have a strait line, a new BSL was created. I was trying to think of another stock that did this but my mind is blank right now. This really doesn't bend the rules. The fact that it broke the original BSL is important of course but we always consider the support area around that break. If there is tons of support it is reasonable to hold the stock until that base' is broken - if owned. For a purchase you would want to wait. If trading you may want to sell but a longer term trade or or investment, especially if everything else looks good, can be held. Often times you see stocks like this, with good support, break the BSL and bounce back up. Hope this makes sense.

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