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Strategies & Market Trends : Point and Figure Charting

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To: dr. z who wrote (24934)	7/18/2000 9:34:47 PM
From: Atin	Read Replies (2) of 34808

Hi Mark, It is sort of tedious to explain -- it is almost easier to actually do it than explain how to do it but I'll try (which is why I started putting the vertical counts on my charts when I created QPnf, horizontal counts are a little harder but I'll have that on the charts one of these days too). Bullish Vertical count: Find the first breakout column (column of Xs that is higher than the previous column of Xs) following a sell signal (column of Os that is lower than the previous column of Os). Count the number of boxes in that column, and multiply by the reversal amount (usually 3) and then multiply by the box size. For example, using your LDP, the last column of Xs following a sell signal was the one that follows that lowest column of Os with the 6 at the bottom. That column of Xs has 11 Xs. 11 x 3 (reversal) = 33. Box size was 0.50 which gives us 11 x 3 x 0.5 = 16.5. Add that to the bottom of the column which was 9.50 and we get 26 for a vertical count. The idea is that we're trying to calculate the momentum that is driving this stock up and projecting that first explosion into the future. Bearish vertical count is similar but we count using the first column of Os that is a sell after the last buy signal. The difference is that you multiply by 2/3 of the reversal size (or just plain 2 usually since the reversal size is 3) instead of the reversal size. Horizontal count is where you count the number of columns in the base of the move, e.g. in LDP the widest part of the base is 16 columns. Multiply by the reversal amount, in this case 3 and then by the box size, in LDP's case 0.5. Add the total to the bottom of the base, in LDP's case 9.00. So we get (16 * 3 * 0.5) + 9.0 = 33. Again, the idea is to project the price based on the consolidation that has happened in the stock. None of this is guaranteed obviously -- this is the stock market after all, it was created to prove us wrong when we think we have it figured out!

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