Hi mph......It's good to know that somebody is reading my Chartcraft Summaries. Chartcraft analyzes p&f data on a daily basis and the results are most helpful for navigating through the investment landscape.
Now to your questions. This week, P-Com gave a relative strength (RS) sell signal at $17 1/2 on it's p&f RS chart. There have been discussions of the importance of RS on this thread and I suggest you might take a look at them. What the signal suggests is a period of under performance for the stock for a good while to come. The stock should now be viewed more as a trading stock, not as a longer term investment. This is not to say that the stock go up in price, it just means that the stock will likely underperform the Dow and underperform stocks with bullish RS as well.
As for MDCO, that stock's RS was already on a sell signal and it RS p&f chart moved to a column of O's, a down column. RS charts have much less action than a stock's regular p&f chart. Sometimes there can be as few as 1 or 2 notations on the chart in a year, of course, with more volatile stocks, there is more action, so a change in columns is significant. Chartcraft notes these changes and again, within the context of it's already bearish RS, this move to a column of O's suggests that the stock is in for a period of under performance.
So how does an investor use the information above. Well, Tom says in his book that an investor should always try to stack the odds in ones favor. That would mean that if you like the oil service sector, find stocks with bullish RS that are trading above their bullish support line. Of course other considerations such as the market (as judged by the NYSE bullish %), and the sector bullish % should be taken into account as well.
Anyway, I hope this helps in some small way.
Bruce |
