Hey Les,
Good to see a true T&A(technical analysis) man on the P&F thread. Point & Figure charting is an excellent addition to any repertoire of classic T&A indicators. And also a superb stand alone method for adding T&A to one's fundamental analysis. Speaking of classic, P&F has been around for a long time. Most of the people on this thread use Tom Dorsey's book on P&F and get their charts from the Dorsey Wright web sight: dorseywright.com
Based on P&F charting, a stock is (amoung other things) either on a buy signal or a sell signal. The Bullish Percent takes about 2000 stocks from the NYSE. If all of them are on a buy signal then the Bullish Percent is 100,(100% of the stocks are on a buy signal) If only 18% of those stocks are on a buy signal, then the Bullish Percent is 18.
Someone at some point noticed that the markets often reversed back down as a large percentage of the stocks reached buy signals. To keep it simple, when over 70% of the stocks are on buy signals, P&F people start thinking market top. (Actually, you make a historical chart of the rising and falling of the bullish percentage, and you take note of the levels in the past where the market has topped, bottomed, etc.)
That is the basic idea, however there is quite a bit more to it than that, like reversal indications, multiple chart tops and bottoms, etc. I highly recommend it.
Cheers, RS
(Jan, did I get that right?) |
