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Strategies & Market Trends : Point and Figure Charting
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To: HighTech who wrote (5758)8/12/1998 12:00:00 PM
From: Ms. X  Read Replies (2) of 34811
 
The rally was very narrow HiTech.
I've explained this before but happy to do it again.

If a stock is on a buy signal, it has already given its vote towards the NYSE BP. It doesn't matter if it gives 27 buy signals in a row, it only counts as 1. It is either on a buy or a sell signal.

During the rally our short term indicators did reverse up and we played the large caps for trades. We noticed it was only the large caps participating in the rally. The broader averages were still moving down.

For instance. You have 30 stocks. 5 of those stocks are going gangbusters and making new highs every day while the other 25 are making new lows. Where is it weighted? To the downside. Unless you are invested in specifically those 5, your portfolio got hit. That is what the NYSE BP represents.

The rally was brief and the large caps benefited but Mr. Jones portfolio didn't.

You can always do trades in any market. The point is knowing where the broader market is headed. We've been right since April. Then 70% of stocks were on buy signals. When the NYSE BP reversed, we went to defense. Now only 28% of stocks are on buy signals. 42% of the stocks reversed on their trend charts and gave new sell signals. Not good.

Take care,

jan I am
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