Lesson on P&Fing and info on DJIA too - ohh, ahhh...
Couple of questions this week on how we chart the movement of stock.
Let's say you have XYZ chart and it is in a column of X's at 50.
At the end of the trading day your first question is "did XYZ trade
to 51?" If yes, put another X REGARDLESS of where it traded down
to during the day. (If it was a big enough move for a reversal down
the next day, take note) If it did not trade to 51, you THEN ask
yourself, "did it trade low enough for a three box reversal (47)?" If
yes, add three O's and a new column. If you cannot answer yes to
either question, you do nothing and move on.
I'm going to use the DJIA chart for examples.
Today's action.
8800 8
8750- ----O ---------
8700 O X
8650 O X O Top
8600 O X O X <--Today it traded as high as 8600 on the chart.
8550 O X O X We added an X because it was in X's from yesterday
8500----- O X O X --It doesn't matter how low the Dow went today we
8450 O X O X answered our first question. "Did it trade high
8400 O O X enough to close another box up". Yes
8350 * O
8300 *
Tomorrow possibility 1
8800 8
8750- ----O ---------
8700 O X
8650 O X O ? <-Our first question tomorrow after close will be
8600 O X O X "Did it trade as high as 8650 to close another box
8550 O X O X up?" If yes, we add an X. Still it doesn't matter
8500----- O X O X --how low it traded in the day. Why? Because we are
8450 O X O X in a column of X's.
8400 O O X
8350 * O
8300 *
Tomorrw possibility 2
8800 8
8750- ----O ---------
8700 O X
8650 O X O Let's say the Dow trades to 8649 as a high and
8600 O X O X 8449 as a low. Our first question is again "Did
8550 O X O X it trade high enough 8650 to add another box up?"
8500----- O X O X --Answer, no. THEN we ask "OK, did it trade low
8450 O X O X enough 8450 to add a three box reversal down?"
8400 O O X Answer, no. So, we would do nothing.
8350 * O
8300 *
Tomorrow Possibility 3
This by the way is the most probable for tomorrow. Dow closed only
9.5 pts away from a reversal.
8800 8
8750- ----O ---------
8700 O X As above, we would ask if it traded high enough
8650 O X O to close a box up at 8650. If the answer is no,
8600 O X O X we would ask if it traded low enough for a three
8550 O X O X O box reversal down 8450. Answer, yes. We can
8500----- O X O X O now add three new O's to the chart.
8450 O X O X O
8400 O O X
8350 * O
8300 *
Hope this helped :-) |
