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Strategies & Market Trends : Point and Figure Charting

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To: SE who wrote (13651)	2/8/1999 8:51:00 AM
From: james ball	Read Replies (3) of 34809

Scott lets answer some questions. SE who already repsonded has some good comments and it is apparent he understands this well. Don't try to pin everything down like this is a science. It is an art and is only for those who want to put their thought process into it. The higher the BP the higher the risk. Bear confirmed from 50% is less risky than Bear Alert from 70%. Although like SE said in his comments to you a 0 reading in the BP does not mean that the decline is over. It simply means that every stock underlyng the NYSE has been visited by sellers. The probability is the selling is nearing an end but nothing suggests the selling is over until the index reverses up. 1987 came in two pieces. Early inMarch there was a mass exodus form the interest rate sensitive stocks which cuased the UTIL BP to collapse early and go below 30% before anything else. Institutions looking for some sort of yield went for the oil stocks. Since the oil stocks are heavy in the Dow and S&P they rose to new highs. The BP also revesed up in June and rose to a LOWER TOP in August while the Dow Jones went to a HIGHER TOP. The next reversal back to Bear Alert in September was serious. Not only Bear Alert reversal from 68% but from a lower top. We went to defense on Sep. 4 and that saved my company in 1987. We avoided the crash. By November the index has reversed from the 6% level and put us back in the market in November while the rest of Wall Street were still thinking it was 1929 again. In fact our play was covered writing at the time because of the astronomical premiums which inflated from the increased volatility from the crash. It was a give away. In the current situation, simply take the action required to shore up a portfolio to YOUR satisfaction and then let happen what will happen. Even if that is a rally in the market that you miss. YOu must stick to the plan no matter. If this plan is not structured to your personality there are other ways of negotiating the market. The most important thing Scott is you develop a plan you can live with and EMBRACE no matter what. Remember you are an integral part of the plan. Just like Bobby Fisher is an integral part of the chess board. Being a craftsman like Bobby Fisher in Chess requires being able to recognize patterns. You seem to be well on your way to accomplishing this. Good Luck Scott. See our www.dorseywright.com page for individuals for these discussions on a daily basis. Tom

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