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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Daveyk who wrote (22704)	7/28/1999 10:25:00 PM
From: Ms. X	Read Replies (4) \| Respond to of 34811

Hi Dave... This will probably be a longer answer than you were looking for but I'll make it as easy as I can. The semi sector along with all the other sectors have alerts assigned to them determining their risk factor at that particular time. The charts have percentage points with 0% being at the bottom and 100% being at the top. 0% is Over sold and 100% is over bought. Never has a sector gone exactly to 0 or 100 but somewhere in between. Above 70% is what we call the "red" zone meaning we are on alert. Let me explain what that means. When a sector is above 70% it means that 70% of stocks in that sector are on point and figure buy signals. We often say that above this level you have all the people in that want to be in. The semi's had move to 86% on the chart which is way over bought. Rarely do sectors ever get that high. The "usual" is 70-75% for a high. There is no where for the chart to go but down at that point. What makes it go down? The stocks in that sector start to deteriorate and give point and figure sell signals. As they do the chart reverses down and a reversal down from 86% is Bear Alert. Bear Alert means a sector has reversed down from a very over bought area over 70%. If that reversal produced a sell signal, the alert would be changed to Bear Confirmed - meaning that the Bear risk was confirmed by a sell signal. Bear Alert tells you a sell signal may be coming. When a sector reverses down at that high a level it is something to take seriously. It isn't like reversing down at 50% or 40% where the bottom (the "usual" being 25-30% for the bottom) isn't so far away. But at 86% the bottom is real far away. A stocks movement is generated approximately 80% by the sector and the market. An analogy is that once a sector reverses down the stocks in that sector now have to swim upstream to succeed which can be difficult. If you notice, sometimes stocks move down and the fundamentals never change. Great numbers come in, more business and everything positive but it keeps going down, why? If you looked at the sector you would probably find it is negative and that stock is responding to the sectors risk. If you are loaded on Semi's I'd be willing to bet your stocks have been suffering a bit. I don't know if you trade or if you are long but now is not a good time for semi's. I'm not going to tell you to sell because that may not be the answer for you but I will tell you that you need to protect your semi's and understand what influences your stocks are under. I'm sure you have good stocks but they can't help being persuaded by the sector. That's the way the market works. If the semi sector moves down to over sold area like 25% and reverses up we call that Bull Alert and we start to buy. If the semi sector is at 86% and it reverses down we call that Bear alert and we sell. If you would like, I'll look at your stocks for you. I should also tell you that our short term indicators have been negative for a week and this is another thing your stocks have to contend with. They are not only swimming up stream but they are doing it without flippers. If the NYSE BP turns negative (our long term indicator) they will they be trying to swim up Niagara Falls with a 2 ton brick tied to their ankles. No matter how good the fundamentals are. Do you follow PnF? If you would like, check out dorseywright.com Of course if you have any other questions there are many on this thread that would love to help. Jan I am

To: Daveyk who wrote (22704)	7/28/1999 11:07:00 PM
From: Lost1	Read Replies (1) \| Respond to of 34811

bear alert status--pertains to a sector, such as semiconductors turning south when it was over 70% (bull confirmed). If the sector had been at 60% then the subsequent turn would have dictated bull correction status. This doesn't necessarily mean a decline is in the cards, but I'd stake my eggs on it. Just my opinion..I'm usually wrong. Many P&Fers here can give you a much better description and I'd suggest you read Tom Dorsey's P&F book. Amazon gives a good description but it's cheaper at BUY.COM. amazon.com Good luck, Lost1