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Non-Tech : Dorsey Wright & Associates. Point and Figure -- Ignore unavailable to you. Want to Upgrade?

To: Lost1 who wrote (2682)12/9/1999 12:46:00 PM
From: Ms. X  Read Replies (3) | Respond to of 9427
 
For PnF newbies....

Basic PnF stuff.

Buy signal:

X <--buy signal.
X X A column of X's exceeds
X O X a previous column of
X O X X's.
X O
X

A buy signal shows demand is
in control of the stock. The
stock was bought past a
previous area of resistance.

Sell signal:

O Where a column of O's
O X exceeds a previous
O X O column of O's
O X O
O O
O<--sell signal.

A sell signal shows supply is in
control of the stock. The stock
has sold past a previous area
of support.

Patterns are developed through the price action of a stock. Volatility.
Charts move up and down creating support and resistance levels and
eventually a buy or sell signal is created. It is always asked if PnF
uses volume in developing the charts. To answer simply, whatever is
driving the stock whether fundamentals, volume or news will show on
a PnF chart.

Double top

X X The chart creates
X O X resistance at a level
X O X with two column of X's
X O
X

Double top buy signal

X The second column
X X of X's exceeds the
X O X previous column of
X O X X's. Demand is in
X O control of this stock.
X

Double bottom

O The chart has created
O X support at a level with
O X O two column of O's.
O X O
>O O <--

Double bottom sell signal.

O The second column of O's
O X has exceeds the previous
O X O column of O's creating the
O X O sell signal. Supply is in
O O control of this stock
O <---

Triple top.

X X X Three times the stock
X O X O X has risen to a price
X O X O X level creating hard
X O O resistance.
X

Triple top buy signal.

X Finally the stock has
X X X enough demand to buy
X O X O X past the level of
X O X O X resistance creating the
X O O buy signal. A very
X strong signal.

Triple bottom

X X Three times the stock
O X O X O has fallen to a price
O X O X O level creating a strong
O O O support level.

Triple bottom sell signal.

X X Supply comes into the
O X O X O stock and the price falls
O X O X O below the support level.
O O O This is usually an ominous
O sign for a chart.

We'll be going through DWA and PnF charts etc. The walk through of DWA will take a couple of weeks. Please feel free to ask questions.

If you are just learning PnF and don't have Tom Dorsey's book you are missing the boat. "Point and Figure Charting". I think the best price is through buy.com but Amazon has it too.

dorseywright.com



To: Lost1 who wrote (2682)12/9/1999 1:54:00 PM
From: Ms. X  Read Replies (1) | Respond to of 9427
 
OXHP
We'll use this chart for an example as to what signals are given when things
are about to go wrong with a stock.

89 X
88 X O
87 X ------X O ----* ------------------------------------------
86 X O X X O X *
85 X O X O X O X --X O * --------------------------------------
84 X O X O X O X O X O *
83 X O O O X O X O *
82 X O * 8 * O Two triple bottom breaks. One at 82,
81 X * * O the other at 81.
80 ------O ----X ----* ----------------* ----------
79 * O X O * X * X <--Rally here but stops
78 * O X O X X * X O X * X O * at resistance.
77 * O X O X O X O X O X O * X O *
78 * O X X O 9 O X O X O X O * X O *
75 ------------------O X O X O X O --O --O X O ----X O ------*
74 Stock drops after O X O X O X O <--Stock tries to recover but eventually
73 the two triple O X O O O X O X O X another triple bottom break
72 bottom breaks --> O O X O X O X O
71 O X O O X O
70 -------------------------------------------O X --* O <--Double bottom break.
69 Another big drop after O X * O <--Second bottom break
68 the third triple bottom-->O * O and the stock collapses
67 - ----------------------------------------* ----------O ----
66 O
65 - ----------------------------------------------------O ----
64 O
63 What happened here with this stock? O
62 Not only did it break a triple bottom which is O
61 a serious break of support, it also broke the O
60 longer term trend line, the Bullish Support Line. -O ----
59 At the same time it broke another triple bottom. O
60 This is three negatives in a row and plenty of O
57 warning to get out of the stock. O
56 OXHP did try to rally but could never really break O
55 all of the resistance built up in the base around -O ----
54 72 to 79. The final sign was the break of that base O
53 to the downside with the move to 68. O
52 Notice a rally from there to 79 did little to help O
51 the stock. This is where people get stuck if they O
50 are not seeing the whole picture on a chart. A trap O ----
49 into believing the stock is recovering but in O
48 reality they are only short term bounces. O
47 O
46 A person may have bought the stock at 81 thinking it O
45 -was a good price, down from the high but 81 was O ----
44 the sign that the stock was breaking down. O
43 O
42 This chart had investors out of the stock at 81 O
41 well before the major decline. O
40 ------------------------------------------------------O ----
39 O
38 O
37 O
36 O
35 -----------------------------------------------------O ----
34 O
33 O
32 O
31 O
30 -------------------------------------------------------O ----
29 O
28 O X <--This reversal only set
27 O X O the chart up for another
26 O X O double bottom break
25 -------------------------------------------------------O --O
24 B
23 O
22 C
21 O
20 ----------------------------------------------------------O
19.5 O
19.0----------------------------------------------------------O
18.5 O
18.0 --------------------------------------------------------O
17.5 O
17.0 ---------------------------------------------------------O
16.5 O
16.0 --------------------------------------------------------O
15.5 O
15.0 --------------------------------------------------------O Eventually the stock
14.5 O makes its way into the
14.0 --------------------------------------------------------O single digits.


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