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

To: Smooth Drive who wrote (24574)1/23/2000 10:01:00 PM
From: Smooth Drive  Read Replies (4) | Respond to of 34822
 
I see that the time issue question is being discussed at the other P&F site. Well, here's my take.

How soon we forget.

Until Abe Cohen came along in the late 40's and created the End Of Day (EOD) P&F charting, P&F charts were a tick driven animal. Only the floor traders, rich and wirehouses used them because of the data requirements. There were firms that provided tick data for the construction of these charts. Wychoff does it now buy only for the charts they follow. It's what the floor traders used then – and now. I've talked with two, and they use tick P&F charts, never EOD.

How's a tick chart constructed? They all start with a one box reversal, with a minimum of two boxes in every column. From these one box charts you can construct a 3, 5, 10, etc chart. Ken Tower uses log boxes of various sizes on his charts. The 3 box charts have many of the same patterns as an EOD.

Even today, many of the big wirehouses use tick P&F charting (ever heard on Alan Shaw – he swears by it). I've had the pleasure of discussing tick P&F charting with Ken Tower. He sells powerful tick P&F charting software, but it's not available to the masses. As a matter of fact, there is a good P&F tape of Ken here nyssa.org

The first real book on tick P&F charting is the 1933 classic The Point and Figure Method of Anticipating Stock Price Movements by Vicor deVilliers. The second is Study Helps in Point and Figure Technique by Alexander H. Wheellan. There are a ton of EOD P&F books.

From my perspective, EOD P&F charting is completely time driven. And, it doesn't matter if it's end of five minutes, ten minutes, two hours, etc., -- it's the end of something and it's damn sure time dependent. A one box tick P&F chart however, just says "Is the box filled above or below?" with no consideration of end of anything.

Here's a sample from Wheellan's book constructing a one box P&F chart, using whole boxes with tick info as follows:

34-36-35-38-37-40-39-40-35-39-38-44-41-44-42-43
42-43-37-39-37-39-37-41-39-40-38-39-38-39-38-39

45
44             X   X
43             X O X O X X
42             X O X O O O
41             X O       O         X
40     X X     X         O         X O X
39     X O O X X         O X   X   X O O X X X
38   X X   O X O         O X O X O X   O O O
37   X O   O X           O   O   O
36 X X     O X
35 X O     O
34 X
33


Now I'll create a 3 box P&F chart from the above.

45
44     X   X
43     X O X O
42     X O X O
41     X O   O X
40 X   X     O X O
39 X O X     O X O
38 X O X     O X O
37 X O X     O
36 X O X
35 X O
34 X
33

Someday, tick charts will be available to the masses. And by that I mean with the convenience of pulling up any stock or index we want.
We'll be able to create the box size we want (number or log), press the button and convert it to a 3 box, or 5 box or whatever. Click another button and create S&R lines where we want them.

Take care,

Eric


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