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

To: Ms. X who wrote (1056)	2/24/1998 11:22:00 AM
From: Allan Harris	Read Replies (1) \| Respond to of 34816

>Vertically, we know the bottom O's is at 26 so we look at the column of X's to the right and count which equals 7. 7x3=21+26=47. The first BUY signal on my chart was given in February with a break of the double top at 34. A subsequent column of O's was entered on a brief pullback to 35, from the X column high of 38. I count that row of X's, the row containing the BUY SIGNAL, as 8. 8x3=24. The low for that column of X's was 28, so 24+28=52. My target is 52. Reference, Tom's book, page 24. Allan, King of France

To: Ms. X who wrote (1056)	2/24/1998 5:36:00 PM
From: Paul V.	Read Replies (1) \| Respond to of 34816

Jan, >Hi Paul, I don't believe Tom has ever mentioned which count is most reliable. I see the vertical count in his reports most often. I think both are effective.< The third complete paragraph of Tom's book reads, "These same principles have been applied to stock and commodity trading to arrive at a rough estimate of the price objective following a breakout of a consolidation area. The vertical count is the most reliable and should be used whenever possible. We don't tend to use the counts much in our daily business because we are investment oriented rather than trading oriented." On page 23, "Price Objectives in Point and Figure technical analysis are derived through two methods called horizontal count and the vertical count." Tom, then explains that his principles came from ballistics and that "the size of the power keg that propel the projectile, the length of the barrel, the resistance the projectile will experience traveling through the barrel, the air temperature, and the attitude of the rifle" will determine how far the bullet will travel. I am interpreting that he compares the horizontal count to the power keg and, the Vertical count would be the barrel. Correct? I am looking at pages 25 and 26. "In figure 2.13, you would simply count the number of boxes horizontally at the widest point of the formation. That number is multiplied by 3 and the product of the multiplication is again multiplied by 3 and the product of that multiplication is again multiplied by the box size...Then add the product of this multiplication to the lowest point of the formation..." When I look at the most current amat chart, the $32 price during October '97 through the 3 rd "x" column after the "O" column in which amat reached it's low of $26, I count 14 columns. I do not understand why the 2nd "X" column in November and the 4th "X" column in December '97 is not included in the ballistic count since it represents the width of the power keg. (I have not read in Tom's book that these spaces were not included.) >You are right on your analysis of AMAT is correct but the count is a little off. Horizontally, You look at the size which is created by consecutive columns without a break.< Horizontal method. >In this case we have 6. 6x3 = 18. We use the bottom set of O's before the upturn which is at 26. 26+18 = 44< Are you using the power keg from the vertical column of "o" when amat reached it's lows of $26 to its third column of "x" to the right for your 6 columns.? Why not use the count from the left of the power keg? I thought I had the horizontal method sorted out in my mind. Now, I am confused. Help?:) If I am counting correctly, using the horizontal method and using your count, at the $33 price I count 10 columns rather than 9 columns. I almost left off the January column of "X" since the "1" was hard to distinguish. Therefore we have 10 columns x 3=$30. $30 + $26=$56. >Vertically, we know the bottom O's is at 26 so we look at the column of X's to the right and count which equals 7. 7x3=21+26=47. Price target is in that area. Remember, if it should happen to break another double bottom, we can start a new count on the next reversal up with a double top buy.< I am in agreement with your vertical method of calculation. I was figuring the 3rd column of vertical "x" when it surpassed the low column of "O" at $34. Using the vertical method how many tiers upward can we expect off a low base, normally, 10-12? My conclusion, is there is no way to give us a rough projection of what the long run of a stock will be. Am I correct? I was using my understanding of the horizontal and vertical DW method as an indication of what to expect from the low base. In amats case, $26. From our discussions the best projections that I had on the last amat run up in 1996 was using the standard deviations of the previous prices which gave me a figure of $105. AMAT hit it's high of $108. I also, use the online DW charts, and IBD EPS, R/S, ACCUM., G/S, funds owned and S/R. Jan, Thanks. Hopefully, you can help clarify my questions. Paul V.