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

To: Smooth Drive who wrote (3495)	6/10/1998 6:10:00 AM
From: Bwe	Read Replies (1) \| Respond to of 34811

Hello Eric (for a little humor, think of the way Seinfeld greets Newman on his show when reading your name)...... Besides Burke's book on p&f charting, my ongoing education in the Chartcraft method has taken three forms; discussions with John Gray and Michael Burke, their weekly and bi-weekly services (I get the Weekly Options update for the Quarterly chartbook and Investor's Intelligence), and the daily telephone commentary. Chartcraft's "respect" for the danger of the danger of High Pole Tops (henceforth, HPT) has been stated innumerable times over the years in Burke's writings and on the telephone commentary. The Weekly Options Service has 9 pages of "breakout" stocks (9 charts to a page) that are annotated with commentary on the assorted p&f formations presented by the charts. HPT's are discussed and consistently highlighted as a most dangerous pattern. Burke's book, as you know, does not go into great explanatory depth on the assorted p&f formations and Tom's book does a much better job of explaining the various chart patterns. I'm not a very empirical guy, Eric, so I wouldn't be able to vouch for the accuracy of the 80% number with regard to movements below a previous bottom after HPT's. Chartcraft has found this to be true, however, and that's good enough for me. The "bottom" referred to is the O column prior to the HPT, or in different cases, a base where the stock bottomed out before the up move that brought about the "pole". As you correctly surmised with your question, the market and RS are the two primary factors that must be taken into consideration. Trend lines should also be factored in and I believe Tom discusses how he uses trend lines in conjunction with the HPT to determine whether action should be taken if a stock evidences a HPT. I believe after much study that a stock's RS is the primary factor to consider when deciding what type of action is needed if a HPT occurs. Since I'm running out of time here this morning, I'll expand further on the topic of RS and HPT's in a post this afternoon. I'll leave you with a recent commentary on the recent chart action of Diebold (DBD) from Chartcraft that illustrates their thinking on the subject: "A couple of months ago, we pointed out HIGH POLE TOP in Diebold at $50, down from $55. At $44 we pointed out breaking of UPTREND LINE. At $40, the RS gave a sell signal and yesterday DBD fell 9 pts. or 22.3% to $31 as they forecast lower earnings. DBD's a great company, but still above 2/8/97 low of $27". More later, but I hope I've been of some help with this message. Take care, Bruce