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

To: Smooth Drive who wrote (3637)	6/13/1998 7:55:00 AM
From: Bwe	Read Replies (9) \| Respond to of 34810

I've been reluctant to post a discussion on RS and the HPT formation for similar reasons. There just doesn't seem to be much interest out there from readers or contributors to this thread for a discussion on the subject. I'd gladly write up a post on the subject which I find most interesting, but I get the feeling that most don't care or aren't interested. Maybe another time. The Chartcraft Report that I've been posting will also most likely be coming to an end. It's been frustrating to post what I feel is important, timely information, only to get almost no response or maybe a clarifying question or two. If there are readers of this thread that would like me to continue posting the Chartcraft summaries, let me know and I'd be happy to continue it. No sense wasting my time or the readers of this thread. There does seem to be interest in p&f looks at particular stocks and in this post I'll repost two writeups I did on Miller Herman (MLHR), the office furniture maker. The stock had a HPT in April at $31 and the stock's price action thereafter shows why it's important to recognize this potentially deadly pattern. Post # 1 from May 26th: >>>I had sold 1/3 of my MLHR position a while ago and was stopped out of the rest today. The point & figure technicals have deteriorated and the stock is coming off a high pole pattern at $31 and that leads to sell signals 80% of the time. MLHR fit the pattern and gave a sell signal at $27 which is where I had my stop. I probably should have had my stop where the HPT was with the NYSE bullish % in bear alert status, however I was hoping that MLHR fell into the 20% of stocks that don't give p&f sells after HPT's. Still positive long term as it is above long term support line and has positive RS but the stock looks to be headed to the low $20's. I still have a position in Hon Industries (HONI) which has held up a bit better than MLHR and I would return to the shares on an improvement in a key p&f indicator, the NYSE Bullish %. If anyone reading this board is interested I'd be happy to post the details of this terrific indicator which has been around for 40 years. The NYSE Bullish % turned negative 2 weeks ago and has given an ominous signal of trouble in store for stock prices. 75% of the risk in stocks is the market and sector and MLHR is not cheap on a fundamental basis anyway. Sad to say goodbye to such a good performer that's been a star in my portfolio for over a year, but maybe we shall meet again.<<< Post #2 written this morning: I wrote on May 26 about the deteriorating point & figure (p&f) technicals MLHR's chart was displaying. Lots of stocks have been displaying High Pole (HPT) formations at this juncture of the market and MLHR's HPT warned of negative price action to come. MLHR has bullish relative strength (RS) but the stock was vulnerable to a price decline despite it's ability to outperform the market because the market itself has been so nasty. This should be a correction in the shares but it looks like there's more downside to come before the stock can resume it's uptrend. Bullish RS can temper the severity of a downside move but it's probably best not to fight the negative trend currently in place for the stock. MLHR gave a sell signal at $27, quickly reversed back up to $29, and then promptly reversed course giving another confirming sell signal at $25 and that's not a good sign. The downside price objective is $16 and if anyone is thinking of bottom fishing at this price I would resist the temptation. Supply is clearly in control of the stock. Good luck to all still holding the stock. The fundamental story, as it's always been, is compelling, however, p&f analysis attempts to answer the question of when to buy or sell a stock, and IMHO, the time to buy is not at hand. If you've got a strong stomach, MLHR would be a hold as it is above it's long term support with bullish RS, however, I would be prepared for further declines in the share price. The bullish support line is at $13. Short term support by the bearish support line at $23. Household Goods sector in bear alert status and the NYSE bullish % at 54% and dropping. Take care and have a good weekend everyone. Let me know if the Chartcraft Report is something that is worthwhile for the thread's time and mine. Bruce