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

To: Ms. X who wrote (8914)	10/22/1998 5:27:00 PM
From: Bwe	Read Replies (2) \| Respond to of 34808

ETH has once again caught my eye, Jan. I'm a RS Buy and Sell signal man as you know, however, the column change on ETH's RS chart has been a good leading indicator. If you followed the column change in May a holder would be way ahead of the game right now as the stock is about $20 lower. I wrote at the end of May about a Low Pole pattern that ETH had moved into at $51. This is what I wrote in that post: >>>The last low pole in the stock back in September of '96 started an up move that saw the stock move from $12 1/2 to $38 in a year. That was the month the stock gave a RS (relative strength) buy signal (9/96). ETH is still on a RS buy but is currently downtrending on it's RS chart.<<< The relationship between a Bullish uptrending RS chart and Low Pole formations is something I learned about from Aby's P&F Charting Book. I'll tie it all together with a quote from Aby near the end of the post. Back to ETH's chart. That Low Pole was followed by a HPT at $49 in June, and with the NYSEBP turning bearish in May, the HPT took precedence and dropped the stock to the low $30's. Another Low Pole followed at $38 in September and this too lead nowhere. Oh yeah, it led somewhere...down to $24. Well, here we are again. ETH just reported another good quarterly earnings report and guess what pattern the stock just moved into at $33....you guessed it, a Low Pole. For a stock that had only exhibited a Low Pole pattern once in 5 years, to have three of 'em in a span of 6 months raises my antenna. ETH is a textbook example of forces other than fundamental news holding sway over a stock's price movement. Here's what Aby says about Relative Strength and the Low Pole formation: "Low pole formations that develop with positive RS signals often result in strong advances.....Low Pole formations seem to lead to bullish stock trends when price action is reinforced by an upside breakout on the RS chart. Low Poles not supported by RS breakouts tend to result in a drifting, wandering sideways move or in lower prices. Investors are vulnerable to low poles with negative RS because abortive rally attempts precede lower prices." The BRL is still in charge of this stock at $49, and a STDL (Short Term Downtrend line) is at $41. a break of the STDL at $42 would coincide with a p&f buy signal and the low pole is suggesting that this is a strong possibility. The old BSL from the 7/96 low of $10 1/2 that was broken for the first time in August is also resistance at $43. With the new upturn on the stock's RS chart, along with the low pole at $33, ETH looks like a good trade with a reasonable po of $40 as a first target and $49 thereafter. The stock is very reasonably priced on a fundamental basis. JMHO, Bruce