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

To: Al Serrao who wrote (9483)	11/12/1998 6:11:00 PM
From: Bwe	Read Replies (1) \| Respond to of 34811

Ethan Allen, a stock I've written about on this thread before, moved into a HPT at $36 yesterday. This pattern is bearish for the short term at least. For those unfamiliar with the pattern, the idea behind a HPT is that a stock makes a good upmove that exceeds the previous column of X's (rising prices) by at least 3 X's (columns of X's and O's alternate and are never in the same column). The stock then pulls back 50%+ of the good upmove providing a subtle clue that something's wrong with the supply/demand relationship for a stock. Factors such as the overall strength of the market and a stock's industry group sector also play a part. The key, however, is a stock's Relative Strength chart. So lets tie it all together and see how it shakes out for ETH. At $36, the stock retraced 6 boxes of the previous 11 box upmove from $32 - $42. This is the third HPT ETH has had in 5 years so it is a rare event. The funny thing is that both times the stock had a HPT (10/97 @ $34 and 12/97 @ $37) the stock actually ROSE and made new all time highs going as high as $66 subsequently. The key element is that the stock's RS chart was bullish then and turned bullish once again a week ago. The RS turned bearish for ETH in May and that was a good signal to step aside. A stock's RS chart has a great bearing on the implications of various p&f patterns a stock happens to form. A stock with bullish RS is likely to show weakness, but will get back in gear in short order when the market starts doing better. The bullish RS stock should do better than the market. The Retail group is Bull Confirmed at 54% and the NYSE Bullish % is at 58.2%, Bull Confirmed but not yet overbought. So both the sector and the broad market are in good enough shape. $31 is the previous bottom for the stock and a move to $30 would give a p&f sell signal. Support at $32, $28, and $27. ETH is still trading below it's Bearish Resistance Line ($45) so that needs to be broken to put the final piece in place to turn the stock from a trading play into a good, solid, long term investment once again. Hope the market is treating you well, Al. Take care. Bruce