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

To: Jerry Olson who wrote (10880)	12/4/1998 11:34:00 AM
From: Augustus Gloop	Read Replies (2) \| Respond to of 34811

Lets talk Dell for a second. I sold based on the drop below 62. I was able to do it at 65 because the pop in the AM was so good. Having said that, I find myself having mixed emotions here. On the one hand it looks like the stock and the market as a whole should trade down a bit. On the other hand it broke 68 yesterday. What do I do. I need to be disciplined

To: Jerry Olson who wrote (10880)	12/4/1998 11:43:00 AM
From: Ms. X	Read Replies (2) \| Respond to of 34811

Basic Charting Rules: Someone asked me about how the columns were constructed. How do you know whether to use X's and O's and how are prices of the day used. I thought I would post my response hoping it would answer the question for some who may be too shy to ask. The question was regarding Cisco and it's trading three days ago. When a chart is in a specific column the rules of PnF state you must continue in that trend. In Cisco's case, it was already in a column of O's (those in black) and so with yesterday's action we had to first answer if it continued down at any point during the day - no matter how high it went. The reason is, PnF measures supply and demand which comes in the form of the highs and lows of the day, not close prices. It is important that we keep this because we now know no matter how high Cisco went, people were willing to sell it to 74 (red O on today's chart). Yesterday's charting had the O's to 75. The first question was "did Cisco sell to 74?" Answer was yes so it got another O even though it closed much higher. Now, if Cisco hadn't sold off to 74 yesterday, a full box lower than the day before, we would not have been able to put a new O (red) in that box and we would have been able to put green X's up to 80 (the high I believe). Today, we would do the same thing. We would look at the chart and ask "Did Cisco sell off enough to close the 73 box, one box lower than yesterday?" So far the answer is no. Cisco's low is 76 and change. So our next question is "Did Cisco buy high enough for a three box reversal which would be 77 (74+3)?" The answer is yes and we will see not just three, but 5 new green X's (because the high so far is 79 and change). When a chart is in X's the first question is "Did it buy high enough to close another box up". See we follow the trend the chart is in currently so we don't miss any support or resistance levels. Remember PnF is the high and low of the day not close prices. What the stock did intra-day is very important. Now we know Cisco's true support level is 74 not 75. This is covered in the first chapter or two in Tom Dorseys book. Jan I am