Welcome to EV's point and figures. This blog is dedicated to the use of point and figure charts in technical analysis.
Although P&F first appeared in charts in the 1930's, it is an often overlooked techique for analysing stocks and charts. A poor relation compared to line and bar charts and their range of momentum indicators. Yet few charts provide a clearer picture of the daily battle between bulls and bears for market control.
Like most methods, it should not be used in isolation. It should form part of an analysts 'tool box' and be used with other techniques to help form an overall view.
The charts that appear on this blog and any accompanying comments are purely for information purposes only - my own personal take on where the prices may be heading. They do not constitute investment advice.
Thursday, April 29, 2010
For the time being at least the long term up trend in the S&P 500 remains firmly in tact. The one glimmer for those of a bearish disposition is the recent sell off which has given an as yet unactivated target of 1,125. A close below 1,175 will bring this in to play. That rally from February has left an unactivated upside target of 1,500. It remains to be seen if this target becomes activated. A close above 1,225 would bring it into play. The more realistic 1,250 target remains in tact.
The hourly and four hourly charts on the FTSE 100 index are much more interesting but here is the closing 25x3 P&F. It can be seen that the uptrend remains firmly in tact but the Tuesday's sell off has given rise to a double bottom sell signal, with an indicated target of 5,375. Remember, the targets are based on P&F rules and may not play out. This target will be negated if the FTSE pushes back above 5,750.
It was a bad day for BP and unsurprisingly so. With 5,000 barrels of oil leaking in to the Gulf of Mexico and lawsuits pending, the shares ended the day down about 6%. The upside target of 635p was reached but we now have an clear double bottom sell signal, with an activated downside target of 520p. BP was trading with an attractive dividend yield of over 6% but that could be under threat now.