....To see them (awesome!!)
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, July 29, 2010
Wednesday, July 28, 2010
The 'shape' of the chart still suggests the HSI is rolling over and Christian (Perfectstockalert) said today he considers the HSI an easy short, so we'll see. Those active downside targets are still valid and (while i've not drawn it in) the index is approaching some short term minor resistance at 21,250.
The less noisy 50x3 closing chart shows a slightly different picture. Here we have an as yet unactivated upside target of 4,100, although I note that this up column of X's was followed by a reversal of seven 0's (175 points) that took the index down below the base of that x column. For this target to become active, we need to see the current column of X's go higher and fill the 3,750 box. Note the red bearish resistance line. This battle should be resolved imminently!
Tuesday, July 27, 2010
Short term the SPX is now at a level where it has previously met resistance (at 1,115 - incidentally, the 200 day weighted moving average on the daily bar chart is at 1,117.13). If the market can push through this resistance, it could prompt a thrust higher similar to that seen back in March/April and give rise to some sort of double top formation around the 1,215. Just a thought.
To the downside, there remains in play an activated target of 935.
The 10x3 shows the resistance at the 1,115 level. There are two minor bearish resistance lines above that the index is going to have to content with shortly. To the downside, the target of 870 is still active.
The slow stochastic (89) is getting towards eye watering levels and volume may be low, but this chart is suggesting further upside.
A bit like the 50x3 FTSE P&F, the less noisy 100x3 closing chart gives a slightly different picture. We already have an activated upside target of 13,100 in place and also an active downside price objective of 8,100. The recent filling of the 10,500 box does give a double top buy signal, as the current column of X's has moved above the previous column of X's at 10,400. I'm just slightly wary that this column (of five X's) was completely taken out by the next reversal column of seven 0's. It makes for a weaker signal in my opinion.
Keep an eye on the short term (red) bearish resistance line. Still holding and could be tested around 10,600. We could potentially see the market reverse, find support and set up a move higher. If the current column of X's reverses now (300 point move required) you would have an unactivated upside target of 12,100. A reversal back up and a new column of X's rising above 10,600 would bring this in to play. For now, the current column of X's is the one to focus on.
The recent recovery in the FTSE 100 has provided some new bullish price targets to the upside. I should stress at this point that the slow stochastic on the FTSE is at an astronomical 94, so one would expect some sort of pull back in the next few days/weeks. But lets see what these P&F charts are telling us.
On the 'noisier' 25x3 closing chart, the long term bullish support line is still intact. Most recently, the long pole down (as shown in the column of 0's with the number 7 in it) reversed in to a column of X's which clawed back all the ground taken by the bears, It only reversed at the 5,250 level. This reversal (in to the column of four 0's) gave an unactivated upside target of 6,100. This became active by the current up column of X's, when the 5,275 box was filled (giving a double top buy signal).
I posited on a previous update that we might see a double top in the FTSE 100 around the 5,800. The chart is currently suggesting further upside. Note however that we have some upcoming resistance around the 5,425-5,475 level, as well as the slow stock. If this column reverses at its current level, it would give an unactivated upside target of 5,725 (25x3x3+5,150).
See that there is short term bullish support at 5,175. If the FTSE can hold this level on any reversal, it would lend support to a continuation of a move higher. To the downside, we still have an activated target of 4,000 but i'd be concerned about the validity of this target if the index moves above 5,425.
The less noisy 50x3 closing chart shows something slightly different. The 6,400 price target given by StockCharts is slightly spurious in my opinion. The chart seems to be following a similar pattern to that seen in January. A gradual trend upwards, that reverses in to a column of 0's that takes the index below the level of the previous column of X's (red circles). This move beneath the X column makes me slightly relucatant to use the X column as a basis for predicting an upside target. Far better to have a series of higher X columns accompanied by 0 columns that do not go below the previous column of X's.
Taking all of this in to consideration, I do not see any active upside targets that I would want to use. I'm guessing Stockcharts have arrived at 6,400 using the current column of 10 X's. If it were to reverse today (requires a 150 point move in the FTSE to fill 3 boxes to create a new down column of 0's) there would be an unactivated upside target of (10x50x3+4,850) 6,350. But this would only become active when the market turns bullish again, reverses and the next column of X's fills the 5,400 box. Until then, this is all conjecture! We do still have an activated downside target of 4,050 but i'd see this as fading if the market rises above 5,400 and fills the 5,400 box.
Monday, July 26, 2010
Friday, July 23, 2010
The 50x3 looks a little cluttered at the moment. There is an activated downside target of 8,900 (not 8,950 as shown, apologies), which was given by that column of 15 0's from the top of the chart. This was activated when the next column of 0's passed beneath the previous level at 10,400, filling the 10,350 box and giving a double bottom sell signal.
The 100x3 closing chart, as it name suggests, requires moves of 100 points to fill one box and therefore contains less 'noise' than the 50x3. Here we have an activated upside target of 13,000, which activated when the column of X's containing the month numbers 3 and 4 filled the 10,800 box, creating a double top buy signal.
More recently however, the shorter term bullish support has been punctured and we have two shorter term bearish resistance lines. The primary trend remains higher, as evidenced by the thicker blue line.
To the downside, we have an activated target of 8,100, with no time frame to achieve. Keep an open mind but the current shape of the chart currently suggests more risk to the downside at the time. As the Q2 earnings season peters out (and bear in mind this is all past results) what catalysts will drive this market higher?
Thursday, July 22, 2010
But note also that Apple's recent chart has a fairly consistent pattern. Twice before we have seen high poles, followed by consolidation, then a sharp move higher. This time the tussle between bulls and bears has lasted slightly longer, so bears may just win this particular battle.
Tuesday, July 20, 2010
It can be seen from the chart below that there is currently an epic battle being fought between bulls and bears in the 500 point 'green zone' between 5,700 and 6,200, with no clues at present as to who will prevail.
It can be seen that the activated price target of 6,200 (given by the double top buy signal in March) was met. Since then, there has been clear resistance at the 6,250/6,300 levels and support around the 5,700 level. Three times the bulls have been pushed back but each time they have regrouped and pushed the index higher. Note also the long term blue bullish support line is still in tact as is the minor blue support line, but that is under threat. The overall trend remains up.
In terms of resolution to this particular battle, we need to keep an eye on the following levels. There is currently an unactivated downside target of 5,050, given by the down column of eight 0's. In order for that to become activated, we need to see the bears take control and push the index down below 5,800. Filling the 5,800 box will create a double bottom sell signal (where the current colunm of 0's fills one box below the previous column of 0's). But there is also an unactivated upside target of 6,900, given by the most recent column of X's which reversed in to the last column of three 0's. If the market can push above those previous lines of resistance at 6,250/6,300 and fill the 6,350 box, that upside target will be activated. Either way, this should resolve itself in the coming days and weeks.
All that said, we are looking for directional guidance here and I say lower - recent support at $150 has been broken. The filling of the $145 box gave a double bottom sell signal. The 'shape' of this chart does not currently provide for any upside price objectives. To the downside, we now have an activated price objective of $70, no time horizon. If the results surprise to the upside and we get a 3 box reversal today and a new up column of x's (would require a move of $15 to fill 3 boxes), the next (unactivated) target (from the last column of nine 0's) would be in the order of $45.
Monday, July 19, 2010
Anyway, the chart below shows that the recent support at 9,500 has been punctured, as has the blue bullish support line. The market was down 277 points Friday at 9,408 - this is a 100x3 (ie 300 points) chart so we did not get a 3 box reversal and a new column of 0's. The index is now honing in on the longer term support at 9,100, levels where the market has held on two previous occasions. If that box gets filled, we will have a new double bottom sell signal from the previous column of o's and an activated downside price target of 7,200 (as always, no time horizon for this).
This 9,100 level (shown by the larger red circle) looks very important - expect a battle here between bulls and bears. If we see a drop below it and the 9,000 box gets filled, that would be a bearish development, as those two previous support levels would be punctured.
There is also an activated downside target of 5,900 still in play and an upside target of 14,500 (but that will become invalid if the 9,100 box gets filled). I would suggest more risks to the downside at this particular juncture because the bullish support line has been breached and we now have the more recent bearish resistance line, just my opinion but keep an open mind. Japan - its a 'killer'!
Wednesday, July 14, 2010
The 25x3 has far too much noise in it for my liking but the recent price action and upside target is the same