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.
Tuesday, September 28, 2010
At first glance, (although the long and short term bullish support lines are undeniably in tact) this chart does not look particularly bullish. GS is nowhere near its pre-flash crash level of $182.5 and since that decline in April, the bulls efforts to push the share price back up have been thwarted on two occasions now. We had reversals at $155 and more recently at $152.5.
Its not a perfect forming triangle but we are reaching a point where the price should move out of this area. To the downside, look for support at $137.5 and $132.5. If these levels are taken out, that target of $102.5 comes in to play. The mega bearish price target of $32.5 is unactivated and will only become active if the price falls below the bottom of the column of 20 0's (ie filling a box below the $132.5 level). That sort of level sits more comfortably with the Prechter doomsday view of Dow Jones 1,000-3,000. As i've said before, these are just targets that may be achieved, You never know!!
To the upside, we have an unactivated upside target of $182.5. For this to be activated, we need to see the $155 box get filled, which would give a higher column of X's than the previous column of X's.
This was the previous observation on 13th Sept. Note that the shares got beaten down at the previous level of resistance, as denoted by the red oval.
Friday, September 24, 2010
This is the current picture on the Dow. All looks very positive. We need to see a break above that 11,200 line to give those upside targets a bit more credibility. Bears can take heart that that previous high has not been taken out.
What a difference 2 months makes. Back in July, this same 100x3 chart showed that on balance the risks were to the downside. The 50x3 and 25x3 charts are better for providing shorter term indications.
Tuesday, September 21, 2010
And here is the survey on its own.
Monday, September 20, 2010
Friday, September 17, 2010
But see also how a similar pattern played out in May-July 2008, the only difference being the 200 day WMVA was not pointing upwards in the quite the same way.
If the bear market is to re-asset itself, we need to see a hard down on the FTSE 100 soon.
Wednesday, September 15, 2010
Not sure how successful this will be in the long term. Currency intervention is a fairly blunt weapon and in the past it was often undertaken on a co-ordinated basis between central banks. In the current climate I suspect all central banks would like weaker currencies to boost their own country's/region's exports, so will self interest take over?
Either way, it provided the Nikkei with a major shot of adrenalin. Clear support at 8,890 and an activated upside target of 10,200. It needs to overcome resistance at 9,750 and could potentially do so if the US dollar suddenly perks up. But I can't see currency intervention providing anything more than a temporary boost and the yen is regarded by many as a safe haven currency.
I wonder if the BOJ bought US Treasuries with their newly acquired dollars??!
Tuesday, September 14, 2010
We live in a world where markets are being 'juiced' by central banks, and I guess one must keep that in mind when looking at these and other charts. Its certainly playing havoc with bond yields and distorting post QE economic data (IMO).
Before looking at this indices, this is a follow up to a previous posting on Goldman. It looked like there was a forming triangle but the triangle pattern no longer appears viable. Upcoming resistance at $155.
A 25 point box value on the Dow Jones makes this chart quite noisy but it was worth showing, as it is currently pointing to an almost perfect double top at 11,225. That target is active, as the most recent column of X's has given a double top buy signal, having taken out 10,450. To the downside, there is a target of 9,200 but this will fall away if the Dow pushes on through 10,675.
Funnily enough, the 50x3 closing chart on the Dow is more muddled and shows the continuing battle between bulls and bears. More clarity is required here, ie to confirm the bullish target the current or next column of X's really needs to take out the previous high at 10,650.
Monday, September 13, 2010
Anyway, that's my guestimate! If it pushes on, a double top scenario seems most likely, as alluded to in a previous P&F previous post (see July: FTSE 100: the wicker man)
Friday, September 10, 2010
The Australian ASX is at an interesting juncture. Once of the first markets to recover from the initial credit crisis in 07, buoyed by its rich mineral base and exports to China. Interest rates are ticking up down under. And their cricket team is in transition. Strong resistance at current levels, which if broken through suggest a bullish move higher. There is support at 4,300. A decisive break below that level will activate a downside target of 2,900. Will resolve very soon.
We could have a potential flag formation here to the downside but it can be seen that the ASX need only close above 4,650 to activate the upside target.
The Hang Seng has recovered well. The last column of X's created a double top buy signal but note the recent resistance at and around these levels. Is this index topping?
Indonesia, not a market I follow but one which has now pretty much recovered its post credit crisis lows. Recent price action is bullish but note the horizontal resistance line from the last multi year high. No obvious downside targets at this time.
Wednesday, September 8, 2010
We have a potential forming triangle on this chart. To qualify as a triangle, the pattern must have 5 columns - there are currently four.
Usually a stock in an UPTREND will resolve the triangle to the upside and vice versa. According to P&F guru Tom Dorsey, breakouts from a triangle formation typically result in explosive moves.
The most recent column of 0's was reversed by the latest column of 3 x's and has left an unactivated downside target of $102.5. It will be activated if Goldman's share price falls below $135, filling the $135 box. A fall below $130 would take out the previous level of support and would lend strength to the bearish case/lower target.
To the upside, a move up beyond $157.5 would give a double top buy signal and a price target of $200. But in the absence of a Fed inspired major dose of QE2, its hard to see what other catalyst could propel GS's price to that level in what remains a generally poor economic climate.