P&F Chart School

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airlift said:
L2R,
I believe that I have misinterpreted the P&F mechanics due to a lack of understanding of how it works. With the 2nd X box and an upward revision to 1440, is it correct to interpret that the most likely price rise could be 1440 in the short or intermediate term? TIA.
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James is the expert in interpreting them, I just post them. I'm still waiting for him to visit here.:D

The thread originator posted some info on the P&F Charts way back at the beginning of this thread that you may find helpful in understanding the charts.

If you want to learn more about the P&F and other charts, visit stockcharts.com. You simply choose the type of chart you want, plug in the symbol for your stock or fund, and voila! instant chart with neat lines, etc. To learn how to interpret the charts, click the "Chart School" tab, and visit the various links there for a better understanding.
 
James is TDY. Here's what he had to say about yesterday's chart in a quick PM:

Sorry- am out TDY this week. Will be back tonight.

I really don't see anything bad in P&F chart- we just had a few days of solid up, so yesterday was just a normal consolidation rest. I think we'll have an up thrusday and friday, although we may be down today. As long as oil continues to drift lower, that's good for stocks. If Oil turns around and heads higher, then we'll have some problems.
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Sorry- been out TDY all week- and didn't have time to comment-

But all I have to say is this-

High Pole warning has me sitting up and taking notice, but there is no evidence yet that would lure me out at the moment. We got a high pole warning only because we retraced 50% off the high, and since the number of "X's was small (only 6 x's up) having three down gives you an automtaic high pole warning.

My gut says the six X's up were primarily intertwined with the fall in the price of oil.

Watch out of oil- if it starts heading back up big time then we could be in trouble.

On the other hand, if it starts to drop again, then I think we'll start seeing higher stocks as well. Right now they seem to be tied at the hip in an inverse relationship.

Inflation is not good, credit markets are poor, everyday we seem to hear some bad news, BUT- it appears that every GOOD NEWS item that comes out helps stocks a little. So I am not really too concerned at the moment.

I'm letting it ride, but might pull some off if we get a nice solid uptick. We have a little head and shoulders action forming- but again, the high pole warning in and of itself here is still pretty weak- and I think we'll do fine for the next cycle, (still showing a bullish higher price objective) unless something else happens that changes market sentiment.
 
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Despite the "doom and gloom", and general market malaise of the last couple days, we're still exactluy within the normal cycle pattern so far. We're still getting a narrowing triangle, and still well above the recent lows. Yes, we got a high pole warning last friday, but other than that, we're within normal ranges of the daily recoil.

Today's chart shows one new "O" appearing, and it's within the expected zone.

Now, I don't know about you, but after having 1. Oil climb up the last two days, 2. Higher than expected inflation report, 3. Lower than expected housing starts, 4. Fanny May / Freddy Mac problems again yesterday, and 5. A fizzling non-hurricane that made people nervous....well, if that's all the sell-off we get after all that bad news, then I guess we're in pretty good shape for a rebound the next couple days.

let's hope for some good news out there, to swing the direction around once more.

​
 
OK- here goes.

We've got a pennent formating starting to take shape. Makes me a little cautious about now. We've gotten some good moves over the past week, but we'd need a nice 1320 to gain two more "X"s in order to keep the cycle going. Right now we're just on the high side of the recent normal oscilation. I would expect one of two things is about to happen, depending on outside forces.

1. We COULD continue the move up, in which case we'll head up to 1320, then pause down a bit, and then resume upward trend. The country feels pretty good right now, with the Denver Convention being a positive to a lot of people. That COULD be a driver higher tomorrow.

or

2. We could hit a wall right here, in which case we'll break downward sharply on the next cycle.

I am worried about #2, and the approaching hurricane especially. It won't hit land until Monday or Tuesday. And then we won't know for a few days after that if it had much damage or not.

And that puts us in a tough place.

Tomorrow noon is the deadline to decide what to do. What ever we do, we're locked in until at least Tuesday COB as a result. Should we have a repeat of Katrina with a New Orleans hit, or even a significant hit on Houston and the oil fields, then we'll see a big down day tuesday.

So that is the danger to look out for. Monday holiday, and tuesday we'll be in the thick of a landfall of a hurricane.

I have not moved this month, as I saw no good, solid place to take advantage of the cycles. I MAY move to G tomorrow, just for safety until I see what the hurricane does next week. WE're at a pretty nice point right now to rest for a bit. I'll have to think overnight about it, and then see what the markets do tomorrow morning.


Which outside force will be stronger?

We'll know soon.
 
Next move is either up tomorrow, or else we're going to get a big downslide shortly.

I'm sitting invested right now. I know I should be on the sidelines, like the vast majority of the top TSPTALK performers- but I'm not able to watch the markets much, and there is still a lot of uncertainty brewing over storm damage.

We'll see how it pans out.

My gut tells me 40% chance of higher tomorrow- 10% chance of flat, and 50% chance of lower.

however, if we drop ten more points on the S&P (to below 1260,) then I think we'll drop big time- like back down to the 1200-1210 range.

My 2 cents.
 
Bottom bet is in, James. Double bottom breakdown with bearish PO back to 1190. Summer mini-rally is over, the big boys are back in town. Dumped commodities yesterday, stocks today.
​
 
Yep. Dang. I should have bailed yesterday.

Here is my take on the chart:

First of all, yes, we broke below 1260 and the bottom is falling out. The next point of real resistance isn't until we go way down. Perhaps 1200 to 1190 range. We're at 1245 as I write this, but it would not surprise me at all to get down to 1210 or even 1200 yet today.


The bears are back in full force. The double bottom breakdown means that we're in freefall today, maybe even tomorrow. If you note to the left on this chart, I've highlighted what happened the last time we were like this. The angle going downward was below the previous low. And there is nothing this time to stop it from doing likewise again- 1190 is what the chart is saying, and I will agree with that number, but to me, that number of 1190 is OPTIMISTIC, not pessimistic. We COULD go down to the 1150's without a second thought.​

Note the appearance of aditional "O"s below the trend line. That indicates the August gains are about to be blown, and we're toast.​

Credit again to the TSPTALKER top 20 performers, most all of whom were and are sitting on the sidelines; and to the 20 bottom TSPTALKERS who were mostly in stocks when this blew into town. I really think that shows the value of this board.​

I missed out and am going down, because I didn't have time to look this morning. And now it's too late for me to bail. But, there is always next time.​

I'm sitting tight- not because I want to , but because I'm already here, and it's too late today to do anything about it today. I'll take another look tomorrow and try to decide what to do then. Unfortunately, I'll be on the road tomorrow- so I may not be able to post a move here, if that is what I end up doing tomorrow.​

Good luck to all.​
 
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