P&F Chart School

[JTH]

I understand the X's and O's. But what do the red numbers mean?

I believe for the months, i.e., 1-9 for Jan-Sep, A+B+C for Oct, Nov, Dec. The year is across the bottom.

Quick Note: For any given month, the first box filled gets the number or letter assigned. This is to say it doesn't always happen on the 1st of the month, it can actually happen on any day of the month. Today the Transports filled in the first box for the month of April, that is why it is marked 4, and that is why it happened today.

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[James48843]

All of my comments, moves and attempts to explain logic should be taken with a large grain of salt. I use an approach based on recent news, my own interpretation of sentiment, a dose of contrarian pessimism and a variety of unrelated "indicators". Call it the finger in the wind approach. I've spent years studying and analyzing patterns in Natural Science and I try to apply some of that experience to the markets. If I manage to disseminate all that into a good trade there's a lot of gut instinct and luck involved.

Yep - that's exactly it.

You NEVER STOP LEARNING of new things to look at, or data points to think about.

When you get enough datapoints, it no longer is simply going on gut.

It is going on educated gut, and that is a lot better!

 

[JTH]

If you'll allow me, I want to talk about fear. For the moment fear is confirming price, when this happens I give the Volatility Index more weight than I normally do. While it is important to acknowledge we have a Quadruple Ascending Top Breakout, it is perhaps more important to notice the level of resistance at 21 where 4 Xs reside. A breakout above this level would signal a Spread Quadruple Top Breakout indicating strong fear-based conviction. I don't trade the $VIX nor apply it conversely to the markets, so take this observation for what it is.

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[Silverbird]

Getting change in S&P 500 Point and Figure chart $spx
Tradtional, 3 box reversal chart
Bullish Price Obj. (Rev.). 1850.0

If someone knows how to post it, please do so.

Correction: Never mind, already been posted. That's what I get for being so busy this year.

 

[JTH]

Good morning

Although we are getting a second day bounce, from a PnF perspective very little has changed, we've yet to see bullish reversals on the S&P 500, Transports, and Wilshire 4500.

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[skycophigh]

JTH, so if your chart looks to be at a top, where would u put ur money??????

 

[JTH]

JTH, so if your chart looks to be at a top, where would u put ur money??????

For long-term investors (2-3 IFTs a year) I don't think we've seen enough damage to warant an exit from the markets. For Intermediate investors I'd stay in (if you're already in) and stay out (if you're already out.) Short termers should be looking for an exhaustive-style sell off, then take the bounce (that was the setup we already had this week.)

 

[JTH]

Good morning fellow Americans

It's nothing special or unusual, but it is worth mentioning. Over the last 2 days, while the markets were surging, the F-Fund has held unto the majority of its gains. As it stands now the F-Fund is in an area of congestion at a double top.

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[James48843]

OK JTH_ Let's talk for a moment-

Technically, the P&F chart for the S&P 500 still has not triggerd a change in the price objective (P.O. is still saying bullish 1850).

But if you change the "reversal" chart scale from 3 units for reversal, to 2 units for reversal, you'll see a bearish price objective of 1330.

Because I have been using the "3" reversal setting, I have not pulled the trigger on the P&F chart C mock account in the auto tracker. But now that I am looking at the "2" reversal setting, I am thinking maybe I should be using that instead, for increased sensitivity on moving around.

So far, this year, there has not been a single move in the tracker account for P&F chart C. I am thinking I should be more "sensitive" and it may get better results.

JTH- what are your thoughts about changing the sensitivity from a "3" box reversal, to a "2" box reversal for that account.

As an alternative, I COULD set up another mock account that uses the "2" sensitivty, and then we could track it better.

The down side of doing a second account, is that I would need to monitor it more closely, and, because I travel quite a bit, I might miss a buy or sell signal some time.

What are your thoughts on that JTH? Should I set up a second account? (monitoring the S&P, not anything else). Do you think it would be worth evaluating for a while?

 

[JTH]

I've thought about the 2 box system myself, but when I look at those 2-box charts, they seem to produce too much noise for my own personal preference. When we consider the S&P 500 has been leading the markets this year I think your current system is running perfectly fine, problem is the S&P 500 happens to be overbought and the other charts aren't.

I wouldn't change the current system, adding the 2-box system isn't a bad idea, but I do worry it would cause some confusion with some of our less expierenced pnf readers.

OBTW maybe you haven't noticed, but your previous assesment of 640 on $EMW is nearly spot on, the current PO is listed as 635.

 

[Intrepid_Timer]

Good morning

Although we are getting a second day bounce, from a PnF perspective very little has changed, we've yet to see bullish reversals on the S&P 500, Transports, and Wilshire 4500.

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JTH, can you tell us why the Wilshire 4500 closing above 695 yesterday didn't produce an upward 3 X pattern and how far up it actually has to go to show one? Thanks!

 

[James48843]

...OBTW maybe you haven't noticed, but your previous assesment of 640 on $EMW is nearly spot on, the current PO is listed as 635.

If you want to see something REALLY interesting, go do the Wilshire 4500 ($emw) and hit the 2X display.

That one has a PO back down at 635, but the blue line held two days ago, and to me it says we've already hit bottom here, and are about to head north again.

So much information overload- I am not sure what to do. We have 15 minutes to decide, and the "2X" version tells me I should buy, while the "3X" version says we still have more downside ahead.

I sure wish we had FOUR trades per month, instead of just 2. Just think of the possiblities if we had FOUR.

 

[JTH]

JTH, can you tell us why the Wilshire 4500 closing above 695 yesterday didn't produce an upward 3 X pattern and how far up it actually has to go to show one? Thanks!

You are right IT the 3 Xs are there, when I posted that chart 695 hadn't been hit yet.

 

[Intrepid_Timer]

You are right IT the 3 Xs are there, when I posted that chart 695 hadn't been hit yet.

K, thanks!

 

[JTH]

It's a mixed bag, but when you factor in seasonality, I think we have a good case for lower highs to be established from this point forward.

 

[JTH]

With 3 Xs on the Wishire 4500, for another row of Os we'd have to tag 680 which would also be a Triple Bottom, for now we appear to be in a 680-720 trading range. I personally think the bears have the advantage, but the charts don't fully support what I believe.

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[JTH]

Good morning

For the F-Fund (based on share price) we have a Spread Double Top Breakout. Combine this with a rising support line from underneath and one could summize the F-Fund is ready for the next long tail up (dowside price action in stocks could fuel the next leg up.)

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[JTH]

Note" the previous F-Fund chart was mislabled, it was not a spread Double Top Breakout, it was just a regular Double Top Breakout.

Not much has changed in the PnF 3-Box reversal world.

The F-Fund is the strongest chart, but bear in mind it's at 52-week highs.
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The S&P 500 has Higher lows and lower highs although support is stronger than resistance.
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The Wilshire 4500 in a wide 680-720 range, resistance on top is stronger than support from the bottom.
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[JTH]

We have a lot of action on the PnF charts, watch the key levels.

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[James48843]

This is what I said two weeks ago today- that we'd have a better opportunity to buy back in lower ahead:

Here is what I am looking at, and seeing, in the "S" fund chart:

I am looking at the number of "X"s that we previously traveled through. If there is only a single one, that is 'light resistance" to me. If we have more than that, then I expect more resistance. Does that make sense? I know it's not how you are supposed to use P&F charts- but it seems to have some value to me.

Take a look at the purple line I marked here:

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I see a little light resistance here. then less resistance lower, until we hit big resistance again at the 640 to 635 level.

That's just my 2 cents. I think we also could get some reversal here as a buying opportunity, depending on whether or not money floods back in tomorrow at the level here.

I'm still thinking we'll reach 640-645level before the resistence kicks in.
P.O. says 635, but I don't think we'll reach 635 exactly. I do think, however, we'll get closer than we are today, and we'll have a great buying opportunity shortly.

Best of luck.