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JTH

It's not over, or is it?

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___Here's a quick review of the Point and Figure charts. These are not the usually charts you'll see, but I thought I'd mix it up a bit. The hourly timeframe was chosen because the price objectives are tighter and I believe it speaks better to the intermediate scale many of us use.

AGG: While price has broken below 5 Os, there are still 3 Os of support at 108.1, and a bearish price objective of 108.4 nearly met, I believe much of September's decline may have already taken place. Within the Green/Yellow/Red boxes, we are within a hair's reach of median price and while the trend is still broken, the long term trend remains largely intact.

F Fund Confusion-001-png
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SPX: Price has broken below 2 Os, there is minor support at 1946 & 1910 with a bearish price objective of 1940. With a .25% gain, we will tag 1987 and put in a column of Xs. Looking at the broader view, I think the damage is minimal, I have median price set at 1963, this has been a previous area of support with 3 Xs outlined within the yellow box.

F Fund Confusion-002-png
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EMW: Looking at the Wilshire 4500, we can see we have a great many issues to deal with. Most recently, prices declined to major support at 997, ___held___, then put in a reversal with 3 Xs. For now, we have 4 Os of support at 997, but there is still a lot to be gained before we reach median price at 1017, and afterwards there's still 4 Xs of resistance at 1038. As you may have noticed, the correlation between Large & Small caps has fallen out of sync. The S-Fund has been under-performing on the way up, and over-performing on the way down, this is not a healthy relationship. The best advice I have is to do what we should always do "follow the winner" and transfer your risk over to the C-Fund. There will be a time when the small caps will resume their role as the leader, but that time isn't now and it could be months or perhaps even years before we see this happen. I have not outlined it, but if 997 breaks, the next major level of support is at 958, which is another -5% decline from current levels, so be careful.


F Fund Confusion-003-png
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Note: The Green/Red bars running horizontally on the left is the Volume at Price indicator. For more information, click Point and Figure Charting - Basics, for P&F Intra-day talk, please visit James's thread P&F Chart School.

Trade safe...Jason


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Comments

  1. James48843's Avatar
    good thoughts- I am still trying to decide what to do Monday - conflicting data made me hold up on Friday to get more data input. thanks for your writeup.
  2. Mapper's Avatar
    I'm not totally straight with the P&F ways but wanted to comment on something I saw in the above charts. I'll let anyone else add further comment as to the significance, or lack of.

    On the S&P chart you indicated areas of support/resistance. The resistance areas indicate fairly low upside potential, from a % gain perspective. Alternatively the support levels are a larger % drop. This applies primarily to the secondary/tertiary levels of support/resistance. Not so much the primary levels (compared to "median"). Compared to current price the gain potential seems even more dire.

    On the surface this seems blatant and suggests it may not be time to increase risk exporsure. However, we all know that markets like to "take the stairs up, elevators down"...so maybe what I describe is perfectly normal? I don't know...just making the observation.
  3. JTH's Avatar
    Quote Originally Posted by Mapper
    I'm not totally straight with the P&F ways but wanted to comment on something I saw in the above charts. I'll let anyone else add further comment as to the significance, or lack of.

    On the S&P chart you indicated areas of support/resistance. The resistance areas indicate fairly low upside potential, from a % gain perspective. Alternatively the support levels are a larger % drop. This applies primarily to the secondary/tertiary levels of support/resistance. Not so much the primary levels (compared to "median"). Compared to current price the gain potential seems even more dire.

    On the surface this seems blatant and suggests it may not be time to increase risk exporsure. However, we all know that markets like to "take the stairs up, elevators down"...so maybe what I describe is perfectly normal? I don't know...just making the observation.
    Those are the levels outlined, but it's also fair to say the S&P 500 is in uncharted territory, where new all-time highs were recently made. After the initial resistance is broken, we are charting uncharted historical waters.

    Conversely, using a risk/reward analysis, a double top breakout at 2004 has a stop at 1963. That's partially my fault for setting up an hourly chart, and leaving the box size (5.86pts) at the default setting. I've been working on setting up the PnF sweet spots with the time frames, more than likely I will switch over to a percentage-based scale, instead of points.

SPY (C Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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