What is point and figure. It is the relationship between supply and demand. If you were to look at a chart, you will see (X's) and (O's), some numbers and some letters.
What does all that me. It is quite simple. The X's signify demand and the O's signify supply. It is that simple. The letters and the number just tell you what month you are in. Starting in January (1) to December (C). So 1-9 are the first nine months of the year and A,B,C are the last 3 months.
Point and figure charts are the easiest charts to read. There is no ambiguity about it. Here is why. If you go to the far right of the chart, and lets say it is in a column of X's. If the last column of X's exceeds a previous column of X's you have what is called a double top and the chart is on a buy signal. The opposite applies to O's. If the last column to the right is O's and that column exceeds the previous column of O's, you have a double bottom and a sell signal. It is that easy. If you are on a buy demand has control and if you are on a sell supply has control. It is basic economics. Supply and demand.
When demand is in control the price will rise, when supply has control the price will drop.
What I hope to accomplish with this topic is to show and explain various charts to determine if we have demand in control or supply in control.
PnF can also be used to show relative strength. I hope to show relative strength in conjunction with the charts. This will help to show if you will see under performance or out performance of a specific chart for the near term as well as the long term.
There is so much activity going on in the markets, PnF can help clear up some of the confusion. I hope to accomplish this with the various charts and topics that I will be displaying.
I also have many other indicators using PnF that will help to show if the overall market is on offense or defense.
I take a top down approach for the markets. First is the overall market expecting to go up/down. Next the sector, then the stock.
For example right now all of my indicator are showing that we are in a defensive mode. The risk is high in the markets currently. I hope to show this relationship using PnF charts.
I feel that this will be a wonderful learning experience for all to see.
Kirk Lindstrom - With my writing, I hope to help you too reach AND MAINTAIN critical mass where your investments earn enough money that you don't have to ...
