The SPX has reached a five-year high and generated a new buy signal on the medium-term P&F chart today, confirming bulls’ determination to achieve the 1530 target established in October 2011. On December 03, 2011 analyzing the SPX medium-term chart I wrote:
On the upside the surge in October established and activated a new vertical count pointing out to the 1530 level. It is very close to the projected price target of 1520 from the horizontal count from the 2009 lows on the long-time chart. Two counts from different locations on different time frames target the 1520-1530 area. It gives more weight to this area if the price moves higher from here.
The SPX was at 1245 at that time. It’s just a reminder how important the 1520-1530 area is. The vertical count from June points to 1540 in the same area. I have drawn the internal support line from the first reaction after the October 2011 rally to highlight the significance of the 1520-1540 area. This line served as support in November 2011 when a Symmetrical Triangle was forming. Later it provided resistance to the summer rally in 2012 and signaled about overbought conditions in September-October. I expect this internal trendline to be meaningful in the future as well. We don’t see it on this chart, but this trendline is hovering at 1520 above the current X column. Odds are high that the 1520-1540 area is the final destination of the ongoing rally.
Igor, great work. Thanks. Appreciate your insights as always. I am really interested how you can draw those TLs on the P+F charts. I may have a question or two on that in the next few days if you don't mind. I just need to catch up on some other things that are piling up here right now :)
ReplyDeleteHappy Sunday Igor!
CB
..interested in how you can draw TLs, Igor..sorry had a typo there..need more coffee :)
ReplyDeleteCB
Thank you CB, have a great weekend too!
ReplyDeletethanks Igor. Was wondering the other day what ST target you had for Spx &then I saw this extensive work you've done (thanks). I myself was working with these 3 extensions: 61%=1462 100% at 1502 and 168% at 1542 to get approx levels. Now that I see that you can determine the same from P&F charts as well & from your TLs, I am curious how you did this.
ReplyDeleteFirst, ther are quite a few things that I don't know how to do, so that's part of the problem. Hopefully you can point me a bit in the right direction without doing too much extra work. Here are some things I have some difficulty with, for instance: When you say that the vertical count form June points to 1540, exactly how do you determine that, Igor? Also, I think I've never had an opportunity to draw TL on P&F charts 'cause my software doesn't really have that option, so I mostly rely on their (stockcharts). Are there guidelines about that in Dorsey's book that will tell me how to do that? Thanks Igor. Don't worry about giving me a very detailed answer as you've already done so much work on this. If you can just give me a hint where to start that would help a lot. Thanks Igor.
CB
Hi CB,
ReplyDeleteI highly value Dorsey's book, although my Bible on P&F charts is Jeremy du Plessis' "The Definitive Guide To Point And Figure". It's 500 pages of condensed material. 70 pages are devoted to calculating potential price targets and 30 pages to proper charting of TLs. So, it's impossible to cover all this material in a short comment. Besides, you really need to read the whole book to get the right understanding of the subject. I've read it 3 times from cover to cover and every time I discovered something new for myself.
StockCharts' software doesn't allow to draw internal TLs and calculate the proper price objectives. I do it by hand. Actually, the right analysis of P&F charts requires time not speaking about putting annotations manually on P&F charts. It took 3 hours to analyse, annotate and write my latest update on NOK, though I do P&F chart analysis exclusively the last 2 years. I guess that's why P&F charts are not so popular among new generation of traders. Bottom line: you really need to put an extra work in studying P&F charts if you want to get advantage of them.
Sorry, I guess my answer is not much of help to you. If you are serious about studying P&F charts I highly recommend you to read Jeremy du Plessis' book.
Igor, thanks. I like it when people say what they think, and not necessarily what they think others want to hear from them. That's just being truthful. If sth. is complex, it's complex and that's the answer :-) U are always ready to help & give me straight answers which is quite rare, so I appreciate an oppty to ask U questions. It's quite impressive how much you've progressed since you started doing ur P&F work, & I was not aware that one can work with them on an intraday basis until U showed us some examples. I guess "vertical" versus "horizontal" count must be a specific way to count those boxes & project that length..so I need to read more on that..Well, as they say anything worth doing is worth doing well, and you've definitely devoted enough time to do it very well. Congrats, Igor. And I agree with that attitude. I'll follow ur work & try to learn as much as I can since you offer this unique oppty. to share what you've learned. thanks Igor.
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