[RT] An Intro to P&F and some NDX100 charts

[Mudit Wahal <mwahal@xxxxxxxxx>]

Hello Group,

I've been a silent lurker for sometime. I use P&F exclusively for trading purposes,
from 1 min to yearly. I like P&F because of its simplicity. P&F charts solely look
at the prices and the patterns stand out ! Also, the support and resistance trendlines
are easy to plot, always at 45 deg angle :-) P&F formations sometime can predict the
probable price point where a stock/index/future will move.

The signals from P&F charts are binary in nature. The stock is either bullish (when it
gives its first double top confirm signal) and it remains bullish till it gives its
first bearish signal (first double bottom confirm signal). And at all the times, you
know at what price points new signals will be given. So, its easy to put stop losses.
If you take an index and find out all the stocks with bullish signal and divide them
by total stocks in the index, you get the Bullish Percentage. This BP usually fluctuate
between 20 and 80. At 20, it means only 20% of the stocks are bullish, at 80, it means
80% stocks are bullish. Buying can take place when the BP goes below 30 and comes back up.
At this point, since stocks have started coming up slowly, the risk is low. At BP above 70, 
almost every stock has been bought and the risk is very high and great
care must be taken. The BP is quite uncanny in predicting turning points.

P&F was used by Richard Wyckoff. BTW, Richard's "Studies in Tape Reading" is a must read
book for any day trader. A. W. Cohen wrote a book under Chart Craft. Its the best one.
Recently Tom Dorsey of http://www.dorseywright.com has written a book. His website has
P&F university where one can learn more about P&F. (I'm in no way affliated with Dorsey.)

I run various screens to calculate Bullish Percentages for various indices and sectors.
Then filter the stocks which are bullish and have promising chart patterns.

I'm attaching few charts. The first one is NDX100 for last 20 days 1 min period with boxsize
of 5. The second chart is for last 3 years, with a boxsize of 25. Third chart is NDX100 since
July'99.

Yahoo has limitation of 3 files attachment. I'll send another two charts showing
NDX100 since Jan 1, and the Bullish Percentage since Jan 1, in the next email.


Thanks

Mudit








__________________________________________________
Do You Yahoo!?
Yahoo! Auctions - buy the things you want at great prices
http://auctions.yahoo.com/
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx

 

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/ 


ndx100_20_1.gif

ndx100_3yr.gif

Attachment: Description: ""

Attachment: Description: "ndx100_july99.gif"

Attachment: Description: ""