Point and Figure Charting

[gassah]

A count for the SP500 taken along the 1400 line = 140 points (14 boxes X 10 pts per box). The aggressive count projects from this line, the count line. The conservative count projects from the high of the range for a count range of 1260-1300.

[gassah]

Attached is the 20pt chart for the NDX. The earliest place to begin taking counts is at a spring and if it's tested then at the test. A spring is a minor penetration of a trading range. It doesn't need to take out the lows of the entire range though in this case it did. A spring can also breach minor support above the bottom of the entire range.

Counting back from the test of the spring the base can be divided into two phases. The phases are demarcated by price reacting to the count line with relatively heavy volume. The idea behind creating phases is that not all of a trading range is accumulation or distribution. It might not be anything. If the range breaks out to the upside we initially use the right most phase for the projection, "B" in this situation, and assume only B was accumulation. If phase "A" is also accumulation then another minor base will usually form at the "B" target that will often equal the size of phase "A". In other words, if "A" is nine boxes then the re-accumulation base, or stepping-stone count at the "B" target will often get to nine boxes also before it moves higher to the combined target of "A" plus "B". If A was not accumulation then the phase B target might be the end of the move.

We cannot conclude "A" is also accumulation until the stepping-stone count base actually breaks out and moves higher. At that point we can add phase A's projection. The price/volume chart is needed to make this determination of strength.

The NDX reached the first target and is basing between 1960 and 2040 but it's too early to tell if phase A will be fulfilled.

Counts from higher levels within the Jan-April base can also be taken. The reaction lows of 3/28 and 4/15 are good places and they can be extended back with their own phases. The counts can be used to confirm the lower spring test count if they match up, or to project much higher potential counts. It's best to take it phase by phase, level by level, conservatively, taking note of confirmations and waiting until each phase proves itself.

[Tannism]

Just an update on how it is going with the du Plessis log charts. Here is my latest look at PENN. (can't look back far enough intraday with stockcharts using User Defined).

On the line chart, the region is extended to the left in the 52ish area. The stop-look-see from the new area is calculated at 25 for now.

[gassah]

Hi Tannis,

Following up on PENN: having reached the PnF target in an oversold position relative to the channel, with massive volume, this is where I'd be happy taking profits if I were short.