Lady Market and Intangibles – October 27, 2011

[Pascal]

Pascal,

I thought something of interest was that on your charts, SKF appears to have been attracting a lot of buy interest especially after the dip. Could this be an indication of what's to come?

It could, but you'd need many of these, especially in critical inversed ETFs (FXP for China, SMN for materials, SCO for oil)

Pascal

[adam ali]

Paul,

In regards to the P&F charts, they are easily accessed for free at www.stockcharts.com.

In my experience, the point and figure methodology relies on a progression of indicators to tell its tale. There are short-term indicators (Hi-Lo, 10-Week measurements) and longer 30-week indicators. As each turns, the advice is to push more chips on to the table. In this respect, the methodology is similar to yours, and it becomes a weight of the evidence call. The more oversold/overbought the body of indicators, the greater confidence one has that once a preponderance of indicators do turn in the opposite direction, the reversal can be relied upon.

I have not seen a quantitative study that specifies how often a turn up/down in the short-term indicators is reversed before the long-term indicators have an opportunity to turn as well (i.e., a whipsaw).