In this week’s Mullooly Asset Management podcast Tom and Brendan discuss bell curves. Bell curves are something that most of you probably remember learning way back in high school, but this concept can be applied to point & figure charts. Bell curves can supply us with some very useful information when they are applied to point & figure charting. Tom will explain all of this in this week’s podcast.
Two thirds of the time things will lie in somewhere around the middle of the band in a bell curve. When things get crazy we can see extreme situations arise. This means two things, we can see something be over-bought or over-sold. Being over-bought means that something has been in such high demand that it has reached its peak, and it is likely due to regress back to the middle of the band at some point. On the flip side being over-sold typically means that some selling occurred and a panic occurred. The particular stock has probably broke through support lines and bottomed out entirely.
When we talk about something being over-bought or over-sold it doesn’t really affect the technical story. This means we use the bell curves with point & figure charts to find a point of “entry” or “exit”. It doesn’t affect the overall direction or trend of the market.
There is a lot to learn about bell curves and how they are used in point & figure charting! Tom walks through several in depth example charts as well, which you will be able to see in the upcoming video version of this podcast. Make sure you tune in and check out what Tom and Brendan have to say in this week’s podcast!
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