Point and Figure Charts for Dow Jones and S&P 500: July 25, 2012

by | Jul 26, 2012 | Videos, Asset Management

Support Lines and Point and Figure Charts

If you have seen my other video lessons on point and figure charts, you know that support lines often act like brick walls. And point and figure charts tend to drift down toward support lines and often (but not always) bounce off the brick walls of support.

Using point and figure charts, there’s NO way we’ll know from day to day precisely what will happen with the market. This video (below) was created right before the market opened on Wednesday July 25. I think it is important to keep in mind that while the headlines have distracted us (and worried us), some of the major stock market indices like the Dow Jones and the Standard and Poor’s 500 Index have been quietly building bases and testing support on their point and figure charts.

One of the best approaches to take is take identify point and figure charts we like, wait for the chart to approach the support line, and buy near support. Here is an example:
Suppose you find a point and figure chart you like, with the price around 44, with support at 42. There’s just a few points of risk, if you have a stop under the support line.
Yes, it can be upsetting to buy a stock and get stopped out right away, but when a stock breaks a support line, it is an important change in trend.

Point and Figure charts can change, and support lines can be broken. We have a game plan to manage the risk, but we need to remain flexible in our approach. As I have written many times: when the charts change, we WILL change.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

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