As Tim shared on a previous video, point and figure relative strength charts can be configured in one of four ways. One of these configurations involves being on a buy signal and in a column of X’s.
What Does This Point and Figure Relative Strength Configuration Tell Us?
When a point and figure relative strength chart is in a column of X’s, it signifies near term outperformance versus its benchmark. When a point and figure relative strength chart is in on a buy signal, it indicates longer term outperformance versus its benchmark.
When a point and figure relative strength chart is on a buy signal and in a column of X’s, it is performing better than its benchmark on both a near term and longer term basis. This is the optimal relative strength chart configuration to seek for potential investments.
To quote a whitepaper on this subject written by our friends at Dorsey Wright Money Management:
“No matter how you look at the data, over long periods of time the stocks on point and figure relative strength buy signals and in a column of X’s are really where you need to focus.”
Source:
http://dorseywrightmm.com/sites/default/files/White%20Paper%20-%20PnF%20RS%20Signals.pdf
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