We’ve previously discussed the following configurations for point and figure relative strength charts:
Buy Signal in X’s
Buy Signal in O’s
Sell Signal in X’s
Today we conclude our discussion on the four types of point and figure relative strength chart configurations by discussing what it means when we see a chart on a sell signal and in a column of O’s.
To put it plainly, this security is likely to be a laggard. When a relative strength chart is on a sell signal that identifies its longer term underperformance versus the specified benchmark. Near term underperformance is characterized by the chart being in a column of O’s.
Longer term underperformance, without any signs of near term improvement, makes this the weakest point and figure relative strength chart configuration. This is one to be avoided if your investment strategy focuses on high relative strength securities.