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buy signals

Foundations of Our Strategy: Point and Figure Basics

March 18, 2015 by Brendan Mullooly, CFP®

https://media.blubrry.com/invest/p/content.blubrry.com/invest/Foundations_of_Our_Strategy_Point_and_Figure_Basics_March_2015_Podcast.mp3

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At Mullooly Asset Management, one of the foundations of our strategy is point and figure charting. Point and figure charting is a type of technical anaylsis that tracks security prices through columns of X’s and O’s. People successfully use other types of technical analysis to manage money, but we prefer point and figure because we find it clear and concise. We have a lot of respect for other types of technical analysis, but they’re just not our style. Much of our point and figure knowledge can be attributed to our friends at Dorsey Wright and Associates. Their research is invaluable, and we’ve learned a great deal from them. Tom Dorsey’s book, Point and Figure Charting, is required reading here at the office. We use the point and figure methodology to manage the risk in our clients’ investments.

We often discuss different aspects of point and figure on our weekly podcast. However, without visual examples, we’re worried that some of our listeners might be confused. Below I’ve linked to several educational point and figure videos that we’ve put together. If you’re a visual learner, I highly recommend you check them out.

Bullish Support Lines – https://mullooly.net/what-is-a-bullish-support-line/8037
Double Top Buy Signals – https://mullooly.net/point-figure-buy-signal/7937
Double Bottom Sell Signals – https://mullooly.net/point-figure-sell-signal/7945
How Point and Figure Charts Work – https://mullooly.net/how-point-and-figure-charts-work/7925

On this week’s podcast, Tom and I discuss the point and figure concepts covered in the above videos. We share basic attributes that we look for when scouting potential investment ideas.

The first thing we look at when evaluating a security’s point and figure chart is its trend. The bullish support line helps us determine this. When a security is trading above its bullish support line, it’s in a positive trend. When a security is trading below its support line, it’s in a negative trend. We usually tend to avoid investments in negative trends. That’s not to say money cannot be made in them, however you’re stacking the odds against yourself. We’re in the business of stacking the odds in your favor, so naturally that doesn’t tend to mesh.

Once we’ve identified the trend of a security, we’re then looking for buy signals and sell signals. A double top buy signal is when the current column of X’s, on a point and figure chart, exceeds the previous column of X’s. Conversely, a double bottom sell signal is when the current column of O’s exceeds the previous column of O’s. What do all these columns of X’s and O’s tell us? We’re really measuring supply and demand. It’s as simple as that. New buy signals tell us that demand is strong for the security. Strong demand means prices will rise. New sell signals tell us that demand is getting weaker and a growing supply exists. Weak demand means prices will fall. Very straightforward and concise.

Is that it?

Albert Einstein said that, “Everything should be made as simple as possible, but not simpler”. So while we’ve simplified the point and figure methodology to explain it here…no, that isn’t “it”. These basic concepts truly are part of our foundation at Mullooly Asset Management though. Looking for investments in positive trends that are on buy signals is a great place to start your process. It helps us weed out investments where the odds are stacked against us. From there we let another foundation of our strategy, relative strength, guide the process. More on that another time though!

Filed Under: Chart School, Podcasts, Technical Analysis Tagged With: buy signals, point and figure, support lines

What is a Bullish Catapult?

March 2, 2015 by Brendan Mullooly, CFP®

On this video I discuss a point and figure pattern referred to as the bullish catapult. As the name implies, this is a very positive pattern. Just think about the words bullish catapult for a moment. We all know that the word bullish suggests positivity, but what do catapults do? They launch objects over long distances. The bullish catapult is a very strong and positive pattern that can serve as a launching pad to higher prices.

The Steps of a Bullish Catapult

– The security must give a triple top buy signal on its point and figure chart
– It then pulls back into a column of O’s
– Before creating a double bottom, the security reverses to X’s creating a rising bottom
– The bullish catapult is completed with an additional double top buy signal

The triple top is a positive pattern. It’s followed by a rising bottom, which means demand is getting stronger. The final double top buy signal, that completes the bullish catapult, confirms the initial triple top buy signal. In point and figure charting, we refer to this combination of the triple top buy signal and double top buy signal as the bullish catapult.

Filed Under: Videos, Chart School, Technical Analysis Tagged With: buy signals, point and figure

Triple Top Buy Signals and Triple Bottom Sell Signals

February 23, 2015 by Thomas Mullooly

Before watching this video, make sure you’ve seen its predecessors on double top buy signals and double bottom sell signals. Watching those videos will help make this one easier to understand. On this week’s video, Tim explains and shows what triple top buy signals and triple bottom sell signals are.

To put it plainly, triple top buy signals and triple bottom sell signals are slightly stronger versions of their double top and double bottom brethren. Their strength comes from the additional columns and time they take to develop. Specifically, a triple top buy signal needs three columns of X’s to exist. While a triple bottom sell signal needs three columns of O’s. A triple top buy signal is slightly more positive than a double top buy signal, and a triple bottom sell signal is slightly more negative than a double bottom sell signal.

The best way to learn what these two patterns look like on a chart is to watch our video! Tim walks through examples of both.

Filed Under: Videos, Chart School, Technical Analysis Tagged With: buy signals, point and figure

What is a Point and Figure Buy Signal?

February 9, 2015 by Thomas Mullooly

In the last video, Tom showed us the daily process of updating a point and figure chart. Another main component of point and figure charting is the buy signal. Tom shows exactly what a point and figure buy signal is in this video.

In point and figure, when a current column of X’s reaches the same level as the previous column of X’s this is a double top. When the current column of X’s exceeds the previous column of X’s, we call this a double top buy signal. This is one of the most basic chart patterns in point and figure. As you can likely imply from the name, a buy signal is a positive development. We consider many other factors important in the purchase of a security, but a buy signal is definitely a pro rather than a con.

Point and figure charting is best learned in a visual method, so check out this week’s video. You will understand a point and figure buy signal more clearly after watching.

Filed Under: Videos, Chart School, Technical Analysis Tagged With: buy signals, point and figure

Point and Figure Charting: Not Just For Stocks

February 12, 2012 by Thomas Mullooly

Point and Figure Charting is not simply for stocks, mutual funds or exchange-traded funds. Of course, if you have an investment in your 401k or your retirement account at work, we would be happy to analyze the funds and investments in your account for you. But we can analyze so many other topics, for example housing starts or buy and sell signals. In this video, we examine the point and figure charting  for XHB, the S&P Homebuilders Index, along with the history (and chart patterns) of Housing Starts in the United States, going back over twenty-five years.

You have heard me say before, 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.

 

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.

Filed Under: Videos, Technical Analysis Tagged With: buy signals, sell signal

Relative Strength: The Basics

January 30, 2012 by Thomas Mullooly

https://media.blubrry.com/invest/p/mullooly.net/wp-content/uploads/2012/01/January-25-2012-Podcast.mp3

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Relative Strength is possibly the single best approach to keep tabs on winners and losers in the stock market. How do you know if your investment is merely taking a breather or pulling back — or how do you know if this is the start of a freefall off a cliff? Relative Strength, along with point and figure charts, can often hold the keys.

Charts with Relative Strength BUY signals tend to:
Go UP FASTER than the rest of the market
— and tends to go DOWN SLOWER than the rest of the market.

Charts with Relative Strength SELL Signals tend to:
Go UP SLOWER than the rest of the market
— but tends to go DOWN FASTER than the rest of the market

We say “tends to” because it is not a RULE, but we often see tendencies in these patterns.

For more information about point and figure charts, feel free to call us!  A change in relative strength is a VERY big deal. But I would also add the following: 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.

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.

Filed Under: Asset Management, Point and Figure Tagged With: buy signals, relative strength, sell signal

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