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Point and figure trading of US stocks

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Here I will share thoughts on US stocks using:

technical analysis,
point and figure charting,
market analysis,
sector analysis,
Richard D. Wyckoff method analysis,
relative strength analysis,
and inner thoughts and feelings.

In my trading I have been using point and figure and the Richard D. Wyckoff method for many years now. I usually do top-down analysis by first identifying the market setup, I then do sector analysis and relative strength analysis to find the strongest or weakest stocks in the strongest or weakest sectors.

In my investing I combine fundamental analysis with the above and I use a few exceptional market timing signals for longer term bullishness or bearishness. These have showed to be far more accurate than my own feelings, so I’d rather trust the professional quantitative analysts than my own emotions. These signals are also used in my shorter term trading.

Here I will gather my thoughts and post my trading ideas. These are my ideas, and you are invited to follow me. I like to exchange ideas and learn from my readers as well.
 
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My Point and Figure trading journal 2012

Here is a standard Point and Figure analysis / Wyckoff Technical analysis setup for AAPL that I have been trading with success this past year.


This is what I usually look at in my technical trading: P&F chart of the stock. Bar chart of the stock. A P&F chart of the market (S&P 500). The Relative Strength versus the market. Usually I don't do RS analysis of the sectors. I get a fairly good view on the strong and weak sectors to avoid just by viewing their charts. As long as we are stronger than market, we're usually golden.

So what about the analysis of AAPL?
We are in a down trend with some kind of support at around 580. We already broke the 650 support. (And I got stopped out.) We went back to lick it (Wyckoff test of ice, guys). Markets seem to want to go south, but is hesitating a bit. AAPL is short-term weaker than the market which is generally not a good sign. AAPL has been a market leader for a long time, and when the market leaders stop going up, normally the rest of the pack will follow it sideways or down.
 
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My Point and Figure trading journal 2012

Looking at REED technical analysis today.

On the 1% point and figure chart we are at a nice level of support at this level:



On the Candle stick chart we can see the nice uptrend. The last candle tried to go down but closed at the top - a bullish sign.

 
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My Point and Figure trading journal 2012

Let's have a look at URI, a stock I have been interested in a long time. Nice fundamentals and all.

We have quite a nice setup. We had a strong up move on heavy volume over the 37-38 area, gapped up even. Had a pullback/flat for a few days on much lower volume and then shot up again on heavier volume.

Another pullback/breather now, let's see the future.

 
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ECL is another stock on my list.

I really like the uptrend it is showing on the daily and weekly point & figure charts. The candlestick charts shows the latest strong upmove on high volume and BIG bars. Somebody really wants to own this company, but taking a breather at the previous resistance, now acting as support. A pullback to the side of the creek - for using the Wyckoff trader lingo.

Daily Point & figure chart


with weekly point and figure chart:
 
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Today I have four strong stocks. These are in the Utilities group that has performed well and been a market leader for a period.

First a technical analysis of AME
here we broke through the resistance at around 35.50. Now we seems to have a quick pullback on lower volume and I would not be surprised to see us head up if markets want to go higher from here.

We can notice a nice wyckoff spring at the end of the trading range before the breakout. For Spring traders this was just screaming out to buy. Springs are something I have always had trouble with, although they are a very reliable signal. With some hindsight in technical analysis they are a great confirmation in my opinion.

 
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Next technical analysis is DE - Deere & Company. These guys make tractors!

Tractors are apparently selling well, because we are breaking out of every resistance point there is. The point and figure 45 degree down trend line, and any minor resistance on the way. Now we had a slight pullback, a trading range above the resisitance "creek" on diminishing volume.

Also here we can see the Wyckoff spring in first part of october. You had to be cool to enter on it, but you had also been happy with your profits.

 
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Then we have PHM. Never heard of em...

PulteGroup, Inc., through its subsidiaries, engages in homebuilding and financial services businesses primarily in the United States.

Alrighty then, homebuilders. People need homes right?

Point and figure analysis - old resistance became support in the 17 level, now we are at resistance, or double top. We have a major diagonal uptrend in the bar chart. Strong.


 
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Then some Rock n roll:

ROK

The last three days have been exceptional.

The formation leading to that crazy breakout is quite strange with lower lows and lower highs. That's what some people would call a flag. Chart patterns were my introduction to price action analysis and trading. From that I moved to Richard D Wyckoff's work, and later simplified my own analysis with heavier focus on Point and Figure and confirming analysis on bar charts or candle stick charts.

 
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I just had to include this one also. SPRT. High risk - high reward?

I normally do not like these companies that are driven by news, but this pharmaceutical company apparently had a drug approved or something and the news made it blow through the roof. Now we are in a pullback after that news, and perhaps at a place where we might see a reversal.



About halfway of closing the gap. Normally a Wyckoff trader would consider the half-way point from top to bottom of pullback. When we're having a gap, we must look at it another way. Gaps want to be filled. That is one of their only reason for living.... A strong stock will not fill its gap, but it still wants to be tested. If we don't fill the gap, we are dealing with a strong stock.

Now, the point & figure chart just looks like a column of X and a column of O. Interesting to not when we're talking about half-way points - the column of X is 44 boxes, and the column of O is 22 boxes - and for those of you that know basic math, that is half.

 
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First of all,

sorry the post yesterday should have been SRPT and not SPRT - two different securities.

The one in my pics is SRPT.

Ever bought or sold the wrong stock? I have. You feel like an idiot when you do. It happens
to everyone once in a while I guess.


Anyway....


We had an up move in the markets. Dare we believe that it will continue, or did we see a reversal bar yesterday?
A "peek-a-boo" in the resistance zone at 1420? Will we jump into that zone or was it the last time we saw these levels
for some time?

Looking at the Spiders SPY.



The 5 box size says we're approaching a resistance zone above 145.
The 1 box size says we're heading down through the support at 142.

I wrote a little poem for you:

What do you do,
when you are in doubt?
When you don't have a clue?
You had better stay out!
 
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Is it safe to say that the general market does not like the elected president?
No confidence in the president's abilities to solve the financial trouble?

Is it safe to say that the market had a terrible day?

We officially jumped into the deep water, with a big splash. Huge bar, huge volume. Force.

I expect lower prices, with a test of the new resistance zone at some point.



We can confidently start looking at some short candidates.
 
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Yes we're heading downwards. The volume has picked up significantly - what I would call heavy selling.

The point and figure chart shows two levels of support at 137, the previous resistance level and a minor
45 degree trendline - both at the same level of 137. Another 45 degree trendline below that might
be the next support somewhere close to 134, where we also have a support level on the point and figure
plottings.



Looking at the barchart we can see that recently up-moves have had smaller and more bara, while
the down moves have been on larger and fewer bars - this shows that the line of least resistance have been down.
Likewise we can also note that the volume has been heavier on the down moves.

The last two days have had much heavier volume than any other bar lately.

 
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Sundays are good for doing general market analysis before markets open on Monday. I'd rather take Friday afternoon off, and do it on Sundays instead.

S&P500 has been weaker than Nasdaq, on a long term scale - Big chart on the right is the Relative Strength of SPY and QQQ.



This is normal. Now that we are on our way down I am assuming technology based Nasdaq will perform worse.

We did have an up day on Friday - but not very big, more of a breather. But still a heavy reversal with a close on the low end of the range. Tried to go up, closed down - if we can't go up, we will probably go down.
 
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Facebook stock technical analysis

Assuming Nasdaq will perform worse in a bear market, it is safe to assume FB will perform badly as it has since the IPO. Action has been terrible and I feel for the people who bought there and then on promises. Who dares touching this one now. There are some technical points to consider which can provide for good setups. A break out below the 18 level would mean to me that we are heading down again, a confirming pullback on low volume for added confidence. The action in the current trading range is quite erratic. I don't see real stopping action, more a low base type of pattern.

 

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