Point & Figure Charts Revisited
In the August 2000 issue of the AAII Journal, we introduced the seemingly forgotten art of point and figure charting. These charts illustrate the underlying supply and demand for a security while ignoring the passage of time. You can find this article at the AAII Web site (www.aaii.com) using the search tool. Member feedback prompts us to offer this supplement to the article, correcting a few mistakes and more explicitly laying out how the sample point and figure chart was plotted.
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The time period for Figure 1 in the August article is mislabeled. The chart for Cisco is stated as covering the period January 4, 1999, through April 31, 1999. This chart, reproduced here in Figure 1, actually covers the time period January 4, 1999, through May 31, 2000.
The high/low price table in Figure 2 in the August article shows italicized dates corresponding to those dates where a shift in column takes place from X’s to O’s or O’s to X’s. June 5 is incorrectly italicized when, instead, June 6 was the date to shift from a column of X’s to a column of O’s. The explanation below walks you through this shift. One final note on the August article: Figure 6 shows a double-top formation at $37, which we failed to label.
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