Point & Figure Charts Revisited
by Wayne A. Thorp, CFA
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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correction
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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Discussion
Another good online site that is good for Point & Figure charting is, StockCharts.com. Many of the websites products can be used for free, and membership opens up much more to the individual investor. Not only for P&F but all methods of charting are available. My best to all AAII members future investments.
posted about 1 year ago by Jose from Illinois
I agree. Stockcharts.com is highly regarded by CI and is consistently one of our top-reviewed websites for technical analysis and charting.
posted about 1 year ago by Wayne from Illinois
