Learning to read Price Action with P&F Charting

Quote from flyinglead:

Has anybody been watching JNJ. Been sneaking up for a long time, and today I hear they are buying back a lot of their stock and Buffet has been large amounts of it. So my question, is it being propped up and the main reason it is up in a down market? Is Buffet buying just to keep his money in an equity that isn't tanking? The stock seems to be kinda sluggish right now but at least it hasn't tanked like some of the stocks.but what happens when the bear market ends and they start to sell off?
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9/16/08...

It's likely that news was late and the purchases were already completed...


Hang on, folks.
 
Quote from HooLee:

Yes you will do well if you can identify range bouncing and trending correctly. P&F is about trend following, and typical win rate for such systems is about 30-40%.
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page 202 (finally - only 50+ more to go...)


Just to clarify - PnF is not a trend following methodology. (A 50 x 200dma crossover strategy IS...)

If anything, the very nature of the bullish percent index concept tilts it toward the predictive side. It IS, at the least, adaptive. The BPI was an alert to supply entering the market in June, and price began to confirm it in bar/stick charts of broad market indexes in July by taking out two levels of support at ~1200 from earlier in the year. And the worst of the fundamental news wasn't even out yet.

With sincerest apologies to Mr. Grail - whom I am grateful initiated this thread - I'll just make a subtle suggestion that volume studies were also hinting at some trouble.:D (I am sorry to learn of your property loss, sir.)

The participation by the rest of you has been worth your while, as well. There is a tool here whose value you won't fully comprehend for some time. Stick with it.

Having lifted my leg all over this thread, I'm going to see if I can't finish the next 50 or so pages, now. Unfortunately, I sense it takes a negative turn toward the end... ...
 
Quote from flyinglead:

Did everybody give up? this thread sure went dead.
couple things I've noticed about p&f. doesn't matter how good the signal is, how it is doing against its sector or one of the indexes, a bear market is still a bear market. I'm sure this ties in to bulllish percentage altho I am still struggling with the bullish percentage. Probably cause I haven't studied it thoroughly.
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9/29/08

Flyinglead, you don't know how true your words are...

You have not been trusting your primary flight instruments. Or learned them, for that matter.

Try viewing the BPI in this format:
(forget all the other indicators and MA's, etc.that appear on it - just look at the line values of the BP... in time segments. A/O 9/29 it was heading south like a migrating bird - DEFENSE.)

http://stockcharts.com/h-sc/ui?s=$BPNYA&p=D&yr=2&mn=0&dy=0&id=0

This chart represents true demand in the market. Because of it's predictive nature, it bottomed in October and made subsequent higher tops in November and again in March. Prices went lower still, but this created a bullish divergence that most missed later on.

The BP's depict the underlying market. Prices do not always do so. To get your mind around the BP, you first must KNOW the individual PnF chart... for the BP can only be made up of the aggregate of individual charts.

If you're still around in 50 more pages, you will have proven your determination.

Hope to see you soon.

MS
 
Quote from dentist007:

does anybody have a name for this chart pattern.?
a 1 box reversal hilo data.0.5% box size
i am thinking of: fishing line with a hook
attachment.php
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From 10/12/08


Long tail of O's down. Dead cat bounce play for a 38 - 50% retracement.
 
Quote from anugrahtex:

I am still studying these PNF chart

But when I try to study . for example DJIA/$INDU

i got different chart , all is under :

BOX : 1
Reversal : 3

but from Stocksharts AMibroker, or Prorealtime i got 3 different chart..

Is it because PNF is for personal or is it the starting point is different.. ?

need comment..

thx
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The default format provided by Stockcharts is traditional. (IMO what should be used, also, until you have a solid understanding).
 
Quote from yayt:

I'd look to get short msft if it reached the previous 2 tops and then began reversing down again

keep posting, I'll try to post some charts soon myself

good job on the trade though
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from 12/10 or so...

To all in general,

The NYSE BP reversed up several weeks before this post... in X's from below 30%... Bull Alert status...

I know it's hindsight, and it didn't last, but this was the time to step in front of demand/go long (actually, right after Thanksgiving).

It was tough and the market had plans to shake the tree again to get the last of the sellers to sell. Also a time for a cup-check... ...

This is a great exercise for all.

Forensic trading... ...!
 
Quote from rtr1129:

I have been reading this journal from the beginning, and it's great, but the one thing I have not felt confident about at any point is trendlines.

In many of the posted charts, I see numerous places where a trendline should be drawn according to HolyGrail's description of how to draw a trendline, but a trendline is not drawn.

Example: http://www.elitetrader.com/vb/attachment.php?s=&postid=1849155

Around the 11.00 price level, near the center of the chart where the 8,9 is, it looks like there should be a trendline, but no trendline was drawn.

There are many other charts like this that have been posted. I basically just want to feel confident when drawing a trendline on PnF charts, but I feel like I'm missing something.

Is it really as simple as an X going higher than the previous X, and an O going lower than the previous O? In the posted charts, did people just leave off trendlines that were unimportant to the point they were making, or did they not draw the trendlines because a trendline shouldn't have been drawn?
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From early January, '09

Trendlines can only be changed when they are violated (penetrated, through) by a stock's price. Only then will you go to the other end - top or bottom - and draw a new line in the opposite direction (up or down) from a previous bottom or top.

Click on any default chart in Stockcharts and it will depict them. WMT is a good example since it has been range-bound for so long it shows plenty of changes in bullish support and bearish resistance lines. It is also scaled correctly.

http://stockcharts.com/def/servlet/SC.pnf?chart=wmt,PLTADANRBO[PA][D20100130][F1!3!!!2!20]&pref=G


Adding bullish resistance and bearish support lines to create a trading channel is a bit more involved, but not much.
 
Quote from rtr1129:

Okay, I gave it a try. See attached chart. I included the double top/bottoms and connected them to the trendlines. Let me know if that's correct, incorrect, or just overkill :)
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From 2/8/08

It's simpler than this. But your chart has to be correct first, as well. Start with default scaling.

And - learn the construction of a PnF chart well... it takes 5 minutes.

(That info is buried someplace back in this thread.)
 
Quote from CWU:

First, you looked at the stockcharts P&F chart and that’s a good thing because I provided their code pounder with the exact algorithm I posted here. (This was some 5 or 6 years ago.)

I see that you added 4 superfluous secondary BLSL – but for what reason?

First, master the Bullish Support Lines and Bearish Resistance Lines. Then, the Bullish Resistance Lines and Bearish Support Lines. Then, short term lines

Take any chart in Bullseye, remove all the trendlines, go to the hard left and start drawing in the trendlines. Simply follow the algorithm. Post that.
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From 2/8/08

Your posts are very clear, CWU, but there are only 3 un-needed blue BLSL's - the uppermost left one is actually a correct BLSL because there was a violation of the BRRL at 81.

The final red BRRL off the top at 58 and down was un-needed since there was no penetration of the BLSL... just a meeting of it - which moves the BLSL over to the next most obvious place at 48-49...
 
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