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Point and Figure Charting: The Essential Application for Forecasting and Tracking Market Prices
"The law of supply and demand affects the price of everything we buy - from lumber used for construction to gasoline we put in our cars. This law, which influences our everyday lives, is all the more prevalent in the world of securities. In the Second Edition of Point and Figure Charting: The Essential Application for Forecasting and Tracking Market Prices, Thomas J. Dorsey revisits the time-honored tradition of point and figure charting. This proven method of tracking fluctuations in the supply and demand of securities allows the investor to recognize promising trends in the market early enough to take advantage of them."--BOOK JACKET.
- GenresFinance
398 pages, Kindle Edition
First published May 18, 1995
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130 people want to read
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Displaying 1 - 5 of 5 reviews
November 24, 2019
Point & Figure Charting by Thomas J. Dorsey is a worthwhile read if you want to view market activity through a different technical lens than a typical price vs. volume stock chart.
Point & figure charting is a technical analysis tool in which time is not a consideration. These charts look different from any stock price chart that you typically see. Charles Dow is given the recognition for the creation of this charting methodology so this is not new. The essential feature of a point & figure chart is that, by definition, stock price activity is the only consideration – and that is supposed to be real representation of supply and demand. Dorsey repeats in the book that stock price activity is the result of supply and demand, not earnings performance. He cites the many well-performing companies whose stock prices plummeted in 2008 as “proof” that stock price depends on whether or not there are more buyers than sellers or more sellers than buyers.
Besides highlighting a different method for charting stock price activity, the other major point of Dorsey’s book is his advice to track and understand relative strength. Relative strength does not predict what happens next but it does allow the trader to understand what has happened. Then the trader can react.
Another point made by Dorsey is his recommendation to view indexes via an equal weight perspective, not just a market capitalization perspective which is the composition of a “typical” stock index fund. A market capitalization view allows very large companies like Apple, Microsoft, Alphabet, and other behemoths to influence the index when an equal weight perspective gives a much broader view of the breadth of the current market. He frequently cites market cap perspective to equal weight perspective as the difference between the composition of the US House of Representatives (ie, population-weighted) vs. the US Senate (equal weighting by state). Using an equal-weighted index when combined with relative strength and point and figure charting allows an objective look at current market/sector/etc. conditions.
Read this book for a different point of view of market assessment and trade entries/exits.
Point & figure charting is a technical analysis tool in which time is not a consideration. These charts look different from any stock price chart that you typically see. Charles Dow is given the recognition for the creation of this charting methodology so this is not new. The essential feature of a point & figure chart is that, by definition, stock price activity is the only consideration – and that is supposed to be real representation of supply and demand. Dorsey repeats in the book that stock price activity is the result of supply and demand, not earnings performance. He cites the many well-performing companies whose stock prices plummeted in 2008 as “proof” that stock price depends on whether or not there are more buyers than sellers or more sellers than buyers.
Besides highlighting a different method for charting stock price activity, the other major point of Dorsey’s book is his advice to track and understand relative strength. Relative strength does not predict what happens next but it does allow the trader to understand what has happened. Then the trader can react.
Another point made by Dorsey is his recommendation to view indexes via an equal weight perspective, not just a market capitalization perspective which is the composition of a “typical” stock index fund. A market capitalization view allows very large companies like Apple, Microsoft, Alphabet, and other behemoths to influence the index when an equal weight perspective gives a much broader view of the breadth of the current market. He frequently cites market cap perspective to equal weight perspective as the difference between the composition of the US House of Representatives (ie, population-weighted) vs. the US Senate (equal weighting by state). Using an equal-weighted index when combined with relative strength and point and figure charting allows an objective look at current market/sector/etc. conditions.
Read this book for a different point of view of market assessment and trade entries/exits.
February 22, 2022
It is a fantastic method for charting stocks!
January 1, 2010
This is the ultimate book about the financial markets. Whether you are a professional in the business like I am or you do it yourself, the techinal methodology and analysis of the Dorsey Wright & Associates is superior to any fundamental approach available.
This book brings alive in easy to understand prose how to properly chart a stock, mutual fund or ETF and how to know when supply or demand is in control in the market. That simple revelation would be a huge improvement over the advice you garner from TV or the print media.
All private investors should read this book and decide whether or not they will attempt to implement themselves or hire a professional who has been trained by this company. Following this investment philosophy would have meant that your accounts would be up to the tune of 50% since October 2007. In fact, you would have only been in equities 1 day in the disaster of 2009.
This book brings alive in easy to understand prose how to properly chart a stock, mutual fund or ETF and how to know when supply or demand is in control in the market. That simple revelation would be a huge improvement over the advice you garner from TV or the print media.
All private investors should read this book and decide whether or not they will attempt to implement themselves or hire a professional who has been trained by this company. Following this investment philosophy would have meant that your accounts would be up to the tune of 50% since October 2007. In fact, you would have only been in equities 1 day in the disaster of 2009.
February 17, 2008
Probably one of the easiest reads I've read on investing. So from the pure reading aspect I'd recommend it. However the truth will be in putting it into action so that I have yet to analyze!
July 13, 2009
Good information on a very basic type of technical anlaysis for stock and etf traders.
Displaying 1 - 5 of 5 reviews