Point & Go Figure
These are some charts that caught my eye over the weekend. I have added text and illustrations where necessary.
All charts courtesy of Dorsey, Wright & Associates.
Is GE still an important stock? A general among infantry? So far the trend line from the March 2003 lows remains intact. A violation of this trend line would be important to me.
General Electric Company (GE)
Perhaps this longer-term chart of GE will better illustrate why I believe the stock remains an important tell in this market. GE violated what I believe was a secular trend line dating back to the early 80s in June 2002. The longer-term chart below shows that now GE has retraced a little more than a third of its move down from the high of 60, and the stock is quickly approaching this important downtrend line. Seems like it sure has taken a lot of energy since March 2003 to get here.
General Electric Company (GE) (2x3 scale)
PnF charts provide a context for decision-making. In my opinion, they prevent arbitrary buys and sells based on emotion. For example, WFMI last gave a sell signal on the chart in July 2002. Would I consider buying it here? Of course not. The nearest support level is 126 and I would not be able to gather enough evidence to say I am wrong about the stock until it moves to 116. Being "wrong" on a stock and being "wrong" on an entry point are two different things.
Whole Foods Market, Inc. (WFMI)
Google (GOOG) gave a sell signal on a 4x3 chart last Friday. But a 5x3 chart shows a slightly different picture. Which chart is more important to you depends on your timeframe. But if both charts line up and agree then, timeframes notwithstanding, the probabilities would suggest a more serious move down is underway.
Google Inc. (GOOG)
Monsanto Company (MON)
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter