[theory6453]

Question: Where is a good online resource to get charts for overall sectors and sector sub-groups?

For example, I recently took a small short position the other day in McDonald’s (MCD). It looked to me that it was entering a Stage 3 and about to go into a Stage 4. I now realize that conclusion was WAY too premature (since the MA is not yet falling), however, another mistake was that I forgot to check how the overall sector (Services) and sub-group (Restaurants) is performing since I shouldn’t be shorting MCD if the Services sector and/or Restaurants sub-group is in a Stage 2.

Anyone have a good resource where I can get this info at-a-glance? I have StockCharts already so if it's available there that would work too.

Thanks!

[isatrader]

Question: Where is a good online resource to get charts for overall sectors and sector sub-groups?

You can find them all on stockcharts at: Sector Summary: S&P Sectors and then you can click through to the sub sectors by clicking on the name of the sector.

Another new feature that stockcharts made available for extra members recently was the ability to style the charts in the Gallery View which shows you the intraday, daily, weekly and standard P&F on one page.

To style the daily and weekly charts you just need to set your chart up and make it 800 pixels wide, and then add a new ChartStyle and call it GalleryDaily for the daily chart and GalleryWeekly for the weekly chart, and then the next time you click on the gallery view it will show the chart styles you set up instead of the default charts. Personally, I now use the Gallery View all the time, as it makes working out the stages much easier with multiple time frames on one screen.

Here's the link to the blog post explaining how to set it up in case I didn't explain it very well: http://blogs.stockcharts.com/chartwatche...thing.html and I've attached a screenshot of the gallery view I use.

[theory6453]

That is super helpful! Thank you!

[theory6453]

Hello,

2 questions:

1) I've heard to stay away from stocks that are too "thinly traded"... that seems like a fairly subjective term. Did Stan have an opinion/definition on what this meant? Would also love too hear others thoughts on what their threshold is...

2) In doing some research, I've found a few charts where the stock appears to be entering a Stage 2a, however when I check the stock's P&F chart and look at the preliminary price target it turns out to be bearish... What does this mean? I'm assuming their are conflicting indicators and I should not touch with a ten foot pole.

Thoughts?

Thanks!

[isatrader]

1) I've heard to stay away from stocks that are too "thinly traded"... that seems like a fairly subjective term. Did Stan have an opinion/definition on what this meant? Would also love too hear others thoughts on what their threshold is...

Can't remember off the top of my head if this has been mentioned by Stan in the book or any of the interviews. So I will just give you my opinion on the subject, which is that I've traded a number of thinly traded stocks over the years, as it's particularly common with a large amount of UK stocks which I trade as the market is quite small and a lot of the volume is in the FTSE 100 stocks. Lack of liquidity in a stock can cause very volatile price movements in both directions, which can cause you to be stopped out for no reason intraday or on the open even and then the price snaps back again within a few minutes, and you can get very large bid ask spreads which you don't want, as you want the spread to be as tight as possible. So these days I impose a limit on my trades of a maximum bid ask spread size of 0.5%. If it's anymore than that then I won't consider it as in some thinly traded stocks you can have spreads that are 4 or 5%, so you are immediately 5% down when you open the trade on top of the broker fees, so these are some of my reasons for avoiding them.

2) In doing some research, I've found a few charts where the stock appears to be entering a Stage 2a, however when I check the stock's P&F chart and look at the preliminary price target it turns out to be bearish... What does this mean? I'm assuming their are conflicting indicators and I should not touch with a ten foot pole.

I'm assuming that you are looking at point and figure chart of a stock with a single digit price and using the traditional scaling method. This will not have much movement as each box will have a very high percentage in the single digits, and it requires a 3 box reversal on the traditional scale. So a huge move is required to add an additional X to the column in the single digits, and so I'd suggest using percentage based scaling on charts with very low values especially, or they'll be looking back to much higher swing highs in order to give a breakout signal, and hence why it's still on a bear signal.

Basically with the traditional scaling method and a low value chart, the P&F breakout signal will come only after a much bigger move, and so the Stage 2A breakout that you are seeing might be quite an early one, which are not always as strong as breakouts from a much more developed Stage 1 base. But I'd suggest learning much more about using point and figure charts before implementing them with your live trades, as they are great, but you need to understand how to read them correctly.

A few of the best books on the subject are The Definitive Guide to Point and Figure by Jeremy du Plessis, which focuses on the price action aspect of them mostly and Point and Figure Charting by Tom Dorsey which focuses on the relative strength and market breadth uses which overlap with Weinstein's method in many ways.

[theory6453]

2) In doing some research, I've found a few charts where the stock appears to be entering a Stage 2a, however when I check the stock's P&F chart and look at the preliminary price target it turns out to be bearish... What does this mean? I'm assuming their are conflicting indicators and I should not touch with a ten foot pole.

I'm assuming that you are looking at point and figure chart of a stock with a single digit price and using the traditional scaling method. This will not have much movement as each box will have a very high percentage in the single digits, and it requires a 3 box reversal on the traditional scale. So a huge move is required to add an additional X to the column in the single digits, and so I'd suggest using percentage based scaling on charts with very low values especially, or they'll be looking back to much higher swing highs in order to give a breakout signal, and hence why it's still on a bear signal.

Basically with the traditional scaling method and a low value chart, the P&F breakout signal will come only after a much bigger move, and so the Stage 2A breakout that you are seeing might be quite an early one, which are not always as strong as breakouts from a much more developed Stage 1 base. But I'd suggest learning much more about using point and figure charts before implementing them with your live trades, as they are great, but you need to understand how to read them correctly.

A few of the best books on the subject are The Definitive Guide to Point and Figure by Jeremy du Plessis, which focuses on the price action aspect of them mostly and Point and Figure Charting by Tom Dorsey which focuses on the relative strength and market breadth uses which overlap with Weinstein's method in many ways.

Fantastic. I'm going to put the Dorsey book on my reading list. Sounds like a really good primer for me.

To follow up on P&F, do you have a high-level threshold for P&F where you move from traditional box down to percentage P&F chart? (i.e. - Price > $10 use traditional P&F; Price < $10 use percentage method) Is there an in-between method? Is there a price range where you might look at both.

On an another note, I was re-reading Stan's section on sell stops last night. His advice was to set the stop just below the nearest round number (i.e. - $17 7/8) Now, of course, this was back in the 80s when stocks were tracked in eighths of a point. Do you have a guideline that you follow to adhere to this rule that is more up-to-date? To your point earlier, depending on the price of the stock, $0.12 could be quite significant and maybe there is a tighter rule we could be following now that stocks are traded in much smaller fractions of a point.

I appreciate your patience with all my questions. If there is a thread where either of these questions were already addressed, feel free to point me there.

Cheers!

[theory6453]

2) In doing some research, I've found a few charts where the stock appears to be entering a Stage 2a, however when I check the stock's P&F chart and look at the preliminary price target it turns out to be bearish... What does this mean? I'm assuming their are conflicting indicators and I should not touch with a ten foot pole.

I'm assuming that you are looking at point and figure chart of a stock with a single digit price and using the traditional scaling method. This will not have much movement as each box will have a very high percentage in the single digits, and it requires a 3 box reversal on the traditional scale. So a huge move is required to add an additional X to the column in the single digits, and so I'd suggest using percentage based scaling on charts with very low values especially, or they'll be looking back to much higher swing highs in order to give a breakout signal, and hence why it's still on a bear signal.

Basically with the traditional scaling method and a low value chart, the P&F breakout signal will come only after a much bigger move, and so the Stage 2A breakout that you are seeing might be quite an early one, which are not always as strong as breakouts from a much more developed Stage 1 base. But I'd suggest learning much more about using point and figure charts before implementing them with your live trades, as they are great, but you need to understand how to read them correctly.

A few of the best books on the subject are The Definitive Guide to Point and Figure by Jeremy du Plessis, which focuses on the price action aspect of them mostly and Point and Figure Charting by Tom Dorsey which focuses on the relative strength and market breadth uses which overlap with Weinstein's method in many ways.

Fantastic. I'm going to put the Dorsey book on my reading list. Sounds like a really good primer for me.

To follow up on P&F, do you have a high-level threshold for P&F where you move from traditional box down to percentage P&F chart? (i.e. - Price > $10 use traditional P&F; Price < $10 use percentage method) Is there an in-between method? Is there a price range where you might look at both.

On an another note, I was re-reading Stan's section on sell stops last night. His advice was to set the stop just below the nearest round number (i.e. - $17 7/8) Now, of course, this was back in the 80s when stocks were tracked in eighths of a point. Do you have a guideline that you follow to adhere to this rule that is more up-to-date? To your point earlier, depending on the price of the stock, $0.12 could be quite significant and maybe there is a tighter rule we could be following now that stocks are traded in much smaller fractions of a point.

I appreciate your patience with all my questions. If there is a thread where either of these questions were already addressed, feel free to point me there.

Cheers!

Sorry also... can you refresh my memory on how to incorporate a log scale into my charts (to analyze large scale declines)... I'm not exactly sure what that is. Thx.

[isatrader]

Sorry also... can you refresh my memory on how to incorporate a log scale into my charts (to analyze large scale declines)... I'm not exactly sure what that is. Thx.

You need to tick the box that says log scale in the chart attributes section in stockcharts. I've attached a screen shot with it highlighted.

I'll reply to the other longer question a bit later on.