Good evening,
There’s a lot of new followers lately (thank you & welcome!) and I’m sure many are new to “Point and Figure” charts & targets. Even for the longer term members (thank you!) this should be a nice recap.
I just thought I’d send out a quick update on how I come up with my objectives (aka targets) using these special charts - that look like a glorified tick-tack-toe board. I’m going to use an example from tonight’s futures chart of SPX500.
The chart settings are important:
Time frame. This example is going to use the 5 minute time frame.
Chart type: I am choosing the “Close Only” method to limit the columns of Xs and Os and give a more conservative count. The other popular choice in Point and Figure is the “High/Low” method, which will produce more columns.
Box Size. For this chart the box size will be set at 5.
Reversal amount. For this chart the reversal amount will be 3 boxes. This is the number of boxes that is needed to print in the opposite direction from the current column in order to generate a reversal column.
The abbreviated way I would say the above is “Close only, box size 5, 3-box”.
Ok, so here’s the chart with example count:
I am providing two counting methods here: “Horizontal”, and “Vertical”
Horizontal:
Step 1: The count
The count is taken by first identifying a long column of Os on the left, and a long column of Xs on the right. This shows up quite frequently in PnF. Then all you do is count the number of columns from left to right, which is 24 in my example on the chart (far left). Then the count goes like this:
(# of columns) * (box size) * (reversal amount) —> 24 * 5 * 3 = 360
Step 2: The anchor
You take this count, and add it to the “anchor” of the accumulation. I choose the anchor to be lowest O in the 24 columns, which for this example is $3,525.
Step 3: The objective (aka target)
The objective is simply calculated by adding steps 1 & 2 together. This would be $3,880 (shown on chart).
Vertical:
Step 1: The count
The count is taken from the breakout column of Xs from the lows. You add up the quantity of Xs in this column - which in this case is 21 Xs. Quick math is [(High X - Low X )/ Box Size] +1
Step 2: The anchor
This is the bottom O of the prior column - which in this case is $3,525
Step 3: The objective (aka target)
The objective is calculated the same way for horizontal and vertical counts, by adding the count and the anchor together. In this example the objective is $3,840 (shown on chart)
Bearish counts:
The above counts are for bullish counts. Bearish counts can be generated in the same way, except using the highest X as the anchor (horizontal method) or the high X in the prior column (vertical method).
Invalidation:
Bullish objectives (or targets) are invalidated when an O prints below the anchor that was used for Step 2.
Bearish objectives are invalidated when an X prints above the anchor that was used for Step 2.
For other counting example write-ups of mine, see:
My Bitcoin write-up from October 25th (link here) where I shared how to count with log scale Point and Figure.
My gold and silver write-up from Aug 16th (link here) where I showed the very long term counts I can come up with for the precious metals.
And for my high-level write-up on point and figure, see the post from July 18th, “Point and Figure Post #1” (link here).
A disclaimer on point and figure objectives:
They are not guaranteed. Nothing is. This is simply one way of gauging the potential energy in a move, and how much gas is left in the tank. They are targets which can be invalidated, and nothing more. There are other ways to come up with price targets, but this is by far my favorite. Since starting this service in the summer, for the premium members, I have shared many targets which went on to become achieved - and it has helped lead to many gains.
Other than my market insights, charts & targets - I also share trade ideas in a real time portfolio and options.
Shared Portfolio Trade Ideas:
The portfolio that I share real time trade ideas for premium members is up +27% since inception (July 1), which is outperforming both SPX (+20%) and NDX (+22%) over the same period.
Options Trade Ideas:
For those interested in options, below are the closed options trades I have shared, all of which are winners:
The average % change on the closed options positions is 159%. Said another way, the average closed position is a 2.6 bagger.
There are currently 16 open options positions, many of which are just getting started and haven’t had much time to work yet.
Out of respect to the premium members I cannot share my tracking sheet which would give away the trades. But I can share that the average % change for those 16 open positions is currently +36%.
If you are looking to change things up and try out a proven service with winning results, consider becoming a premium member.
All the best,
Trace