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1992issue C041-10

Point-and-figure, breadth, and volume as falsifiable hypotheses

A time-independent congestion count, a breadth confirmation, and a volume-price shift can each be read as a claim. Editorial stance: later price action is what confirms or kills it.

  • A point-and-figure count measures congestion horizontally and implies an upside or downside objective after a breakout, a construction later price can confirm or fail.
  • Breadth is still used as a leading check when it confirms peaks, while upside-volume peaks that have become coincident arrive too late to time a low.
  • The technician ranks names on technical criteria and does not own the buy, sell, or profit-taking decision.
  • The same pattern rules are applied across eras and overseas markets, but market character still changes and has to be recognized.
Entries in this reading3 entries
Current trackPoint and figure chart37 readingsMarket breadth120 readingsVolume-price analysis129 readings

A count turns congestion into an objective

Point-and-figure charts are time-independent, so the same breakout and congestion rules can be applied whether a pattern forms in a few days in a derivative or over months or years in a stock. A count measures a congestion area horizontally to produce an upside or downside objective after a breakout. The archive contrasts that target construction with bar charts.

Pattern work on these charts looks for an accumulation or distribution area, then treats an upside or downside breakout as confirmation that a containing price has given way.

Breadth still leads when it confirms; some volume peaks do not

Market breadth is presented as a still-valid leading indicator when it confirms peaks. The archive uses that conventional reading to stay constructive on the market for the time being.

Upside-volume peaks are described as having shifted from leading to coincident. By the time a noticeable peak appears, the market may already be near a low, which collapses the signal's usefulness. Editorial note: volume-price analysis here is a check on whether volume still leads price, has become coincident with it, or has lost value as a timing signal.

Ranking names is not issuing a trade

Technical work is defined as ranking names on technical criteria rather than labeling buys and sells. Taking profits is treated as trading strategy, which the technician serves but does not own. That technician role leaves the strategy decision with the trader or investor.

Market history is grouped into five eras with different character, including a mid-1960s through early-1980s range near 1000 on the Dow and a faster-growth stretch from 1982 into 1992. Editorial note: era-recognition asks the technician to notice when market character changes across those regimes, even while pattern rules stay conceptually the same.

A 1987 decline of a size compared with 1929 recovered quickly and did not produce a lasting economic break. The archive uses that episode to argue that similar shocks can occur without long-lasting importance. Overseas markets are treated as following the same technical rules as U.S. markets because human emotion, not nationality, is said to generate the patterns.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
10 of 30 in the Point and figure chart track
19921-8 pp.Next on Point and figure chartThree-gate stock selection with ranks and point and figureThe earnings-consistency-screen is binary: a down year in the last five annual earnings prints, or a quarter in the last two years below the same quarter a year earlier, deletes the name.
All readings on this track · 30 readings
  1. 1988Constructing trend definitions with filters and lines
  2. 1989Reversal count as the clock on point-and-figure charts
  3. 1989Point-and-figure setup and session-average entry windows
  4. 1989Two-scale point-and-figure trendlines and stop placement
  5. 1989Adjusted net asset value, tighter reversals, and written stops on a fund point-and-figure chart
  6. 1990Stack option odds after point-and-figure signals
  7. 1991Constructing a point-and-figure downtrend-break
  8. 1991Constructing point-and-figure box and reversal charts
  9. 1991Constructing a close-tested one-two ladder on a point-and-figure chart
  10. 1992Point-and-figure, breadth, and volume as falsifiable hypotheses
  11. 1992Three-gate stock selection with ranks and point and figure
  12. 1993Constructing combined stochastics and point-and-figure relative strength
  13. 1997Point-and-figure box scale and reversal construction
  14. 2000Cotton weekly point-and-figure: late-stage decline, named weekly close
  15. 2000Constructing point-and-figure charts for support, resistance, and breakouts
  16. 2001Swiss franc: seasonal permission and a weekly point-and-figure breakout
  17. 2001Constructing point-and-figure boxes and reversals
  18. 2002Point-and-figure construction: box, live column, and three-box reversal
  19. 2003E-mini point-and-figure box-size and a descending-triangle breakout
  20. 2003A reconstruction critique of point-and-figure daytrading
  21. 2004Point-and-figure column moving-average crossovers
  22. 2005Box-series transforms for trend and channel work
  23. 2006Constructing bearish point-and-figure support breaks
  24. 2008Point-and-figure forex breakouts and triangles
  25. 2012From tactile charts to written trade rules
  26. 2013Combine a Point and figure chart and Moving-average crossover inside one System optimization procedure
  27. 2015Point-and-figure time and volume limits are conventions to test
  28. 2016Measurement-first critique of indicator defaults
  29. 2017Point-and-figure construction, reversals, and column-based overlays
  30. 2019A 2019 charting case as a three-check trend classroom
By fieldMarket breadth101 readingsBy year1992115 readings
All 37 readings tagged Point and figure chart
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1992Percent filters, log point-and-figure, and breadth residuals1988Constructing intradaily point-and-figure boxes and pivot ladders1988Constructing trend definitions with filters and lines1988Remaining life on a percent-filtered swing chart1989Adjusted net asset value, tighter reversals, and written stops on a fund point-and-figure chart