“The most rewarding things you do in life are often the ones that look like they cannot be done.”

Arnold Palmer

Technical Analysis:  “The When”

The Point & Figure methodology has continued to develop over the past 100-plus years but remains at its core a logical, organized means for recording the supply and demand relationship in any investment vehicle.  As both consumers and investors, we are innately familiar with the forces of supply and demand; it is, after all, the first subject introduced in any Economics 101 class, and we experience its impact regularly in our daily lives.  We know why tomatoes in the winter don’t often taste particularly good, don’t have as long a shelf life, and are paradoxically more expensive than those sent to market in July.  What many investors are slow to accept is that the very same forces that cause price movement in the supermarket also trigger price movement in the financial markets.  When all is said and done, in a free market of any kind, if there are more buyers than sellers willing to sell, the price will tend to move higher.  If there are more sellers than buyers willing to buy, the price will tend to move lower.  If buying and selling are equal, the price will tend to remain the same.  By charting this price action in an organized manner, we hope to ascertain who is winning the battle, sellers or buyers, supply or demand.  By having the ability to evaluate changes in the market, we have taken the first step toward also becoming responsive to both bullish and bearish periods.


Source:  Dorsey, Wright & Associates.  Stifel is not affiliated with Dorsey, Wright & Associates.  Investment products and services are offered through Stifel.

Past performance is no guarantee of future results, and no one can predict the markets with any certainty.