Integrating Fundamental And Technical Analysis For Profit In Boston – Point and Figure (P&F) charts for long-term investing have been described as one of the simplest systems for determining specific entry and exit points in stock market trading. This charting system tracks supply and demand for each issue while keeping an eye on trends. What makes P&F charts unique is that they do not consider the discrete passage of time as most other types of charts do on their x-axes.

Although point and line charting has never been at the top of the list of popular techniques used by technical analysts, there is growing interest in P&F in all corners of the charting community. Here we take a closer look at P&F graphs and how to read and construct them.

Integrating Fundamental And Technical Analysis For Profit In Boston

Integrating Fundamental And Technical Analysis For Profit In Boston

Conventional technical analysis charts are usually open-close/high-low charts that depict price movements over time, such as day-to-day. In creating P&F rankings, the emphasis is only on the closing price of the issue. The developers of the P&F chart were interested in the development of the trend, and so they were not interested in the daily noise of small ups and downs, but how the bigger picture was shaping up from a supply and demand perspective.

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The key to P&F charts is determining the price unit, which is a unit measure of the price movement plotted on the chart. P&F graphs do not have a time axis, only a price axis. Rising stock prices are indicated by X and falling prices by O. These points appear on the chart only when the price moved at least one price unit in either direction.

Let’s say that the stock’s closing prices increased three times by one price unit. It appears as a column of three X’s. When the price action reverses direction, the chart shows a new column of O’s with O’s drawn for each unit of price action. X’s and O’s never appear in the same column. However, the chart must determine how many price units form a box, meaning how much the price must move in the opposite direction for the chart to start a new column.

For example, let’s say the stock you are tracking was trading at $25 and you used $1 unit and the reversal box is three units. Now, if the stock had traded to $25, the stock would have to close at $22 before the chart turns into a column of O’s. Since each unit of price action must be plotted, each unit of price action below the $25 level must be represented by one O in this new column of O’s. The next reversal would see the stock trade at least $3 or $3 higher. points before the new X column became visible again on our P&F chart. So let’s say the problem continues to fall to $20 before it reverses itself; X’s will reappear when the price reaches $23. Remember that you choose the size of the item yourself. It could be $0.50, $1, or even $2 if the stock price is high enough. Graphically, the first two columns of our example look like this:

Now that we’ve looked at how to make a P&F chart, the next question is how do we read it. P&F experts clearly understand that the law of supply and demand determines the price of a stock. If the problem is a rising price and we have an uptrend with at least three X’s, we believe that demand has exceeded supply.

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Conversely, when this chart gives us the three O’s, it indicates that supply has exceeded demand. P&F charts show us trend setting, trend reversal, and supply and demand of mapped issues.

The following will give you a solid foundation for further exploration of two important P&F charting principles: support levels and resistance levels. You should remember that both support and resistance are shown by horizontal lines and trend lines are shown at a 45 degree angle.

A support level is a level at which both investors and traders believe that prices will begin to move higher after reaching the support mark. Look at the three O’s in the example above to see what it means. When a trend reversal and an uptrend reset, you look for a horizontal O-line.

Integrating Fundamental And Technical Analysis For Profit In Boston

The horizontal line of X’s represent the resistance levels you need to look for in the P&F mapping survey. Trendline studies have shown that breakouts of resistance levels generally occur with high appetite, ie, high volume and a rapidly rising stock price.

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Trends take a long time to reverse, so traders should remember that the P&F chart is for long-term investors and has no value for the short-term trader. By using point and line charts to identify general price trends, technical investors can take positions that have a high probability of profit.

This is just a basic overview of P&F graphs. The best book ever written on the subject is Point and Figure Mapping by Thomas Dorsey. This book is a must for anyone who wants to gain an in-depth understanding of this popular mapping method. Since their introduction, P&F charts have been deeply integrated into other technical analysis and trading strategies.

The offers in this table are from partnerships that receive compensation. This allowance may affect how and where listings appear. does not cover all the offers available in the market. Fundamental analysis is a method of evaluating the intrinsic value of a security or asset by analyzing various economic, financial and qualitative factors that can affect the value of the asset in the long term.

This approach involves examining factors such as a company’s financial statements, industry trends, quality of management and macroeconomic conditions to determine an asset’s growth potential and fair market value.

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The purpose of fundamental analysis is to identify undervalued or overvalued investments based on intrinsic value and to make informed investment decisions based on this analysis.

Economic indicators are important tools that help investors assess the general state of the economy and make informed investment decisions. Some key economic indicators are:

GDP represents the total value of goods and services produced in a country during a certain period. A growing GDP indicates a healthy economy and can positively affect the performance of companies and, consequently, their share prices.

Integrating Fundamental And Technical Analysis For Profit In Boston

Employment data, such as the unemployment rate and job growth, provide insight into the health of the labor market. A strong labor market usually means higher consumer spending, which benefits companies and their stock prices.

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Inflation measures the rate of general price increases for goods and services, while interest rates measure the cost of borrowing money.

Both factors can affect stock prices, as higher inflation and interest rates can negatively affect the profitability of companies and the willingness of investors to invest.

Consumer confidence measures consumers’ optimism about the economy and financial situation, which affects their spending habits. Increased consumer confidence and spending can boost corporate earnings and stock prices.

International trade and balance of payments provide an overview of the country’s trade relations and the general state of the economy. A positive trade balance can lead to a stronger currency and higher stock prices, while a negative trade balance can have the opposite effect.

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Before evaluating individual companies, it is important to analyze the industries and sectors in which they operate. This includes understanding the competitive landscape, growth potential and industry-specific metrics.

Porter’s Five Forces Model is a framework developed by Harvard Business School professor Michael Porter to analyze the competitive forces that shape industries and companies.

The model identifies and analyzes five competitive forces that determine the level of competition and attractiveness of an industry or market.

Integrating Fundamental And Technical Analysis For Profit In Boston

These five forces include the bargaining power of suppliers, the bargaining power of buyers, the threat of new entrants, the threat of substitute products or services, and the intensity of competition.

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The model is widely used in business strategy to assess the potential profitability of an industry and to develop effective competitive strategies.

The industry life cycle refers to the stages an industry goes through, from inception to maturity and finally to decline. Understanding the stage of the life cycle can help investors identify the growth potential and risks associated with a particular industry.

Industry-specific metrics are critical to understanding the performance and financial health of companies in a particular industry. Examples include same-store sales in retail, average revenue per user (ARPU) in telecommunications, and property occupancy.

After researching the industry, it is critical to analyze individual companies to determine their financial health, competitive advantages, and growth prospects.

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Investors can evaluate a company’s financial position and performance by analyzing its financial statements, which include the income statement, balance sheet, and cash flow statement.

Financial ratios are tools that investors, analysts, and managers use to evaluate a company’s financial health and performance.

These ratios are calculated by comparing various financial metrics in a company’s financial statements, for example

Integrating Fundamental And Technical Analysis For Profit In Boston

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