From Bruce Kamich’s “The Charts Are Cooking Up an ‘Apple’ Turnover” ($) posted Friday by Real Money:
Apple ( AAPL) is perhaps the most closely followed company on the face of the planet. Many people track all the new developments as they can become “game changer” moves. As a technical, analyst I follow the moves of the stock price.
Let’s check out the charts and indicators…
In this daily Point and Figure chart of AAPL, below, I can see a downside price target in the $137 area.
My take: Technical analysis I’ve heard of, but Point-and-Finger charts are new to me. Here’s Investopedia:
Conventional technical analysis charts tend to be the open-close/high-low chart that plot price movements over the course of time, say from day to day. In the creation of P&F charts, the emphasis is only on the closing price of an issue. The developers of P&F charting were interested in trend development and thus were not concerned with the noise created daily by minor moves up or down, but with how the larger picture played out from a supply and demand perspective.
The key to P&F charts is the establishment of the unit of price, which is the unit measurement of a price movement plotted on the graph. On P&F charts, there is no time axis, only a price axis. Rising stock prices are shown with X’s and falling prices are shown with O’s. These points appear on the chart only if the price moved at least one unit of price in either direction…
Reading P&F Charts
Now that we have had a look at how to construct a P&F chart, the next question is how do we read it. It is clearly understood by P&F experts that the law of supply and demand determines the price of the stock. If the issue is rising in price and we have an uptrend in place with at least three X’s, we believe that demand has overcome supply.
The reverse, when that chart gives us three O’s, indicates supply has overcome demand. P&F charts show us the establishment of trends, trend reversals and the supply and demand of charted issues.
Here are some examples:
