Point and Figure Charting: The Essential Application for Forecasting and Tracking Market Prices

Praise for Point and Figure Charting "I have spent five decades in the financial services industry, and it is a hard thing to navigate the markets; but Tom's Point and Figure method is the most straightforward, logical way that I've seen of analyzing the markets. He has expanded my understanding of the stock market and the way I look at my investments." —Hugh L. McColl Jr., retired CEO, Bank of America "Everyone who's involved in financial markets must understand Point and Figure charting in order to get the full picture, whatever your view of technical analysis." —Jim Rogers , author of Hot Commodities and Investment Biker "Tom Dorsey's industry-leading technical research has survived the test of time and continues to adapt to the new and ever-changing world of the investment advisor. I have counted Tom as a friend and business partner for the last two decades, and continue to learn at the feet of the master. Once again, Tom is equipping the advisor, through this book, with the armor needed to both defend a client's assets and outperform when the markets look impossible." —Ben Fulton, President and CEO, Elkhorn Investments "The key to successful investing is to adhere to a disciplined, time-proven method for entering and exiting a stock, a sector, or the market as a whole. Point and Figure Charting provides that discipline and there is no better champion than Tom Dorsey. In clear concise language, Tom has, once again, explained the dispassionate barometer that can give every investor the confidence to know when to buy and when to sell." —Joshua B. Parker , President, Gargoyle Investment Advisor LLC "The three cornerstones of our high-net-worth/ultra-high-net-worth financial advisory practice are macro, fundamental, and technical analyses. When it comes to technical analysis, we use Dorsey, Wright & Associates daily to monitor both portfolios and dynamic changes in asset classes and make decisions based on the data and trends we see. We think in this post—global financial crisis world that the Point and Figure methodology is extremely important in navigating markets." —Stephanie Twomey , Director, Twomey, Zell & Gibbons Group, Morgan Stanley Private Wealth Management; Barron's Top 100 Women Financial Advisors

Acknowledgments vii Part I Learn the Point and Figure Methodology Chapter 1 Introduction 3 Chapter 2 Point and Figure Fundamentals 29 Chapter 3 Chart Patterns 61 Chapter 4 Foundations of Relative Strength 105 Chapter 5 Advanced Relative Strength Concepts 145 Chapter 6 Primary Market Indicators for Gauging Risk 183 Chapter 7 Secondary Market Indicators 223 Chapter 8 Sector Rotation Tools 247 Part II The Point and Figure Methodology— A Complete Analysis Tool Chapter 9 Fixed–Income Indicators 275 Chapter 10 Utilizing the Exchange–Traded Fund Market 291 Chapter 11 Evaluating the Commodity Market for Opportunities 319 Chapter 12 Trading Options Using Point and Figure 349 Part III Apply the Point and Figure Methodology to Your Investment Process Chapter 13 Portfolio Construction and Management 369 About the Web Site 379 Index 381

THOMAS J. DORSEY is cofounder and President of Dorsey, Wright & Associates, LLC, a registered investment advisory firm that specializes in research and investable products based on the Point and Figure method of technical analysis. Formerly a senior vice president and director of Options Strategies with Wheat First Securities, and a stockbroker with Merrill Lynch, Dorsey has become the industry's foremost expert in Point and Figure Charting and teaches this method worldwide. He has appeared on mainstream financial media including Fox News's Cavuto on Business and received the Distinguished Speaker Award from the Wharton School of Finance Securities Industry Association. Mr. Dorsey is also the author of three previous editions of Point and Figure Charting and Commodity Strategies: High-Profit Techniques for Investors and Traders , all published by Wiley. SARA GIEGERICH is Corporate Counsel to Dorsey, Wright & Associates. Ms. Giegerich began her current role in September of 2011; however, she has been with Dorsey Wright for nearly a decade, having started as an intern in high school. She worked for the company throughout her education at the University of Virginia and the University of Georgia School of Law. Ms. Giegerich was instrumental as an analyst, project manager, and editor for every facet of the fourth edition of Point and Figure Charting .