Saturday, May 7, 2011

S&P 500 P&F Price Target - 1640

The Point & Figure "count" above is so obvious that I am sure I may have been the last person to have done this analysis, but I also presume that a price target as audacious as 1640 has inhibited its wide publication.

Doing a count and price target on a P&F chart is relatively simple once you learn the rules. First, count the number of columns spanning the consolidation-breakout area, shown in a horizontal blue bar above. There are 21. Then, multiply that count by the box size and the reversal size: 21 x 10 x 3 = 630. Add this to the July 2010 low of 1010 on the S&P yields the target of 1640.

The consolidation phase, which began in February 2011 and has yet to be resolved to the up or downside, will also allow a count and a target. An upside breakout on the next column of Xs would yield a 1490 target, 8 x 10 x 3 + 1250. The target on a downside breakout would be 1160. To repeat, these targets are tentative since the pattern has yet to complete.

"The only true global macro play is the price of money, set by the US Central Bank."

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