Point and Figure Charting: The Essential Application for Forecasting and Tracking Market Prices, 4th Edition

CHAPTER 7

Secondary Market Indicators

Secondary market indicators dovetail beautifully with the long-established Point and Figure indicators. With these new indicators, we still use the Bullish Percent concept. We simply apply this concept to the other aspects of a stock's technical attributes that we find essential. I think about it like the dashboard of your car. You'd never be successful in reaching your journey if you didn't keep your eyes focused on the road ahead, which for us are the NYSE and OTC Bullish Percents, but you do need to consult the gauges on your dashboard to make sure the car is performing the way it should be. You probably will find that you most often glance at the speedometer, but periodically you glance at the temperature gauge to make sure the car isn't running too hot, suggesting something might be wrong with the engine internally. You keep checking the gas gauge and RPMs. These gauges are like the secondary indicators we are going to discuss in this chapter. Let's gain some perspective first. Over the years, we have found that relative strength (RS) comparisons are the most important consideration on where to invest your money in the market. This is where we compare and contrast asset classes. It was the year 2000 when Rydex Funds came out with the Equal-Weighted S&P 500. This was major because it allowed us to compare on an RS basis the Capitalization-Weighted S&P 500 vs. the Equal-Weighted S&P 500. Sounds strange, doesn't it—S&P 500 against the S&P ...