Education & Information
Sell Signals
Point and figure charts create basic buy and sell signals. A sell signal is one in which a column of Os declines below a previous column of Os indicating the supply for that stock is gaining strength. A sell signal in and of itself is not enough information to necessarily sell the stock if you own it. Other considerations need to be made, such as the over all market condition, the industry sector condition, major trend for the stock, relative strength for the stock, etc… If some of these considerations are turning negative as well, then a sell signal on the point & figure chart should be acted on.
Sell signals take the form of many patterns. The basic and most common is the double bottom. Other sell signals are an extension of the double bottom. What make them different are the patterns that are formed prior to the sell signal. Below are some of the more important sell signal patterns: