Fannie Mae (FNMA)

[stockprofitter]

Point & Figure Chart has FNMA Target $8.50
http://stockcharts.com/def/servlet/SC.pnf?c=fnma,P


How Are P&F Charts Calculated?
As stated above, Point & Figure charts show an "X" when prices rise by the amount of the "box size" (a value you specify) and show an "O" when prices fall by the amount of the box size. If prices rise or fall by an amount that is less than the box size, no X's or O's are drawn.

Each column contains a stack of either X's or O's, but rarely both (using a 1 box reversal can result in an X and O stack). Columns will always alternate between X's and O's, and in order to change columns, prices must reverse by the "reversal amount" (another value you specify) multiplied by the box size. For example, if the box size is 5 points and the reversal amount is 3 boxes, then prices must reverse direction 15 points (5 x 3) in order to change columns. If you are in a column of X's, the price must fall 15 points to change to a column of O's. If you are in a column of O's, the price must rise 15 points to change to a column of X's.

The columns of X's and O's represent price trends. So when a column changes, it likewise signals a change in the trend of prices. When a new column of X's appears, it shows that prices are rallying higher. When a new column of Os appears, it shows that prices are moving lower.

Because prices must reverse direction by the reversal amount, the minimum number of X's or Os that can appear in a column is equal to the "reversal amount."

It is common practice is to use the high and low prices (not just the close) to decide if prices have changed enough to display a new box.

Why Use A Point & Figure Chart?
While the SharpCharts workbench is a great tool for charting a security over a period of time, sometimes all an investor is interested in is the actual price movement. P&F charts are great for observing active market activity, and as such are very helpful in identifying support/resistance lines, buy/sell signals, and trendlines.

P&F charts are also very flexible in that they can easily be made more or less sensitive to price changes to discern between long and short term trends. By varying box and reversal sizes, these charts can be adapted to almost any need. There are also many different ways these charts can be used for entry and exit points. As such, all types of investors can benefit from an applied understanding of P&F charting.