Magnitude and Duration of the Rise or the Fall of a Stock Price?

SCAlchemist

There are many indicators that maximize our chances of knowing when to get into and out of stocks.

Sometimes, a stock price rises for a short time and then quickly falls back down. Sometimes, a stock price falls for a short time and then quickly rises back up. Sometimes, the rise or fall of a stock price continues for a long time. Are there any indicators or group of indicators or scenarios that would maximize our chances of predicting the magnitude and duration of the rise or fall of a stock price, so that we can better predict when to get into a stock that will have a long term rise in price or to get out of a stock that is going to have a long term fall in price?

markd

The Point and figure (P&F) charting method includes a method for estimating price objectives.

The Stockcharts Chart School explanation is pretty thorough. See the "Price Objectives" section:

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:pnf_charts

If you like books, there are two major authors, Tom Dorsey and Jeremy DuPlessis. Each has more than one title in print. I lean toward DuPlessis, but both are worthwhile.

A problem with P&F price objectives is, they don't include a time element. A count may project an increase of, say, 200 per cent, but it can't tell you whether that will occur in a few weeks, a few months, or a few years.

The Wyckoff method (accumulation-markup-distribution-markdown) uses P&F to estimate price objectives. Some articles in the Wyckoff blog on Stockcharts include examples of setting price objectives:

http://stockcharts.com/articles/wyckoff/

On bar charts, the various volume indicators can also show accumulation and distribution through divergences with price. However, as far as I know, none of them indicate price objectives in a systematic way. I like Force with custom parameters and MAs, but frankly, there are wide variations in the patterns that lead to extended price moves.

All of that said, a company's future prospects are as obscure as anything else about the future. If we think of the future as a mile long cave with many alternative paths, technical analysis illuminates only the first few feet.