[isatrader]

I was browsing the OptionsMonster sub-groups chart the other day and saw that the Education Companies group is up 20% over the last 3 months. As I dug into the group a bit more, I found EDMC. EDMC got pretty battered in 2012 but has made a strong comeback in 2013. If there were a pullback sometime in the next coming weeks, it might be ripe for a move higher on a Stage 2 continuation. The indicators that I look at look positive for this one. The main negative thing that I found was that it is trading below the Bearish Resistance Line on its P&F chart.

Wanted to get some feedback from the group...

With regards to the point and figure charts, you've set your box size at a fixed size of 0.5pts per box which is why you are seeing a higher bearish resistance line than you should be as on the traditional chart, the box sizes changes at various pre determined points. So with regards to this stock at Price Range 1.01 to 5.00 the box size is 0.25 per box, and at Price range 5.01 to 20.00 it is 0.50 per box, and at Price range 20.01 to 100.00 it is 1.00 per box. Which brings down the bearish resistance line significantly as the trading above 20 is at 1pt per box.

   

Another very useful scaling method that I prefer to use is percentage based. I calculate the percentage to use from the 20 day ATR figure. So for example on EDMC the 20 day ATR was 0.69, so I minus that from the current price of 14.58 and then divide the result by the the current price, and then minus by 1 to get the percentage - which in this case was 4.73 percent. So I change the setting from Traditional to Percentage and enter 4.73 in the box. Which gives you the following chart.

   

Final chart is the relative performance chart versus the other stocks in the group. I've left out the three weakest as you can only put 6 indicators on the chart, and being the weakest you can ignore them. As you can see it's been outperforming most of the sector for the majority of the year, and you are starting to see some fresh Stage 2 breakouts in the group from CECO and APOL, so the sector is improving overall, so it's worth watching how it reacts over the next month or so if it is starting to pullback following the recent run ups.