How to Make Money in Stocks Trilogy

© 2009 Investor’s Business Daily, Inc.
160,000
Volume
20,000
80,000
40,000
Price
3.4
4.0
3.0
2.2
2.6
34
30
19
50
40
22
26
60
Sep 1969
k
week
closes back below 10-week
up over 9 weeks and then
Jun 1969
e
Short sale after 3 rallies
shoulder
r
h
closes back below 10
0
Right t
l
d
moving average line
a
w
h
i
R
R
s
Head
Mar 1969
Head
k
k
a
e
g
g
g
e
era
era
H
a
9 w
k
shoulder
r
a
d
hld
b
g
3/1
Dec 1968
o
e
Lef ft
v
r
i
m
u
S
S
c
S
Volume up
p
S&P 500
Sep 1968
m
week
-week
2-wee
12-wee
bottom
m
double
e
12-we
Buy
l
uy
V
Bu
B
do
o
o
do
Jun 1968
n
Volume on
breakout t
ko
rm
Intermediate term
u
a
Mar 1968
b
Buy
y
u
Loews increased 1025% in 101 weeks.
t
correction
correction
5/2
d
o
m
c
Dec 1967
e
e
g volume increas
Big volume increas
a
Sep 1967
Buy 16 B 14 12 8week 8-week k w 8 p p cup p c 10 7-week 7- base e flat base a f 8 7 k 10-week e - ullback to 10 ullback to 10 o 1 o k to Add: first pullback b Add: first pull g A 6 rage line erage line ing aver moving ave moving ave g a g s ht clos
u
Jun 1967
Big
ls. ls ild ht t Huge earnings acceleration ti a l g i and new high vs. June, 1966 966 sJue, gh e Add Add y Buy Buy u 45-week large cup 45-week large cup a Mar 1967 Dec 1966 Sep 1966
Shortage of hotels since jets greatly Shortage of hotels since jets greatly t g increased travel. Loews Theaters e e land was used in cities to build hotel l b b t iti d s ld 1966 Bear Market k Hu ad n Jun 1966 Mar 1966 Dec 1965
Loews–1967 Weekly Chart Sep 1965 Jun 1965
Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

America’s Greatest Stock-Picking Secrets 47





Price 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 2.6 2.2 Volume 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Sep 1969

k
r h week e Jun 1969
Right t R R shoulder l h d a 0 w i
Head Head a H s Short sale after 3 rallies e up over 9 weeks and then k k closes back below 10-week e g g g era era Mar 1969
r d a a 9 w closes back below 10 k b moving average line
Lef ft shoulder hld o r S S S v u e c g i m p 3/1 Dec 1968
S&P 500 Volume up m Sep 1968

uy Buy Bu B -week week 2-wee 12-wee 12-we e double l o bottom m o V
do
do
n
k 10-week e - Volume on u breakout t ko a Jun 1968
rm
Intermediate term t d m correction correction o c Buy y u 8week 8-week w 8 p p cup p c ullback to 10 ullback to 10 o 1 o k to Add: first pullback b rage line erage line s ht closes ght closes b 5/2 Mar 1968 Dec 1967
k

7-week base e flat base Add: first pull g A ing aver moving ave moving ave g a g 3 weeks tig g g 3 weeks tig e e g volume increas a Sep 1967
Buy B 7- a f 3 3 3 3 Big volume increas u Big Jun 1967 Loews increased 1025% in 101 weeks.







ls. ls ild ht t Huge earnings acceleration ti a l g i and new high vs. June, 1966 966 sJue, gh e Add Add y Buy Buy u 45-week large cup 45-week large cup a Mar 1967 Dec 1966 Sep 1966
Shortage of hotels since jets greatly Shortage of hotels since jets greatly t g increased travel. Loews Theaters e e land was used in cities to build hotel l b b t iti d s ld 1966 Bear Market k Hu ad n Jun 1966 Mar 1966 Dec 1965











Loews–1967 Weekly Chart Sep 1965 Jun 1965





Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

48
A WINNING SYSTEM
120,000
70,000
Volume
20,000
40,000
Price
100
3.8
4.5
80
34
40
70
60
50
30
14
12
10
16
26
22
19
7
8
6
S&P 500
g earnings
increasing earnings
s
nings
s
2/1
the way up with
ith
i
Buy stocks on
a
w
o
increasing
g
g
k
a
m
market correction
n
n
n
t
Intermediate term
m
m
a
p
p
week cup
k cup
y
e
u
c
t
the
r
a
e
wee
y
y
Buy
y
10-we
w
w
c
B
e
10
k
r
n
m
Buy
y
y
y
B
B
Earnings
g
turn up
n
Sep 1966 Dec 1968 Sep 1968 Jun 1968 Mar 1968 Dec 1967 Sep 1967 Jun 1967 Mar 1967 Dec 1966 © 2009 Investor’s Business Daily, Inc. Mattel increased 441% in 66 weeks.
Jun 1966
Mar 1966
S. Dec 1965
Largest toy manufacturer in U.S r m r Do Not Buy stocks on Do Not Buy stocks on n n t the way down or with the way down or with h h n g n Sep 1965 Jun 1965
Mattel–1967 Weekly Chart N w declining earnings g l Mar 1965 Dec 1964 Sep 1964
Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18

48 A WINNING SYSTEM





Price 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 Volume 120,000 70,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.



Dec 1968

S&P 500 Buy stocks on o k ith the way up with w s g earnings increasing earnings nings s i a g g 2/1 Sep 1968 Jun 1968


Intermediate term m m m e a e r n n n market correction t r c k Buy y y y B p p k cup week cup u wee e 10-we w w 10 t y a the increasing a c Mar 1968


Dec 1967
m
n
Sep 1967
Buy B B
y y y
Jun 1967
Mar 1967
Earnings g n turn up Dec 1966 Mattel increased 441% in 66 weeks.



Sep 1966

Jun 1966
Mar 1966

S. Dec 1965
Largest toy manufacturer in U.S r m r Do Not Buy stocks on Do Not Buy stocks on n n t the way down or with the way down or with h h n g n Sep 1965 Jun 1965









Mattel–1967 Weekly Chart N w declining earnings g l Mar 1965 Dec 1964 Sep 1964





Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18

America’s Greatest Stock-Picking Secrets 49
140,000
300,000
640,000
20,000
60,000
Volume
Price
3.2
4.5
3.8
1.7
1.5
2.0
2.8
2.4
16
19
22
10
12
14
30
34
26
40
6
7
8
3/1
S&P 500
1969 bear market t
r
e
6
1
3/1
Sell: climax top
Sell: climax top
Sell: climax top
k cup-with-handle
e
e
n
m
c
Se
p
Volume up
w
p
e
8-week cu
k cu
Volume up
Market correction
Market correction
Buy
c
u
8
m
8-week base
bas
y
Buy
w
r
Sep 1967 © 2009 Investor’s Business Daily, Inc. Dec 1969 Sep 1969 Jun 1969 Mar 1969 Dec 1968 Sep 1968 Jun 1968 Mar 1968 Dec 1967 Skyline increased 715% in 98 weeks.
B
Earnings turn up u E Jun 1967 Mar 1967 Dec 1966
Company manufactures mobile m u homes and travel trailers, a , v leading group in 1968. 1968 i i Sep 1966 Jun 1966
e
di
Mar 1966
l
Skyline–1967 Weekly Chart 105/100 Dec 1965 Sep 1965
Price = 20*eps 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.

America’s Greatest Stock-Picking Secrets 49





Price 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 2.4 2.0 1.7 1.5 Volume 640,000 300,000 140,000 60,000 20,000 © 2009 Investor’s Business Daily, Inc.

Dec 1969
3/1
S&P 500 Sep 1969
Jun 1969

1969 bear market t r e Mar 1969 Dec 1968



6
1
3/1 Sep 1968
Sell: climax top Sell: climax top Sell: climax top m c Se e k cup-with-handle e n w p k cu p Volume up e Jun 1968



Market correction Market correction c r Buy u y 8-week cu 8 8-week base bas Volume up m Mar 1968 Dec 1967


Buy
w
Sep 1967 Skyline increased 715% in 98 weeks.
B
Earnings turn up u E Jun 1967 Mar 1967 Dec 1966



Company manufactures mobile m u homes and travel trailers, a , v e leading group in 1968. 1968 i i di l Sep 1966 Jun 1966 Mar 1966










Skyline–1967 Weekly Chart 105/100 Dec 1965 Sep 1965






Price = 20*eps 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.

50
A WINNING SYSTEM
Volume
80,000
40,000
20,000
Price
2.6
2.2
3.0
4.0
3.4
1.8
16
19
14
10
12
50
34
30
26
40
22
6
5
8
7
on
, ,
higher highs during market correctio
Ascending base: pulled back 3 times
m
each time making higher lows and
each time making higher lows and
d
e
(also 2 pullbacks to the 10-week
week
e
o
3
o
t
(also 2 pullbacks to the 10-
c
2/1
b
r
r
g
t
moving average line)
)
p
g
d
a
a
a
a
h
g
v
l
h
m
g
h
h
v
s
c
S&P 500
m
h
A
(
e
4/3
C
C
Market correction
ven at this extended point
even at this extended point
B
B
Add: 3 weeks tight closes
s
Add: 3 weeks tight closes
t
i i
p
Buy
o
A
u
A
week cup-
week cup-
A
A
A
A
r
th-handle
u
l
c
d
d
t
13-we
we
13-w
13-w
Buy
Buy
with
wit
wit
h
h
w
A
A
Jun 1967 Sep 1969 Jun 1969 Mar 1969 Dec 1968 Sep 1968 Jun 1968 Mar 1968 Dec 1967 Sep 1967 Mar 1967 © 2009 Investor’s Business Daily, Inc. Redman Industries increased 683% in 49 weeks.
e increase
end
Leading producer of mobile l e n homes and aluminum products. homes and aluminum products homes and aluminum products d m s Prior uptrend pt p p P io to base has big volume increase volume v v Dec 1966 Sep 1966
Mar 1966 Jun 1966 Dec 1965
Redman Industries–1968 Weekly Chart Sep 1965 Jun 1965
Price = 20*eps 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.09 0.09 Mar 1965

50 A WINNING SYSTEM





Price 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 2.6 2.2 1.8 Volume 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.
Sep 1969

, , m 3 d on e o week e Jun 1969
Ascending base: pulled back 3 times c b p a g each time making higher lows and each time making higher lows and o r g g a higher highs during market correctio t r d h (also 2 pullbacks to the 10-week (also 2 pullbacks to the 10- t a l moving average line)








S&P 500 c A m h e h h h s ( g v m Sep 1968 Jun 1968

C C B B 4/3
Market correction r c Add: 3 weeks tight closes Add: 3 weeks tight closes o t w even at this extended point ven at this extended point p d d h h Buy u Buy Buy A A A A A A week cup- week cup- u 13-we we 13-w 13-w th-handle l with wit wit Mar 1968 Dec 1967
s
i i
t


A
A
Jun 1967 Sep 1967 Mar 1967 Redman Industries increased 683% in 49 weeks.
e increase
end
Leading producer of mobile l e n homes and aluminum products. homes and aluminum products homes and aluminum products d m s Prior uptrend pt p p P io to base has big volume increase volume v v Dec 1966 Sep 1966








Mar 1966 Jun 1966 Dec 1965
Redman Industries–1968 Weekly Chart Sep 1965 Jun 1965












Price = 20*eps 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.09 0.09 Mar 1965

© 2009 Investor’s Business Daily, Inc.
160,000
320,000
40,000
20,000
Volume
80,000
3.4
3.0
4.0
5
Jun 1972
3/1
Mar 1972
Dec 1971
Sep 1971
2/1
Jun 1971
up
Volume up
Mar 1971
m
Levitz Furniture increased 608% in 87 weeks.
V
Dec 1970
p
p
p
Volume up
e
lu
Sep 1970
V
40-week cup-with-handle
e
-
Jun 1970
Mar 1970
New product: warehouse concept for furniture Price r e o u sales. Consumers’ standard of living rises again. . g e g t s 80 70 S&P 500 60 d d d Sell: goes beyond d y y b go Sll l l 50 upside channel line like e ke i n a s py American Photocopy y c o c m A 40 36)
Dec 1969
Sep 1969
Jun 1969
N
s
IPO O IPO O * 2/1 Mar 1969 Dec 1968 Sep 1968
Levitz Furniture–1970 Weekly Chart Jun 1968 Mar 1968
Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14

America’s Greatest Stock-Picking Secrets 51





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 Volume 320,000 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Jun 1972
3/1
Mar 1972

S&P 500 e ke Dec 1971


Sell: goes beyond b go l l upside channel line like n a s American Photocopy c 36) ) (page 36) 3 Buy y y B 2/1 Jun 1971
d d d d y y i py y c o Sep 1971


m
Sll
a
Buy
A
(
(
u
Buy: ascending base Buy: ascending base a o e e n g e p p p Volume up e lu V Dec 1970
e C C C B B A A up Volume up m V Mar 1971
Add: first 3 pullbacks to Add: first 3 pullbacks to u d week moving average line 10-week moving average line i w 10 Buy Buy B 40-week cup-with-handle - Sep 1970 Jun 1970 Mar 1970 Levitz Furniture increased 608% in 87 weeks.
.
New product: warehouse concept for furniture r e o u sales. Consumers’ standard of living rises again. e g t s 18-month market t t t k th m 8 18 correction correction o Dec 1969 Sep 1969 Jun 1969
g











N
s
IPO O IPO O * 2/1 Mar 1969 Dec 1968 Sep 1968
Levitz Furniture–1970 Weekly Chart Jun 1968 Mar 1968









Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14

52
A WINNING SYSTEM
Price
60
70
34
50
30
26
80
40
S&P 500
Sell: climax top
p
Sell: climax top
x
m
S
S
S
07 Buy Buy B t tim 0 O 22 ry 0 19 h handle growth n 16 ek base e 9-week b b ek b e e w 14 y Buy Buy 12 10 8 7 oses oses s 4 weeks tight close lose e 4 weeks tight clos h e 6 s 3 weeks tight closes 3 weeks tight closes s c ose s s g s e 3 5
18-month bear market similar in time to i il im t k m th b o 17-month major bear market from October 200 k r j o through March 2009. Therefore, 2009 recovery r 2 g could have several big cup-with-handle growth with could have several big cup p r h stocks like Rite Aid
18
Sep 1968 Dec 1968
Rite Aid–1970 Weekly Chart Jun 1968 Mar 1968



Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

52 A WINNING SYSTEM





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 Volume 160,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.


Jun 1972

S&P 500 p 3/1 Mar 1972

Sell: climax top Sell: climax top x m e Dec 1971


S
S
S
Buy Buy B ek base 9-week b b ek b e e w e ? Sep 1971
oses oses s lose e e e ot it? Jun 1971
4 weeks tight close 4 weeks tight clos h e s 3 weeks tight closes 3 weeks tight closes s c ose s s g This pattern was repeated a n t in 2009. Did you spot it? Did you spot o d n 2009 0 p Volume dry up y e at low in handle l a n Mar 1971



46-week big cup-with-handle 46-week big cup-with-handle p Jun 1970 Rite Aid increased 421% in 71 weeks.
Buy Buy 3 Sep 1970
y s e e e n h n m o w t Dec 1970





07 t tim 0 O ry 0 h handle growth n e 46 Mar 1970 Dec 1969
18-month bear market similar in time to i il im t k m th b o 17-month major bear market from October 200 k r j o through March 2009. Therefore, 2009 recovery r 2 g could have several big cup-with-handle growth with could have several big cup p r h stocks like Rite Aid










18
Sep 1968 Dec 1968
Rite Aid–1970 Weekly Chart Jun 1968 Mar 1968






Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

© 2009 Investor’s Business Daily, Inc.
100,000
220,000
460,000
40,000
Volume
Price
140
120
100
60
50
80
70
30
26
40
34
7
8
5
6
Mar 1973
Dec 1972
S&P 500
Sep 1972
s
Tight weeks
s
k
e
ht w
Jun 1972
2/1
Tig
Mar 1972
s
Market correction creates
Market correction creates
s
p
Volume up
Dec 1971
u
t
-on-base
s
r
m
Buy
Base-on-
-on-
o
McDonald’s increased 422% in 108 weeks.
o
B
Sep 1971
c
-
e
base-on-base
r
a
b
o
t
3/2
Jun 1971
Mar 1971
p
Volume up
m
Add 22 19 18 weeks up p e w 16 in a row w a i 14 12 10 America’s Greatest Stock-Picking Secrets 53
Dec 1970
Buy Buy B handle a with Sep 1970
w tim w t r 39-week cup-with-handle week cup u 39 3 Jun 1970
#1 in fast food, save money, save time. y a d t f fa #1 i Kentucky Fried Chicken was also part of new Kentucky Fried Chicken was also partofnew s h k group move. Stock increased another 40 e c m times from 1975 to 2009. 2009 1975 t t fr ti 18-month bear market 18-month bear market t t
McDonald’s–1970 Weekly Chart 2/1 Mar 1969 Dec 1968 Sep 1968

America’s Greatest Stock-Picking Secrets 53





Price 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 Volume 460,000 220,000 100,000 40,000 © 2009 Investor’s Business Daily, Inc.

Mar 1973

Dec 1972
S&P 500 s s k Sep 1972
Tight weeks e ht w Tig 2/1 Jun 1972



Mar 1972

Market correction creates Market correction creates r o c r t e base-on-base b o Buy B -on-base s -on- Base-on- - a 18 weeks up p e w in a row w a i Volume up m o 3/2 Dec 1971 Sep 1971 Jun 1971
s
s
p
t
u



Volume up p m Mar 1971
Add Dec 1970 McDonald’s increased 422% in 108 weeks.
Buy Buy B handle a with Sep 1970


w tim w t r 39-week cup-with-handle week cup u 39 3 Jun 1970
#1 in fast food, save money, save time. y a d t f fa #1 i Kentucky Fried Chicken was also part of new Kentucky Fried Chicken was also partofnew s h k group move. Stock increased another 40 e c m times from 1975 to 2009. 2009 1975 t t fr ti 18-month bear market 18-month bear market t t












McDonald’s–1970 Weekly Chart 2/1 Mar 1969 Dec 1968 Sep 1968

54
A WINNING SYSTEM
Price
30
34
40
26
19
16
22
60
80
70
50
12
14
S&P 500
eek cup-
-
up-
ith-handle
kcu
n
eek c
c
8-week
h
e
8-wee
e
with-
with
uy
Buy
-
u
se
base
ase
10-week bas
bas
week ba
b
b
e
y
Buy
B
10
1
Buy 10 B 8 7 6 9-week base k b 9 4.5 3.8 Volume up Volume up V 3.2 2.8 3/2 3/2 11/10 Volume Volume up o 80,000 40,000 20,000 Mar 1973 Dec 1972 Sep 1972 Jun 1972 Mar 1972 Dec 1971 Sep 1971 Jun 1971 Mar 1971 Dec 1970 © 2009 Investor’s Business Daily, Inc
Sep 1970
Jun 1970
Mar 1970
18-month bear market 1 Dec 1969 Sep 1969
t k
Sambos Restaurants–1971 Weekly Chart Jun 1969 Mar 1969 Dec 1968
Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 Sep 1968

54 A WINNING SYSTEM





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 Volume 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.
Mar 1973

Dec 1972
S&P 500 Sep 1972


Jun 1972

Mar 1972
3/2
up- -
eek cup- kcu eek c c e e ith-handle n h Dec 1971
Buy uy u 8-week 8-wee - with- with Volume up Volume up
base ase se bas b b V 3/2 Sep 1971

Buy y B 10-week bas week ba e 10 1 Jun 1971


9-week base k b 11/10 Mar 1971
Buy B 9 Volume up Dec 1970 Sambos Restaurants increased 458% in 104 weeks.
o
Sep 1970

Jun 1970

Mar 1970
t k
18-month bear market 1 Dec 1969 Sep 1969

Sambos Restaurants–1971 Weekly Chart Jun 1969 Mar 1969 Dec 1968













Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 Sep 1968

America’s Greatest Stock-Picking Secrets 55
80,000
40,000
20,000
Volume
Price
3.8
4.5
3.2
34
10
70
40
60
50
16
30
19
26
22
14
12
80
7
8
6
prior week’s price change
ce change
Heavy increased volume
0
price progress versus
without much further
S&P 50
e
e
r
c
s
p
p
p
Big volume up
p
p
s
oses
s
e
u
’
gr
e
r
Sell: heavy volume increase
Sell: heavy volume increase
e
e
with stalling, lack of furthe
los
Note 3 weeks tight clos
t
u
e
t
i
w
p
v
v
e
h
n
gh
f
o
e
Buy
H
w
Buy
y
p
p
p
B
t
p
p
k
u
a
price progress
price progress
w
g
gre
2/1
o
p
p
Big volume up
9 weeks up
p
a
l
Buy
p
Buy
in a row
w
u
in a row
m
e
k
N
e
l l
w
p
S
n
9
Bi
week moving
to 10-week moving
Volume up
p
Add - first pullback
n
c
u
o
m
l
e
average line
p
l
46-week big cup-with-handle
e
Buy
Buy
n
e
y-up in handle
e
e
w
Note: volume
to 10
0
a
n
-
e
Earnings acceleration
Earnings acceleration
n
n
h
v
o
o
w
A
,
v
p
p
n
%
Pre-tax Margin was 29.6%
p
Market correction
dryp
e
n
At buy point in June 1976:
At buy point in June 1976:
earnings were up 189%
38.2% and last quarter
Return on Equity was
Return on Equity was
u
c
e
w
n
p
q
y
q
Big volume
k
on up week
Big volume
x
g
w
n
u
u
Mar 1975 © 2009 Investor’s Business Daily, Inc. Sep 1977 Jun 1977 Mar 1977 Dec 1976 Sep 1976 Jun 1976 Mar 1976 Dec 1975 Sep 1975 Jun 1975 Dec 1974 Sea Containers increased 448% in 59 weeks.
s
Leases marine cargo containers, Leases marine cargo containers n containerships, and related cranes l p on a worldwide basis. i Sep 1974 Jun 1974
e
n
a
Mar 1974 Dec 1973
Sea Containers–1976 Weekly Chart Sep 1973 Jun 1973
Price = 20*eps 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

America’s Greatest Stock-Picking Secrets 55





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 Volume 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

0 ce change Sep 1977
S&P 50 r e e c
s oses los Heavy increased volume s e i v without much further u t price progress versus s gr p e prior week’s price change p p p ’ w Big volume up p p e u v Jun 1977
Sell: heavy volume increase Sell: heavy volume increase n e u a S with stalling, lack of furthe f a g l w price progress price progress gre o p e p y Buy Buy Buy Buy u Note 3 weeks tight clos gh t k w N p 9 weeks up k e w in a row in a row H h w p p o p p
e
e
r
t
e


Add - first pullback c l p to 10-week moving week moving n o w e e Buy Buy 9 n e n Bi p Volume up u m l e e Sep 1976 Jun 1976



n n o A 0 to 10 o average line a v - w e y-up in handle n h Mar 1976
n n Earnings acceleration Earnings acceleration e , % 46-week big cup-with-handle Note: volume v p p p dryp
Market correction c n At buy point in June 1976: At buy point in June 1976: u Pre-tax Margin was 29.6% w x Return on Equity was Return on Equity was y n 38.2% and last quarter q q earnings were up 189% p g e Big volume u u k on up week w Dec 1975 Sep 1975


Big volume


Mar 1975 Jun 1975 Dec 1974 Sea Containers increased 448% in 59 weeks.
s
Leases marine cargo containers, Leases marine cargo containers n containerships, and related cranes l p on a worldwide basis. i Sep 1974 Jun 1974
e






n
a
Mar 1974 Dec 1973
Sea Containers–1976 Weekly Chart Sep 1973 Jun 1973










Price = 20*eps 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

56
A WINNING SYSTEM
Volume
140,000
80,000
40,000
Price
3.8
4.5
3.2
2.4
2.8
26
22
34
30
19
12
10
16
14
50
60
40
6
8
7
S&P 500
3/2
2/1
Mar 1979 Jun 1981 Mar 1981 Dec 1980 Sep 1980 Jun 1980 Mar 1980 Dec 1979 Sep 1979 Jun 1979 © 2009 Investor’s Business Daily, Inc. Flightsafety International increased 958% in 195 weeks.
lly lly l o e g e Dec 1978
.
Company provides high technology h p training to operators of aircraf ft and i f s ships through the use of simulators ships through the use of simulators s u Lowers cost of pilot training. s General General a market turn t s s eeks tight closes and volume ral d s l ht s ti k back
d
t
o
l
ii
C
L
s
t
n n Market correction Market correction e Buy: 12-week cup-with-handle a u with prior 3 weeks tight closings with prior 3 weeks tight closings l e Buy: 3 weeks ti Buy: 3 weeks ti Buy: 3 week 3 Bu back abo back abo a le le Volume up Volume up l Mar 1978 Dec 1977
Flightsafety Intl.–1977 Weekly Chart M 1 p Buy 23-week double- 23-week double- b w hand bottom-with-hand h with bottom t Note: volume e Note: ote: y-up in handle dry-up in handle a y y Sep 1977 Jun 1977 Mar 1977
Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

56 A WINNING SYSTEM





Price 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 2.4 Volume 140,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.

Jun 1981
S&P 500
Mar 1981

Dec 1980

Sep 1980
3/2
Jun 1980

Mar 1980

Dec 1979

Sep 1979

Jun 1979
2/1
Mar 1979 Flightsafety International increased 958% in 195 weeks.
lly lly l o e g e Dec 1978
.
Company provides high technology h p training to operators of aircraf ft and i f s ships through the use of simulators ships through the use of simulators s u Lowers cost of pilot training. s General General a market turn t s s eeks tight closes and volume ral d s l ht s ti k back
d
o
t
l


ii
C
s
L
t
n n Market correction Market correction e Buy: 12-week cup-with-handle a u with prior 3 weeks tight closings with prior 3 weeks tight closings l e Buy: 3 weeks ti Buy: 3 weeks ti Buy: 3 week 3 Bu back abo back abo a le le Volume up Volume up l Mar 1978 Dec 1977
Flightsafety Intl.–1977 Weekly Chart M 1 p Buy 23-week double- 23-week double- b w hand bottom-with-hand h with bottom t Note: volume e Note: ote: y-up in handle dry-up in handle a y y Sep 1977 Jun 1977 Mar 1977








Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

© 2009 Investor’s Business Daily, Inc.
240,000
160,000
340,000
480,000
Volume
Price
2.4
2.8
2.0
1.5
1.7
22
26
30
40
34
Faulty base: do you
u
Faulty base: do you
Jun 1981
d
s
b
Mar 1981
l
F
Dec 1980
2/1
Sep 1980
k
k
Volume up
Volume up
p
p
Sell: climax top on 19th wee
e
9th wee
u
Jun 1980
m
correction
correction
Buy
y
out of cup-with-handle
Sell: climax top on 19
d
o
Market t
t
B
Mk
n
r
r
M
Mar 1980
h
p
Wang Laboratories increased 1348% in 139 weeks.
c
x
p-
m
c
Dec 1979
o
S
o
Sep 1979
S&P 500
2/1
Jun 1979
is the best time for your success.
throughs in market indexes. This
Bases breakout at time of follow-
s
This
s
w
At this point you are scared and know why? y y w w k 19 c y 3 weeks tight 3 weeks tight h t w 16 unsure and the news is terrible. So So S unsure and the news is terrible s h you can t go by how you feel...learn you can’t go by how you feel...learn a o 14 to act on follow-
Mar 1979
throughs in market indexes
Learn to spot these facts.
d
c
e
u
y
Dec 1978
m
m
o
po
pe e e e d t t s u a o s r t a Sep 1978
Word processors replace type Word processors replace t o d writers, increase productivity and s e standard of living. standard of living i d n Market correction o ec r co ae Sell: climax top Sell: climax top Sell: climax top : 3 weeks s tight closes tight closes s e Buy u 27-week cu
Wang Labs–1978 Weekly Chart M Begins earnings Begins earnings n g acceleration c 2 w 2/1 Volume dry-up with y V 3 weeks tight closes 3 weeks tight closes g 3 Sep 1977 Jun 1977 Mar 1977
Price = 20*eps 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07

America’s Greatest Stock-Picking Secrets 57





Price 40 34 30 26 22 u 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 2.4 2.0 1.7 1.5 Volume 480,000 340,000 240,000 160,000 © 2009 Investor’s Business Daily, Inc.
Faulty base: do you Faulty base: do you d s b l know why? y y w w Jun 1981 Mar 1981




k
F
3 weeks tight 3 weeks tight h t w 2/1 Dec 1980

Sep 1980
k k e - - p p u
9th wee d correction correction t Buy y B ek cup- 18-week cup- c ad e with-handle h Volume up Volume up m o Jun 1980
Sell: climax top on 19th wee Sell: climax top on 19 n p x m out of cup-with-handle h p- c o Market t Mk r M r c 18-wee - 1 h w Mar 1980




S
o
Sep 1979 Dec 1979
S&P 500 So S a w This s s 2/1 Jun 1979 Wang Laboratories increased 1348% in 139 weeks.


At this point you are scared and c y unsure and the news is terrible. So unsure and the news is terrible s h you can t go by how you feel...learn you can’t go by how you feel...learn o to act on follow-throughs. g g g o Bases breakout at time of follow- e o throughs in market in





pe e e e d t t s u a o s r t a Sep 1978
Word processors replace type Word processors replace t o d writers, increase productivity and s e standard of living. standard of living i d n Market correction o ec r co ae Sell: climax top Sell: climax top Sell: climax top : 3 weeks s tight closes tight closes s e Buy u 27-week cu









Wang Labs–1978 Weekly Chart M Begins earnings Begins earnings n g acceleration c 2 w 2/1 Volume dry-up with y V 3 weeks tight closes 3 weeks tight closes g 3 Sep 1977 Jun 1977 Mar 1977








Price = 20*eps 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07

58
A WINNING SYSTEM
320,000
160,000
Volume
80,000
20,000
40,000
Price
140
160
190
100
120
30
80
70
26
22
19
16
34
12
10
40
60
50
14
7
8
s
s
earnings
earnings
increase
increase
back through
week line
10-week line
Heavy increased volume without
on volume
Huge
on volume
Add: price
Add: price
increase
H
e
t
p
l l
e
a
t
x top
d
d
c
10-
ll: climax to
e
c
max to
o
1
o
further decline in price
1
o
b
A
A
x
c
S&P 500
l: clim
Sell: clim
p
v
i i
:
e
e
weeks tight area
4 weeks tight area
r
l
e
S
n
h
Market correction
Market correction
o
h
v
Buy
Buy
y
u
B
H
e
e
o
e
Ma
M
Sep 1976 © 2009 Investor’s Business Daily, Inc. Sep 1978 Jun 1978 Mar 1978 Dec 1977 Sep 1977 Jun 1977 Mar 1977 Dec 1976 Resorts International increased 630% in 24 weeks.
Jun 1976
Mar 1976
, n n
g
gaming Dec 1975
Operates hotels, tourist, gaming tourist s Operates hotels t group and convention facilities in group and convention facilities in o seasonable Bahama Islands. s B Sep 1975 Jun 1975
o
a
p
Mar 1975 Dec 1974
Resorts Intl.–1978 Weekly Chart Sep 1974 Jun 1974
Price = 20*eps 9.00 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30

58 A WINNING SYSTEM





Price 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 Volume 320,000 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.
s s
Huge H earnings earnings e increase increase p back through t 10-week line week line e l l t
x top max to o x Add: price Add: price d d A A c b 10- 1 1 on volume on volume o o increase a c e c Sep 1978
S&P 500 ll: climax to Sell: clim l: clim i i : S r h Heavy increased volume without v e e n further decline in price p e l Jun 1978


Market correction Market correction o e o e Buy y Buy B weeks tight area 4 weeks tight area e v H h u Mar 1978 Dec 1977


Ma
M
Sep 1977
Jun 1977

Mar 1977

Dec 1976

Sep 1976 Resorts International increased 630% in 24 weeks.

Jun 1976

Mar 1976

, n n
gaming Dec 1975
Operates hotels, tourist, gaming tourist s Operates hotels t group and convention facilities in group and convention facilities in o seasonable Bahama Islands. s B Sep 1975 Jun 1975
g



o
a
p
Mar 1975 Dec 1974
Resorts Intl.–1978 Weekly Chart Sep 1974 Jun 1974








Price = 20*eps 9.00 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30

© 2009 Investor’s Business Daily, Inc.
140,000
300,000
Volume
20,000
60,000
Price
120
140
100
60
50
80
70
26
22
30
40
34
8
7
5
6
S&P 500
Dec 1980
11/10
el
el
past channe
past channe
Sep 1980
n
Sell: goes
o
h
Sll l
Volume up
e
line
l line
e
p
p
s
p
Jun 1980
S
p
p
p
p
l
15-week cup
p
arket correction
eek c
o
u
Buy
V
e
u
e
15-w
15-w
Mar 1980
o
-
15
e
2/1
y up, no further selling
g
a
n
Ma
Dec 1979
e
e
r
Sep 1979
Texas Oil & Gas increased 529% in 101 weeks.
and volume dryp, , ,
Huge volume as price closes at
t
peak and part of 3 weeks tight
peak and part of 3 weeks tight
Add
Add
gh
s
Ad
A
Jun 1979
s
o
Add
Add
m
d
e
e
and volu
and volu
3 more weeks
o
r
s
Earnings acceleration
Mar 1979
tight closes
tight closes
Market correction
n
p
o
c
c
d
11/10
t
l
29-week double bottom
Dec 1978
g
p
r
e
Ea
Sep 1978
3 more weeks 19 Buy Buy u 6 weeks in-a-row tight row tight tight ght h o a 6 weeks in- s 6w 6 6 6 6 3 more weeks at base a eate a flat b ate a flat b closes create a flat a a a a c e c tight closes o g 16 Buy Bu 14 ks in a row tight closes and sup
e
Jun 1978
2
3 weeks s s tight closes tight closes s Mar 1978
Dec 1977
Texas Oil at split Texas Oil at split a T T adjusted price of p p p ju j j $15 brokeout of a 5 $ long 7-year base year base long 7 g Sep 1977 Jun 1977
o
p
a
Texas Oil & Gas–1978 Weekly Chart Mar 1977 Dec 1976 Sep 1976
Price = 20*eps 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23

America’s Greatest Stock-Picking Secrets 59





Price 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 Volume 300,000 140,000 60,000 20,000 © 2009 Investor’s Business Daily, Inc.

S&P 500 Dec 1980

el el n o 11/10
Sell: goes o Sll l S past channe past channe h s p l line e e line l p p p p u d l g e Volume up p p p Sep 1980 Jun 1980


arket correction o e o e Buy u 15-week cup eek c e 15-w 15-w - 15 6 weeks in-a-row tight row tight tight ght h o a at base a eate a flat b ate a flat b a a a ks in a row tight closes and support t o g w k to 10-week moving average line k to 10-week moving average line


Ma a 6 weeks in- s closes create a flat a c e eks in a n n e - a a p e g n e 2/1
Add: 4 weeks in a w on pullback back on pullback k bac u om week has tiny price sprea p n s y up, no further selling e r Dec 1979
6w
6
6
6
c
6
Add Add Ad A A o e t s gh Sep 1979
Add Add d 8-week 8-week flat base flat base e: bottom ottom Note: bottom tt tt b and volume dryp, , , m and volu and volu o Huge volume as price closes at o e r peak and part of 3 weeks tight peak and part of 3 weeks tight s e Jun 1979 Mar 1979
s
Market correction n c r Earnings acceleration c Ea 3 more weeks o tight closes tight closes t g Buy Buy u Buy Bu e l p d p 11/10 Dec 1978 Texas Oil & Gas increased 529% in 101 weeks.



3 more weeks 3 more weeks tight closes o 29-week double bottom e Sep 1978


g
s s 2 Jun 1978
3 weeks s tight closes tight closes Mar 1978
Dec 1977
Texas Oil at split Texas Oil at split a T T adjusted price of p p p ju j j $15 brokeout of a 5 $ long 7-year base year base long 7 g Sep 1977 Jun 1977
o
p
a

Texas Oil & Gas–1978 Weekly Chart Mar 1977 Dec 1976 Sep 1976










Price = 20*eps 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23

60
A WINNING SYSTEM
160,000
20,000
Volume
80,000
40,000
Price
3.0
4.0
3.4
14
12
16
30
26
19
10
22
50
60
70
40
80
34
8
5
6
7
and closes in upper half
and closes in upper half
area “A” for a shakeout f f
of week’s spread—sign
sign
cup-with-handle
handle
undercuts low of prior
s
o
i
n
of week s spread—
a
k
of buying support t
p
Stock at point “B”
”
a
with
h
13-week
k
u
p
s
S&P 500
w
r
s
po
s
cup-
s
13
13
u
s
t
n
k
c
A
a “A
c
w
b
u
S
o
o
a
2/1
a
8 weeks up
p
u
in a row
Buy
Buy
k
o
u
B
B
Big volume
m
w
a
ts new high
h
g
o
pward
not buy
pward
y
not buy
g
a
A
b
A
A
A
A
A
A
w
o
Stock price wedges up
p
Stock price wedges up
p
n
along 2 lows, so do n
n
along 2 lows, so do n
week hits
when next week hits
e
d
means accumulation
n
3 weeks tight closes
3 weeks tight closes
ek
d
o
e
s
we
w
o
a
s
w
m
e
h
r
c
g
k
n
t
Market correction
n
Market correction
tight closes
s
tight closes
cup-with-handle
e
3 weeks
Buy
Buy
25-week big
u
h
i
r
e
t
M
2
c
Sep 1978 Mar 1981 Dec 1980 Sep 1980 Jun 1980 Mar 1980 Dec 1979 Sep 1979 Jun 1979 Mar 1979 Dec 1978 © 2009 Investor’s Business Daily, Inc. Global Marine increased 752% in 94 weeks.
% o % i f g
Note: sharp angle up of a earnings line shows big % earnings line shows big % e increases in earnings for last 2 quarters e Jun 1978 Mar 1978
r
o
s
c
Dec 1977
Sep 1977
Jun 1977
Global Marine–1979 Weekly Chart Mar 1977 Dec 1976
Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 Sep 1976

60 A WINNING SYSTEM





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 Volume 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

handle k cup-with-handle n a h ” i o k p u sign s a p Mar 1981 Dec 1980


S&P 500 13-week w 13 13 with cup- c Stock at point “B” po t c undercuts low of prior u area “A” for a shakeout f f s r A a “A and closes in upper half and closes in upper half s s of week’s spread—sign of week s spread— s k w of buying support t s n b Sep 1980



p u S u a a o o 2/1 Jun 1980
Buy Buy u B B 8 weeks up k w in a row o a m

A A A A A A A pward pward a p p y not buy not buy b o n h ts new high g w n Big volume o g Mar 1980 Dec 1979
Stock price wedges up Stock price wedges up e d w r k along 2 lows, so do n along 2 lows, so do n d s s g week hits when next week hits ek we w e n 3 weeks tight closes 3 weeks tight closes e o h t means accumulation n o a m c Sep 1979 Jun 197







Market correction Market correction n r 3 weeks e tight closes tight closes s t Buy Buy u 25-week big i cup-with-handle e h Mar 1979 Dec 1978 Global Marine increased 752% in 94 weeks.



M
c
2
Sep 1978
% o % i f g
Note: sharp angle up of a earnings line shows big % earnings line shows big % e increases in earnings for last 2 quarters e Jun 1978 Mar 1978


o
c
r
s
Dec 1977
Sep 1977
Jun 1977
Global Marine–1979 Weekly Chart Mar 1977 Dec 1976









Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 Sep 1976

© 2009 Investor’s Business Daily, Inc.
320,000
160,000
80,000
40,000
Volume
Price
4.0
3.4
2.6
3.0
70
5
base new high on
very low volume
Low volume
Low volume
Sep 1983
Sell: 3rd stage
Sell: 3rd stage
g
y low vo
ery lowv
w
w
e
Jun 1983
L
e
e
a
ve
e
ve
Mar 1983
S&P 500
Dec 1982
p
Volume up
Volume up
e
Sep 1982
u
V
Jun 1982
Mar 1982
Pic ‘N’ Save increased 948% in 206 weeks.
Dec 1981
Could sell and reduce
e
Could sell and reduce
c
excessive stock split t
Sep 1981
position on 3/1
position on 3/1
s
a
3/1
n
Jun 1981
Market correction 60 n i ke 50 General market General market k a a n G p has strong turn up u g r s h et after bear market e after bear marke a e a 40 34 Market corrects Market corrects t r M 30 26 22 Buy Buy uy 19 weeks weeks e we 3 we w 3w w tight closes
C
p
e
Mar 1981
s e Dec 1980
3 weeks we tight closes l Sep 1980
Add Volume up Jun 1980
d ih t t p
Market Market k correction e Add A 8-week cup- k c e e with-handle n
Buy y 8-w 8-w 8 Mar 1980
Volume up u Dec 1979
Pic ‘N’ Save–1979 Weekly Chart Market M correction c Buy 18-week cup- week cup c 18 1 with-handle w Sep 1979 Jun 1979
Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12

America’s Greatest Stock-Picking Secrets 61





Price 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 2.6 Volume 320,000 160,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.

Sell: 3rd stage Sell: 3rd stage e base new high on g e e a very low volume y low vo ery lowv w ve e ve Low volume Low volume w L Sep 1983 Jun 1983




S&P 500 s Mar 1983
weeks weeks e we 3 we w 3w w tight closes c p Dec 1982
Volume up Volume up e u
t ti
p u et e Buy Buy uy i b i V Sep 1982
General market General market k a a n has strong turn up g r s after bear market after bear marke a e Volume support buying r p m comes in after prior comes in after prior a i week’s shakeout a s Jun 1982 Mar 1982


Market corrects Market corrects t r M V e c k w e c Dec 1981
G
h
a
Could sell and reduce Could sell and reduce a position on 3/1 position on 3/1 n excessive stock split t s 3/1 Sep 1981 Jun 1981 Pic ‘N’ Save increased 948% in 206 weeks.



Market correction n i ke Buy Buy B C p e Mar 1981




s e Dec 1980
3 weeks we tight closes l Sep 1980

d ih t t p
Add Volume up Jun 1980
Market Market k correction e Add A 8-week cup- k c e e with-handle n
Buy y 8-w 8-w 8 Mar 1980
Volume up u Dec 1979

Pic ‘N’ Save–1979 Weekly Chart Market M correction c Buy 18-week cup- week cup c 18 1 with-handle w Sep 1979 Jun 1979








Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12

62
A WINNING SYSTEM
Here’s an example of American entrepreneurial innovatio Price on at r t m m ’ 120 S&P 500 es es and ingenuity. Begins with one discount store and create Begins with one discount store and creat a r c t and ingenuity lower prices for everyone plus 1.5 million new jobs. All l e e o r













Wal-Mart Stores–1980 Weekly Chart Earnings g acceleration acceleration r w Mar 1980 Dec 1979 Sep 1979 Jun 1979 Mar 1979










Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.19

62 A WINNING SYSTEM





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 Volume 620,000 420,000 280,000 180,000 © 2009 Investor’s Business Daily, Inc.

S&P 500 Jun 1983


9week base 9-week base e a k Mar 1983
y y
Buy B w
9
9
Dec 1982
Market correction o kt t Mk r y Buy u 16-week base a k w w 16 16 6 6 similar to base in t t il l i i Dec. 1980 quarter 9 2/1 p Volume up u m Jun 1982
n tio c i e ba ter arter a q q Sep 1982



y e n o
Buy Buy u cup-with-handle cup-with-handle - Mar 1982
17-week ee e 7 w Dec 1981
o
Earnings in acceleration acceleration e

on at r es es a r l e E Sep 1981 Jun 1981 Wal-Mart Stores increased 882% in 158 weeks.
Here’s an example of American entrepreneurial innovatio t m m ’ and ingenuity. Begins with one discount store and create Begins with one discount store and creat c t and ingenuity lower prices for everyone plus 1.5 million new jobs. All e o r consumers’ standard of living rises again. consumers

















Wal-Mart Stores–1980 Weekly Chart Earnings g acceleration acceleration r w Mar 1980 Dec 1979 Sep 1979 Jun 1979 Mar 1979










Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.19

© 2009 Investor’s Business Daily, Inc.
1,640,000
340,000
980,000
580,000
200,000
Volume
Price
1.5
1.7
2.0
1.3
1.1
22
26
19
30
Sep 1983
y 8 moths apart t t
part
2/1
Splits only 8 moths apa
Jun 1983
a
h
nt t
breakout, or slightly below buy poin
pullback to pivot buy point after its
i
o
t
m
0
0
stock will
About 50% of the time, stock will l
S&P 500
Mar 1983
s but price weekly
me price area from 26-3
and volume
e
w
s but price weekly
Splits only 8
m
e
y
-
k
ds retrace much of
Sell: second 2/1 split in
t in
in
plit in
b
c
e
n
o
h
Sell: second 2/1 split
pli
s
lo
l
o
p
u
p
s
months and
d
e
only 8 months and
About 50% of the time
Dec 1982
b
m
p
a
y
p
es but p
e
2/1
/
t ths
htl
increases bt
a
u
t
d
h
r
e
n
li
ncreases
v
s
f
c
ads
r
spreads
Sep 1982
8
o
a
%
a
o
same
e
ame
p
Volume up
Volume up
c
t
u
k
e
u
n
5
p
p
m
k
a
o
Jun 1982
Vo
A
p
b
b
Mar 1982
The Limited increased 673% in 71 weeks.
Dec 1981
Note: If you pyramid, keep your average cost low, Add A 16 erage cost low e r a o o keep d ramid p 14 by never buying more shares at the higher prices, by never buying more shares at the higher prices s o r do not get top heavy with more dollars in at higher e y 12 prices than
Sep 1981
Jun 1981
Mar 1981
Don’t get excessive.
Don t get excessive
Dec 1980
t
t
b
o
o
tha
h
o
B
If
Note
i
d
Buy Huge volume Sep 1980 Jun 1980
Market Mk k correction correction e n g u Mar 1980
Huge earnings acceleration c g a g Dec 1979
The Limited–1982 Weekly Chart Sep 1979 Jun 1979 Mar 1979
Price = 20*eps 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.07 0.07 0.06 0.06 0.05

America’s Greatest Stock-Picking Secrets 63





Price 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 2.4 2.0 1.7 1.5 1.3 1.1 Volume 1,640,000 980,000 580,000 340,000 200,000 © 2009 Investor’s Business Daily, Inc.
se
Add A s e week e w i part 2/1 Sep 1983
weeks weeks k we 4 we w 4w w tight closes l h 1 o u t nt t i o y 8 moths apart t t a h m Jun 1983
0
0
S&P 500 in plit in t in pli l p p and volume e m o d s but price weekly k e e h u - o ti ti e comes back above 10-week comes back above 10 a c average line on big volume increas o n stock will w c s e y b lo Splits only 8 moths apa Splits only 8 n s Mar 1983
Sell: second 2/1 split in Sell: second 2/1 split / d c e months and only 8 months and t ths t n 8 s but price weekly p es but p increases bt u ncreases a c ds retrace much of e r spreads ads a me price area from 26-3 a a r ame same e m Add: price co e co Add: price c c



n
p
p
Tight closes Tight closes s c A 5 o A p u k a b b Volume up Volume up m Vo Jun 1982
g
g
Add d e e e Mar 1982
Buy y 38-week cup-with-handle handle n with week cup p Dec 1981 Sep 1981

.
r
p
e
Note: If you pyramid, keep your average cost low, e r a o o keep d ramid p by never buying more shares at the higher prices, by never buying more shares at the higher prices o do not get top heavy with more dollars in at higher y prices than amount purchased earlier at lower t l t
g
o
erage cost low
s
Don’t get excessive.
Don t get excessive
o
o
b
o
t
h
t
tha
B
If
Note
i
d
Buy Huge volume Sep 1980 Jun 1980
Market Mk k correction correction e n g u Mar 1980
Huge earnings acceleration c g a g Dec 1979
The Limited–1982 Weekly Chart Sep 1979 Jun 1979 Mar 1979




Price = 20*eps 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.07 0.07 0.06 0.06 0.05

64
A WINNING SYSTEM
420,000
640,000
180,000
280,000
Volume
Price
4.5
3.8
1.3
1.7
1.5
3.2
2.0
2.8
2.4
19
14
10
16
12
30
26
34
22
7
6
8
3 weeks
closes
Volume up
p
tight
tight
2/1
e
3
3
3
3
lu
p
p
up
up
p
8-week cup
8-week cup
p
p
p
V
e
y
Buy
S&P 500
B
-
2/1
Volume up
p
u
k
6-week
k
m
base
e
w
day at buy point t
day at buy point
it
l
b
6
h
follow-through
Vo
Buy
y
i
s
has
o
Market has
h
Market h
h
5/4
t b
b
7-week cup with
h
w
k
5 tight weeks
s
5 tight weeks
o
Buy
Buy
u
o
M
B
e
d
d
k
%
Return on Equity of 37.2%
%
y
Buy
t
3/2
g
At breakout, stock has a
stock has a
w
.
t
7-
Market correction
n
h
c
y
c
3 weeks tight
t t
qy
g
s
t
q
o
At breakout
during bear market
closes
Stock came public
p
b
t
u
t
Mar 1981 Jun 1983 Mar 1983 Dec 1982 Sep 1982 Jun 1982 Mar 1982 Dec 1981 Sep 1981 Jun 1981 Dec 1980 © 2009 Investor’s Business Daily, Inc. Home Depot increased 892% in 64 weeks.
s
Only in America…two laid off workers w o e from another hardware store start a r e anced Home Depot. It ultimately advanced n ad ltimatel a It 100-fold in price by the year 2000. y the year 2000 0 y h fold in price by p p p Sep 1980 Jun 1980
Home Depot t
y
100
o
o
n
0
Dec 1979 Mar 1980 Sep 1979
Home Depot–1982 Weekly Chart Jun 1979 Mar 1979
Price = 20*eps 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.07 0.07 0.06

64 A WINNING SYSTEM





Price 34 30 26 22 19 16 14 12 10 8 7 6 4.5 3.8 3.2 2.8 2.4 2.0 1.7 1.5 1.3 Volume 640,000 420,000 280,000 180,000 © 2009 Investor’s Business Daily, Inc.
3 weeks tight tight closes p e 2/1

p 3 3 3 3 p p up p up p p Volume up lu V Jun 1983
y Buy 8-week cup 8-week cup e - Mar 1983
S&P 500 B
2/1
Dec 1982
p
k 6-week k e Volume up u m Sep 1982
h it i y Buy w 6 base b l Vo
Market has Market h k M o o t b b Buy Buy w u s
has s h follow-through o h day at buy point day at buy point t h 5/4 Jun 1982
d
d
% % . B y Buy 7-week cup with k w 5 tight weeks 5 tight weeks e t g 3/2 Mar 1982
n c stock has a h c y t t 7- t Dec 1981
Market correction o At breakout, stock has a s At breakout b Return on Equity of 37.2% qy q t 3 weeks tight g t closes Stock came public p during bear market Sep 1981





u
t
Mar 1981 Jun 1981 Dec 1980 Home Depot increased 892% in 64 weeks.
Only in America…two laid off workers w o e from another hardware store start a r e anced Home Depot. It ultimately advanced n ad ltimatel a It 100-fold in price by the year 2000. y the year 2000 0 y h fold in price by p p p Sep 1980 Jun 1980
s





Home Depot t

y
100
0
o
o
n
Dec 1979 Mar 1980 Sep 1979
Home Depot–1982 Weekly Chart Jun 1979 Mar 1979





Price = 20*eps 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.08 0.07 0.07 0.07 0.06

America’s Greatest Stock-Picking Secrets 65
160,000
300,000
Volume
40,000
20,000
80,000
Price
140
120
100
12
34
26
30
60
50
10
80
16
14
40
19
22
70
6
7
8
5
3 weeks
closes
tight closes
tight closes
tight closes
tight
4 weeks
4 weeks
t
e
w
g
week moving
Add
10-week moving
Volume up
Volume up
Add: pullback to
Add: pullback to
d
closes
t closes
s
s
s
s
S&P 500
m
average line
s
y
Buy
e
a
3 weeks
s
s
3 weeks
t clo
tight cl
c
tight c
k
e
o
l
w
g
a
w
r
went on to gain another
r
Price Co. went on to gain another
10
v
A
h
A
169% before it topped in 1986
169% bef fore it topped in 1986
w
Shakout below
o
n
9
with a total gain of 1294%
n
n
first low
first low
d
o
g
2
o
a
s
Add: 3 weeks tight t
p
f
g
Add again
Add again
t
t
t
i
i
Huge volume
m
k
we
r
d a
Buy
o
d
w
e
o
B
Price Co
m
m
week double bottom
36-week double bottom
Many tight
%
h
o
e
Volume up
p
g
p
:
H
6
e
e
e
retraces back above
retraces back above
r
e
w
Market correction
Buy after shakeout
Buy af fter shakeout
A
n
areas
14.5 by 1.5 points
below first low at
below first low at
o
e
b
a
u
n
t
a
e
14.5 then stock
V
p
p
o
o
o
c
c
b
s
k
n
r
y
h
e
b
k
w
w
First low
36
M
Only traded in local l
t
u
o
e
4
3
4
50
14 50
14.50
San Diego market
San Diego market
3/1
d
d
Mar 1981 Jun 1983 Mar 1983 Dec 1982 Sep 1982 Jun 1982 Mar 1982 Dec 1981 Sep 1981 Jun 1981 © 2009 Investor’s Business Daily, Inc. Price Company increased 417% in 60 weeks.
d e 7 t E e h w . Dec 1980
h
h
h
hi
Price Club
o
0
f 14 50
o
e
wa
C
nnovator in wholesale membership Innovator in wholesale membership m l t warehouse stores. Another leap forward s for consumers’ standard of living. i f li f d d t t ’ s f This was using the old Livermore rule for shakeout e h g below a $30 stock and a retracement back up to $33, belo
Price Co.–1982 Weekly Chart a a b t o i p 1 a o l bu ii i o Sep 1979 Jun 1979 Mar 1979
Price = 20*eps 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25

America’s Greatest Stock-Picking Secrets 65





Price 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 Volume 300,000 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.
3 weeks tight closes
4 weeks 4 weeks e w tight closes tight closes tight closes g Jun 1983
t
Add d s s s s
S&P 500 Buy y 3 weeks s 3 weeks s e closes t closes s t clo tight cl c Add: pullback to Add: pullback to a l week moving 10-week moving k e average line Volume up Volume up m o Mar 1983

r r h n 9 w tight c g A A w 10 a v w o Dec 1982
Price Co. went on to gain another went on to gain another n g t we 169% bef fore it topped in 1986 169% before it topped in 1986 n d p t r e % with a total gain of 1294% 2 f i o Add: 3 weeks tight t g t k w Add again Add again i d a d Buy B Shakout below o a h first low f





Price Co
e
r
6
Market correction n t c k M : A Buy after shakeout Buy af fter shakeout o r u below first low at below first low at a o s e 14.5 then stock o n h 4 retraces back above retraces back above e e e b c b e t 14.5 by 1.5 points n p p y b 4 w o Many tight a a
w
First low
Only traded in local l d d San Diego market San Diego market Sep 1981 Jun 1981
14 50
14.50
50
3/1
Mar 1981 Price Company increased 417% in 60 weeks.

d e 7 t E e h w . Dec 1980
h
h
h
hi
Price Club
o
wa
0
e
f 14 50
o
C
nnovator in wholesale membership Innovator in wholesale membership m l t warehouse stores. Another leap forward s for consumers’ standard of living. i f li f d d t t ’ s f This was using the old Livermore rule for shakeout e h g below a $30 stock and a retracement back up to $33, belo


Price Co.–1982 Weekly Chart a a b t o i p 1 a o l bu ii i o Sep 1979 Jun 1979 Mar 1979






Price = 20*eps 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25

66
A WINNING SYSTEM
Price
S&P 500
Earnings acceleration 80 leration r g 70 60 50 40 34 n n Market correction Market correction r M 30 26 22 19 16 Add: big Add: big b d volume m o 14 12 Buy y 10 k Add: 2nd pullback to10-week e 0 10 k to c llb l d p 2n Add A e moving average line l g a v g
Mar 1981

Dec 1980

Sep 1980

Jun 1980

Mar 1980
Stop & Shop–1982 Weekly Chart Dec 1979 Sep 1979








Price = 20*eps 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16

66 A WINNING SYSTEM





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 Volume 160,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.

S&P 500 Dec 1983

Add: 2nd pullback to10-week k to c llb l d p 2n Add e moving average line l g a v g g g v Add: 1st pullback to10-week k k e w 10 1 k k llba u g average line moving average line i g g g e Jun 1983 Mar 1983
k e 0 10 2/1 Sep 1983





A
moving
g
1s
5/4
Add:
v
m
A
Sep 1982 Dec 1982
e
Add: big Add: big b d volume m o e e Big volume go um Jun 1982
n n Buy y Mar 1982
Market correction Market correction r 38-week double week double d bottom-with-handle w
leration r M 38 Dec 1981
Earnings acceleration g Sep 1981 Jun 1981 Stop & Shop increased 536% in 74 weeks.




Mar 1981

Dec 1980

Sep 1980

Jun 1980

Mar 1980
Stop & Shop–1982 Weekly Chart Dec 1979 Sep 1979








Price = 20*eps 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16

© 2009 Investor’s Business Daily, Inc.
140,000
300,000
60,000
20,000
Volume
Price
100
120
4.0
70
80
50
60
7
6
5
Jun 1983
Sell: climax top off 3rd stage base
Sell: climax top off 3rd stage base
e
Volume up
p
Volume up
Mar 1983
m
p much more
o
t
o
,
n 1st 2 weeks
Dec 1982
Buy
p much
h
r
Bu
e
At end of 8 weeks, now up muc
w
f
ll weeks
k
p
p
p
Volume up
p
e
t
o
Note: up 20% in 1st
Sep 1982
l w
Note: up 20% in 1
w
e
x
s hold 8 full
hold 8 ful l
m
n
ld8fu
u
%
must hold 8
V
2
:
d
e
Jun 1982
w
h
u
h
S
h
Note:
e
e
d
Mar 1982
B
B
A
Digital Switch increased 843% in 46 weeks.
Dec 1981
S&P 500
A
A
A
Sep 1981
Jun 1981
Mar 1981
Note: at point B the S&P 500 (top thin p t 40 line) makes a new low relative to point A. t A i t ti l r l a However, Digital Switch stock at point B Digital Switch stock at point B p h 34 e ase s 8-week bas as e 8 does not make a new low like the S&P 500 0 e o k 30
Dec 1980
Sep 1980
see this clue.
see this clue
k
r
r
However
b
w
)
s
s
e
e
e
t
Mar 1980 Jun 1980
d
li
Dec 1979 Sep 1979
Digital Switch–1982 Weekly Chart Jun 1979 Mar 1979
Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.19

America’s Greatest Stock-Picking Secrets 67





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 Volume 300,000 140,000 60,000 20,000 © 2009 Investor’s Business Daily, Inc.

Jun 1983
e t e ase s 8-week bas as Volume up Volume up p m Mar 1983
Sell: climax top off 3rd stage base Sell: climax top off 3rd stage base r f o x m : S p much more o h p much At end of 8 weeks, now up muc p w n e w , n 1st 2 weeks e w Note: up 20% in 1st t Note: up 20% in 1 % 2 u e e ll weeks k e l w s hold 8 full hold 8 ful l ld8fu must













S&P 500 d A Note: A A B B w Buy after pull back below e c p e week moving average 10-week moving average r i m e 10 line and as price comes m c i d eek line on n n up across 10-week line on o e w p across 10 1 o volume increase a c e B B A Mar 1982 Dec 1981 Sep




Jun 1981
o ff to Mar 1981 Digital Switch increased 843% in 46 weeks.
0
l
t A
Note: at point B the S&P 500 (top thin t line) makes a new low relative to point A. ti l r l a k However, Digital Switch stock at point B Digital Switch stock at point B h r r does not make a new low like the S&P 500 o k does, but holds up at a much higher level. h hi d ld
l
i
h
p
p
e
t
see this clue.
see this clue
However
b
s
s
w
)
e
e
e
t
Mar 1980 Jun 1980
d
li
Dec 1979 Sep 1979
Digital Switch–1982 Weekly Chart Jun 1979 Mar 1979
Price = 20*eps 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.19

68
A WINNING SYSTEM
Price
36
27
23
S&P 500
n
n
Market correction
Market correction
o
c
o
e
a
Market at points A, B and C 19 A A 16 makes new lows while stock makes new lows while stock h e price at A, B, and C is higher A C C B B 13 11 s Cyclical earnings g n e c c turnaround r r 9 7 6 Buy B 4.6 C C C 3.6 2.9 B B B 4 weeks 4 weeks k w 2.5 s tig
2/1 Dec 1980
Sep 1980
k k k Jun 1980
Cyclical building stock Cyclical building stock d Mar 1980
c
Dec 1979 Sep 1979
Pulte Home–1982 Weekly Chart Jun 1979 Mar 1979




Price = 20*eps 1.80 1.45 1.35 1.25 1.15 1.05 0.97 0.88 0.78 0.68 0.63 0.57 0.51 0.46 0.41 0.36 0.31 0.26 0.23 0.20 0.18 0.15 0.14 0.13 0.11 0.11 0.10 0.09 0.08 0.07 0.06 0.06 0.05 0.05 0.04 3/2

68 A WINNING SYSTEM





Price 36 27 23 19 16 13 11 9 7 6 4.6 3.6 2.9 2.5 2.1 1.8 1.5 1.3 1.0 0.8 Volume 320,000 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.



Jun 1983
2/1
S&P 500 s e Mar 1983

4 weeks 4 weeks k w tight closes c h 2/1 Dec 1982

er s s s e e te e
C C C C C a a a q q Sep 1982
Market correction Market correction o e a B B Cyclical earnings n e c c turnaround r r B B B B 55-week cup-with-handle a w p u v g H g g g n big ea big e b e u u V V Mar 1982
n n o c s g Buy e e Huge volume telegraphs e t m g earnings next quarte t q t nings ne n Volume dry-up yp u u y Jun 1982






A A k w 5 A Dec 1981
Sep 1981
Market at points A, B and C makes new lows while stock makes new lows while stock h e price at A, B, and C is higher A Jun 1981 Mar 1981 Pulte Home increased 733% in 47 weeks.







2/1 Dec 1980
Sep 1980
k k k Jun 1980
Cyclical building stock Cyclical building stock d Mar 1980



c
Dec 1979 Sep 1979
Pulte Home–1982 Weekly Chart Jun 1979 Mar 1979








Price = 20*eps 1.80 1.45 1.35 1.25 1.15 1.05 0.97 0.88 0.78 0.68 0.63 0.57 0.51 0.46 0.41 0.36 0.31 0.26 0.23 0.20 0.18 0.15 0.14 0.13 0.11 0.11 0.10 0.09 0.08 0.07 0.06 0.06 0.05 0.05 0.04 3/2

America’s Greatest Stock-Picking Secrets 69
160,000
320,000
40,000
80,000
Volume
Price
3.0
4.0
3.4
16
34
14
12
22
40
19
30
26
50
60
70
10
80
5
7
6
8
n
doesn’t drift down
base wedging up along
along lows like in
Do Not Buy! 3rd stage
Do Not Buy! 3rd stage
i
higher. Handle
Handle
lik
S&P 500
Each low is
s
d
u
r
a
i
first base
first base
lo
n
t
o
a
higher
u
h
s
n
h
t
Eac
Eac
l
h
d
w
E
E
o
a
f
ows
2/1
low
s
Do
D
b
ts
Handle properly drif s
Handle properly drif f s
ts
General market turn
General market turn
n
rn
down along lows
s
Volume up
p
p
e
e
l
e
n
y
y
u
Buy
a
r
B
B
B
B
a
V
e
r
w
n
Buy
3/2
u
G
Computer’s cup-with-handle
d
d
in March 2004 (page 99 and
e
dle
handle
de
14-week cup-with-handle
Good precedent for Apple
n
d
d
l
daily chart on page 114)
daily chart on page 114)
99
a
p
Volume up
Market correction
1
p
Market correction
n
n
n
p
Volume up
-
A
C
C
C
t
e
e
t
a
w
o
h 2004 (
p
Buy
cup-
Buy
n
r
y
V
B
o
0
c
s
k
e
a
ee
e
h
e
M
Ma
d
-
B
B
B
B
Dec 1981 Dec 1983 Sep 1983 Jun 1983 Mar 1983 Dec 1982 Sep 1982 Jun 1982 Mar 1982 © 2009 Investor’s Business Daily, Inc.
A A A A Liz Claiborne increased 211% in 43 weeks.
Sep 1981
O Jun 1981
IPO *
Mar 1981
Dec 1980
Sep 1980
Jun 1980 Mar 1980
Liz Claiborne–1982 Weekly Chart Dec 1979 Sep 1979
Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

America’s Greatest Stock-Picking Secrets 69





Price 80 70 60 50 40 34 30 26 22 19 16 14 12 10 4.0 3.4 3.0 Volume 320,000 160,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.
n i 8 7 6 5
Do Not Buy! 3rd stage Do Not Buy! 3rd stage u o base wedging up along n w Each low is o h Eac Eac E E higher. Handle higher h h t s d n l a first base first base a t f
S&P 500 d u i Handle a doesn’t drift down r along lows like in lik s lo Dec 1983


ows
s
low
Do
D
b
ts ts s 2/1 p p Sep 1983 Jun 1983
rn
n
General market turn General market turn e a r Buy y y B B B B Buy u Handle properly drif f s Handle properly drif s e r e n down along lows l n a w 3/2 Volume up e u V Mar 1983
n n n t G C C C de dle handle d d a t l A o e n - w d d 99 a 1 e p p p e Dec 1982 Sep 1982
Market correction Market correction r k y Buy Buy B 14-week cup-with-handle cup- c e ee Good precedent for Apple n e Computer’s cup-with-handle s e in March 2004 (page 99 and h 2004 ( 0 h daily chart on page 114) daily chart on page 114) p o a Volume up Volume up V Jun


M
Mar 1982
B B - B B d Ma
Dec 1981

A A A A Liz Claiborne increased 211% in 43 weeks.
Sep 1981

IPO * Jun 1981
O
Mar 1981

Dec 1980

Sep 1980

Jun 1980 Mar 1980
Liz Claiborne–1982 Weekly Chart Dec 1979 Sep 1979









Price = 20*eps 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15

70
A WINNING SYSTEM
Price
30
26
40
34
19
14
16
22
60
50
t closes
t closes
4 weeks
4 weeks
e
tight
tight
S&P 500
Sell: climax top
p
p
p
4
t
m
k base
s
c
20-week b
k b
y
y
Buy
S
e
0
s
le
stock triples due to quarterly earnings and sale
paper saying stock was overvalued; ultimately
Stock sells down on New York based financial
Stock sells down on New York based financial
t
c
d
acceleration over 3 consecutive quarters.
m
acceleration over 3 consecutive quarters.
s
t
u
d
u
s
i
a
e
v
k
w Yo
rtl
u
Y
Y
Y
Y
e
r
Y
Y
Y
o
s
w
q
c
n
Market correction
t t
c
o
d
l
a
t
a
i
tk tr
Have you noticed how all the better stocks have 12 e c 10 a a quarter-by-quarter earning’s lines going up at a quarter-by-quarter earning s lines going up at a g y strong rate? That’s the C and A in CAN SLIM. S d e 8 Earnings g n 7 Buy Buy B acceleration 6 s
Franklin Resources–1984 Weekly Chart Sep 1982 Jun 1982 Mar 1982 Dec 1981
Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

70 A WINNING SYSTEM





Price 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 2.6 2.2 Volume 160,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.

4 weeks 4 weeks e t closes t closes tight tight 2/1 Mar 1986
S&P 500 p p p t 4 Second 2/1 split in / d only 10 months only 10 months m 0 me m Dec 1985
Sell: climax top m c k base s c S S y o o o Big volume ol o g Big

20-week b k b e Volume m dryp dry-up ryup u Sep 1985
Buy
y
y
S
0
p p o Jun 1985
s t m u le d s t Red volume up m d R 2/1 Mar 1985
Stock sells down on New York based financial Stock sells down on New York based financial s k w Yo Y Y Y Y Y Y Y paper saying stock was overvalued; ultimately d a e o w c stock triples due to quarterly earnings and sale i e rtl r q t t acceleration over 3 consecutive
c



Market correction t a d l i tk tr a e a a Buy 5/4 Volume up Jun 1984 Mar 1984 Dec 1983 Franklin Resources increased 811% in 78 weeks.
n
o



Have you noticed how all the better stocks have c quarter-by-quarter earning’s lines going up at a quarter-by-quarter earning s lines going up at a g y strong rate? That’s the C and A in CAN SLIM. S d e Earnings g n acceleration s begins begins g O O PO IPO * S













Franklin Resources–1984 Weekly Chart Sep 1982 Jun 1982 Mar 1982 Dec 1981












Price = 20*eps 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

America’s Greatest Stock-Picking Secrets 71
560,000
920,000
200,000
340,000
Volume
Price
190
220
120
140
160
100
300
340
260
11
13
20
24
45
80
28
32
70
17
15
38
60
g
to 10-week moving
Add: 1st pullback
i
for 8 full weeks from
for 8 full weeks from
m
m
Stock up 20% in 3
weeks, must hold
add small amount
ld
buy and can now
w
n
u
u
k
t h
%
e
m
e
t
ot t
average
Do Not Buy! 3 weeks is no
Do Not Buy! 3 weeks is no
a base, sell on way up on
g
w
2
u
n
n
t10-
c
a
this 4th stage non-base
u
s
ve
m
d
u
p
,
b
k
Dry-up
p
S&P 500
e
u
y
d
o
y
e
g
high tight flag
high tight flag
a
n
Buy: possible
r
b
n
y
Buy
f
Buy
r
B
g
o
t
B
ek
s
h
ch
h
e
4th
y
Or you could decide to just hold another 8 or 10 weeks whic
correction of 20%, or stock’s first pullback to around 10-we
moving average line, which will be another buy opportunit ty.
which will be another buy opportunity
Holding for 1st 8 weeks got you through 1st pullback down
B
4
w
B
h
to 40 and now you’re ahead 58% rather than 20%. So due
So due
s
h
h
N
e
w
Buy
ge
ge
thi
to exceptional action, you can hold through stock’s first
s
s
1
h
d
g
ag
361,000. Huge volume increase of 317% above averag
0
Bu
0
D
(1.5 million shares) vs prior 2 weeks volume of 78,000
a
t
c
0
n
e
e
p
e
Average weekly volume when stock breaks out was
han 20%
%
o
e a
o
a
t w
7
l
c
o
abo
o
s
r
n
e
o
b
to 40 and now you re ahead 58% rather th
h
% a
8
1
ows means little selling
g
g
g
g
e
lows means little selling
g
k
c
k
could, by that time, create another base!
e
g
b
e
l
s
e
7
O
g
Volume dry-up along
o
IPO
O
v
r
k b
*
*
3
a
3
o
o
b
a
p
r
k
k
%
ease o
h
w
d
r
t t
u
t t
h
e
w
y
2
a
y
s
n
n
n
h
a
h
c
u
o
w
g
e
e
t
i
n
u
r
m
, y
w
e
e
s
s
o
k
m
s
u
r
r
moving average line
o u
V
l
uge
kl
d
o
n
o
r
e
u
p
,000
o
o
o
36
Av
6
r
o
o
Mar 1985 Jun 1987 Mar 1987 Dec 1986 Sep 1986 Jun 1986 Mar 1986 Dec 1985 Sep 1985 Jun 1985 © 2009 Investor’s Business Daily, Inc. Microsoft increased 272% in 30 weeks.
Software maker for PCs and servers. Businesses and Sof ftware maker for PCs and servers. Businesses and v s k consumers become more productive and increase c o b standard of living. Stock corrects, in late 1987, for two t l i ts Stk c i f li i years back and forth then advances 100 times in
d n n tw f 1987 9 c m o or 3 o e Dec 1984
from 1989 to 1999.
weeks.
d
td
m
n
H
w
s
v
a
n
Sep 1983 Dec 1983
Microsoft–1986 Weekly Chart Jun 1983 Mar 1983
Price = 20*eps 15 14 13 12 11 10 9.00 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50

America’s Greatest Stock-Picking Secrets 71





Price 340 300 260 220 190 160 140 120 100 80 70 60 45 38 32 28 24 20 17 15 13 11 Volume 920,000 560,000 340,000 200,000 © 2009 Investor’s Business Daily, Inc.
g i m m
Add: 1st pullback u to 10-week moving k e n % ld t h w u m Jun 1987
ot t n n p s t d t10- average g a ve Stock up 20% in 3 2 u weeks, must hold u , for 8 full weeks from for 8 full weeks from e w u buy and can now c add small amount m Mar 1987
Do Not Buy! 3 weeks is no Do Not Buy! 3 weeks is no B N D a base, sell on way up on s s a this 4th stage non-base g t 4th 4 thi h Buy: possible o y B B high tight flag high tight flag h h h w d c l So due e % s Buy Buy B ek e w 1 n o t p o h ch h s
S&P 500 e a b n n b g f y o k e r y y d p Dry-up u r


Holding for 1st 8 weeks got you through 1st pullback down 1 g r u y g k to 40 and now you’re ahead 58% rather than 20%. So due han 20% n to 40 and now you re ahead 58% rather th h e a % e to exceptional action, you can hold through stock’s first c s g g g r h a u ,










moving average line
uge
d
o
n
e
r
o
u
,000
p
o
o
6
36
r
o
Av
o
o
Mar 1985 Jun 1985 Microsoft increased 272% in 30 weeks.
Software maker for PCs and servers. Businesses and Sof ftware maker for PCs and servers. Businesses and v s k consumers become more productive and increase c o b standard of living. Stock corrects, in late 1987, for two t l i ts Stk c i f li i years back and forth then advances 100 times in
d n n tw f 1987 9 c m o or 3 o 2 e Dec 1984
from 1989 to 1999.
weeks.
d
td
m
H
w
v
n
s
n
a
Sep 1983 Dec 1983
Microsoft–1986 Weekly Chart Jun 1983 Mar 1983
Price = 20*eps 15 14 13 12 11 10 9.00 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.75 0.70 0.65 0.60 0.55 0.50