How to Make Money in Stocks Trilogy

72
A WINNING SYSTEM
140,000
300,000
20,000
Volume
60,000
Price
3.8
3.2
4.5
19
40
34
16
10
50
22
80
26
14
12
60
30
70
6
8
7
adjusted for
adjusted for
All prices
2/1 split
ic
p
t
2/1
All p
u
A
p
Sell: climax top
a
2
S&P 500
x
to 10-week moving
to 10-week moving
lim
n
high
4-week high
high
h
h
gh
Add: 1st pullback
k
4week hig
c
o
llba
ag
h
g
tight flag
Sll
e
u
k
S
n
Volume up on
correction
o
Buy
1st
y
io
g
g
g
average
ge
w
-
Market
new high
gh
O
IPO
O
e
r
k
Add
d
*
o
m
o
h
M
a
A
o
e
nd
flag of 4 weeks. Note extreme volume dry-up as
s
g
stock. It is not obvious to everyone. That, along
New issue at 5.50 runs up to 9.63, then builds
little selling coming into stock. Little volume an
stock slowly creeps up closing tight with prior
weeks and tiny spread from each week’s high
then builds
to low. Stock is under slow accumulation with
a
h
to low. Stock is under slow accumulation with
weeks and tiny spread from each week s high
io
h
acceleration
d
o
ce the
slight move up means few people notice the
with strong fundamentals, is why it worked.
kd
d
w
u
h
m
i
h
-
ith p
Earnings
g
n
o
r
d
t
o
n
e
c
slight move up means few people notic
’
w
o
c
r
e
e
m
l
ht
t
y i
Newissue at550 runs up to 9 63
hy
y
h
ti i
o
o
L
6
l
u
k
c
e
e
in
e
e
, i
w
lo
w
p
ls
s
o
o
r
s
e
t
p
t
s
d
o
u
c
k
g f f
e
t
l
l
k
ih
g
g
o
t
to
e
e
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. Adobe Systems increased 307% in 23 weeks.
Dec 1984
Sep 1984
Jun 1984
Mar 1984
Dec 1983 Sep 1983
Adobe Systems–1986 Weekly Chart Jun 1983 Mar 1983
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 Dec 1982

72 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 Volume 300,000 140,000 60,000 20,000 © 2009 Investor’s Business Daily, Inc.

All prices ic adjusted for adjusted for t u 2/1 split p 2/1 Jun 1987

p All p A a 2 Mar 1987
S&P 500 Sell: climax top x lim c Sll k llba u n o k 4-week high high high gh h h 4week hig h e ag g Dec 1986


Market k M correction io e o then builds d u n s - d S io ith p t h h ’ h w o nd a m ce the h Add: 1st pullback 1st d Add A g o to 10-week moving to 10-week moving w o kd d r average ge r a y Buy IPO O O g * acceleration i - tight flag g g g Vol


New issue at 5.50 runs up to 9.63, then builds t Newissue at550 runs up to 9 63 6 p s t flag of 4 weeks. Note extreme volume dry-up as m o e r e e stock slowly creeps up closing tight with prior ht ti i in lo p l weeks and tiny spread from each week’s high weeks and tiny s










l
k
ih
g
g
t
o
to
e
e
Mar 1985 Jun 1985 Adobe Systems increased 307% in 23 weeks.
Dec 1984
Sep 1984
Jun 1984
Mar 1984

Dec 1983 Sep 1983

Adobe Systems–1986 Weekly Chart Jun 1983 Mar 1983










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 Dec 1982

© 2009 Investor’s Business Daily, Inc.
1,600,000
200,000
800,000
400,000
Volume
Price
3.0
3.4
4.0
2.6
30
34
40
26
22
19
50
70
60
12
16
14
5
Mar 1992
Dec 1991
S&P 500
Sep 1991
Jun 1991
2/1
Mar 1991
Market correction
n
o
Dec 1990
e
Buy
y
Buy
o
Costco Wholesale increased 712% in 163 weeks.
e
Sep 1990
a
d
buy right, you won’t get scared
u
slightly below, buy point. If you
r
y
this normal pullback to, or
this normal pullback to, or
s
o
out just before big move.
Jun 1990
bi
w
b
Mar 1990
f
tb
n
tju
i
t
Dec 1989
Sep 1989
se Earnings g n E 10 acceleration acceleration o o a a acce e e a ek bas 8 7 6 e 40–60% of leaders will have a d 0 America’s Greatest Stock-Picking Secrets 73
Founder was previously pr d d d partner with Sol Price’s o n Price Co of San Diego n f S C Add Add A A Mar 1989
reviously y y s g Di Buy 10-week base 1 Jun 1989
P i
Tight closes c g Add Buy y 4 weeks 4 weeks w tight closes tight closes g g Dec 1988 Sep 1988
F
n
Market correction
Costco Wholesale–1988 Weekly Chart M e Large cup-with-handle is like Large cup-with-handle is like Large cup-with-handle is like k k c c Xerox base in March, 1963 a b ) 3 Jun 1988 Mar 1988 Dec 1987
r
Price = 20*eps 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 (page 35) (page 35) 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.

America’s Greatest Stock-Picking Secrets 73





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 1,600,000 800,000 400,000 200,000 © 2009 Investor’s Business Daily, Inc.
Mar 1992


S&P 500 Dec 1991
Sep 1991

Jun 1991
2/1
Mar 1991
Market correction e o e a Buy y Buy Earnings g n E acceleration acceleration o o a a acce e e a e u y d r Dec 1990 Sep 1990
n o



40–60% of leaders will have a d 0 this normal pullback to, or this normal pullback to, or o n slightly below, buy point. If you b t buy right, you won’t get scared s w i out just before big move. bi f tb tju Jun 1990 Mar 1990









se ek bas Dec 1989 Sep 1989 Costco Wholesale increased 712% in 163 weeks.
reviously y y s g Di Buy 10-week base 1 Jun 1989
Founder was previously pr d d d partner with Sol Price’s o n Price Co of San Diego n f S C Add Add A A Mar 1989




P i
Tight closes c g Add Buy y 4 weeks 4 weeks w tight closes tight closes g g Dec 1988 Sep 1988
F
Market correction
n
Costco Wholesale–1988 Weekly Chart M e Large cup-with-handle is like Large cup-with-handle is like Large cup-with-handle is like k k c c Xerox base in March, 1963 a b ) 3 Jun 1988 Mar 1988 Dec 1987
r









Price = 20*eps 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 (page 35) (page 35) 0.40 0.35 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.

74
A WINNING SYSTEM
Price
140
190
120
160
100
220
80
S&P 500
n
n
n
Market correction
Market correction
t
r
k
M
Buy: Third base formed is now ! y! Very Important t Do Not Buy tt Do Nt Bu o I I V 70 y Buy y Buy It’s a 3rd stage base It s a 3rd stage base s Buy: Third base formed is now w m tighter, corrected less from high g g s r 60 to low, handle is in upper-half of u n base an
g
w
B
b
t
t
t
e e e Jun 1989
History repeats itself. Qualcomm (page 94) later did g ( lc Q lf it same thing in Jan. 1999 when 1st base was loose 1999 when 1st base was loose s h n and wrong, 2nd base was wrong and then 3rd time and wrong, 2nd base was wrong and then 3rd time w b it tightened up and formed c
did 94) l o t o Historical o Do Not Buy! Second Do Not Buy! Second o base faulty, most of price p t y work on handle in lower n half of base, 200-day line day line 200- Mar 1989 Dec 1988
Microsoft–1989 Weekly Chart y Hi same thing in Jan h o e 9 Jan e N D D D a a o (1 2/1 Mar 1988 Dec 1987 Sep 1987
Price = 20*eps 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 0.45 0.40 0.35

74 A WINNING SYSTEM





Price 220 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 Volume 13,000,000 8,000,000 5,000,000 3,000,000 1,800,000 © 2009 Investor’s Business Daily, Inc.
Mar 1992


S&P 500 Dec 1991 Sep 1991



Support week k pport week e Suppo u Volume dry-up in handle n r j j just before breakout k e e 3/2 Jun 1991



Market correction Market correction r k ! y! o 25-week base week base k e 5 25 m k e w Dec 1990
n n n t y Buy y Buy s e u V f u Mar 1991
Very Important t Do Not Buy tt Do Nt Bu I I V It’s a 3rd stage base It s a 3rd stage base s e Huge volume on v g support week support week r pp 2/1 Sep 1990 Jun 1990 Mar 1990
M





Buy: Third base formed is now Buy: Third base formed is now w m tighter, corrected less from high g g s r to low, handle is in upper-half of u n base and drifts down and has n d tight areas, first and second base a s were wrong third time was right g m g n Dec 1989 Sep 1







g
w
b
B
t
t
t
e e e Jun 1989
did 94) l o t o Historical o Do Not Buy! Second Do Not Buy! Second o base faulty, most of price p t y work on handle in lower n half of base, 200-day line day line 200- Mar 1989 Dec 1988
History repeats itself. Qualcomm (page 94) later did g ( lc Q lf it same thing in Jan. 1999 when 1st base was loose 1999 when 1st base was loose s h n and wrong, 2nd base was wrong and then 3rd time and wrong, 2nd base was wrong and then 3rd time w b it tightened up and formed c


Microsoft–1989 Weekly Chart y Hi same thing in Jan h o e 9 Jan e N D D D a a o (1 2/1 Mar 1988 Dec 1987 Sep 1987







Price = 20*eps 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 0.45 0.40 0.35

© 2009 Investor’s Business Daily, Inc.
1,660,000
980,000
580,000
340,000
200,000
Volume
Price
1.8
0.8
1.5
1.0
1.3
13
36
19
23
27
16
Mar 1992
2/1
Dec 1991
Sell: climax top
p
S&P 500
x
m
Sep 1991
S
Jun 1991
Buy
u
Mar 1991
Dec 1990
American Power Conversion increased 745% in 96 weeks.
3/1
Sep 1990
e Big volume demand
d
m
d
Jun 1990
g
Mar 1990
Big volume clue
Big volume clue
e
Note: angle of earnings line 11 e a a 9 on log chart accelerated in on log chart accelerated in e rate of change 7 6 e stock have more v h o s Hi-tech s e H Buy uy B 4.6 s s ks and shakeouts cks and shakeouts a a pullback pullback ullback pullba g b s Pullbac
m
Dec 1989
Sep 1989
5/4
Mar 1989 Jun 1989 Dec 1988
up:
American Power Conversion–1990 Fundamentals were great before stock made its huge run-up: Fundamentals were great before stock made its huge run f e 3 years of annual earnings nearly doubling each year o s a 100% Annual sales growth up over 100% v th o l Pre-tax margins at 26.9% s t5
c
Price = 20*eps Weekly Chart 1.80 1.45 1.35 1.25 1.15 1.05 0.97 0.88 0.78 e 0.68 0.63 r 0.57 l a A 0.51 a 0.46 n t R 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

America’s Greatest Stock-Picking Secrets 75





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 1,660,000 980,000 580,000 340,000 200,000 © 2009 Investor’s Business Daily, Inc.
e s s must Mar 1992

p stock have more v h ks and shakeouts cks and shakeouts a d h handle. Therefore, must e Therefore f p o h o t 2/1
S&P 500 Sell: climax top x m o s Hi-tech s e H a pullback pullback ullback pullba g b making them harder to e makin mak k k m m h handle d h really know company w y r well to sit through the well to sit through the t w numerous tests. numerous tests o m n Dec 1991 Sep 1

S
Jun 1991
s
Pullbacks l Mar 1991
Buy u c
Dec 1990
3/1
d
e Big volume demand Jun 1990
m Sep 1990
d
g e
Buy uy Mar 1990
e B 4 weeks tight closes 4 weeks tight closes o Big volume clue Big volume clue m Dec 1989 American Power Conversion increased 745% in 96 weeks.
Note: angle of earnings line a a on log chart accelerated in on log chart accelerated in e rate of change k 5/4 Sep 1989







Mar 1989 Jun 1989 Dec 1988
up:
American Power Conversion–1990 Fundamentals were great before stock made its huge run-up: Fundamentals were great before stock made its huge run f e 3 years of annual earnings nearly doubling each year o s a 100% Annual sales growth up over 100% v th o l Pre-tax margins at 26.9% s t5
c














Price = 20*eps Weekly Chart 1.80 1.45 1.35 1.25 1.15 1.05 0.97 0.88 0.78 e 0.68 0.63 r 0.57 l a A 0.51 a 0.46 n t R 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

76
A WINNING SYSTEM
Price
4.5
3.8
16
14
12
22
50
60
30
80
34
19
10
70
40
26
6
7
8
5 weeks tight during 8 weeks
sales
ales
les
k
e
Add: Shakeout
e
t
has huge earnings and sal
below 10-week line, stock
has huge earnings and sa
s
s
8 w
e
o
S&P 500
g
g
+3 rule
h
a
e
+ 3 rule
,
i
g average
ng average
e
g
r
i
Ad
ht d
Ad
n
r
A
e
A
+
ti ig
Add: bounces off
-
i
f f f f
10-week moving
10-week moving
week movin
lume
ine on volume
ume
ine on volume
l line on volume
e
k
k
k
i
u
5 we
u
o
u
c
5 w
w
m
week
b
b
o
e
e
10-we
w
:
e
verage
A
A
g
A
A
A
li
gh
h
Add: coming through
ve
e
g
10-week moving av
t
General market
o
e
line on volume
a
e
i
g t
turns up
p
turns up
m
correction
correction
n
l
l
s
Market t t
e
o
e
Buy
y
c
Mk
w
u
B
G
:
r
r
Ad
Ad
1
A
A
l
double bottom
m
Add
Add
week
16-week
Buy
Buy
B
w
16
eout 3.2 keout k n upper- in upper- n 2.8 k 3/1 2/1 p Volume 12,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc. Mar 1992 Dec 1991 Sep 1991 Jun 1991 Mar 1991 Dec 1990 Sep 1990 Jun 1990 Mar 1990 Dec 1989 Amgen increas
Stock in shake Stock in shake Stock in shake oc o o closes in closes in closes in area closes area c e half for week, shows or week r wee f volume support volume support Sep 1989
St
Jun 1989
Mar 1989 Dec 1988
New drug for cancer c u chemotherapy patients. chemotherapy patients. t i i ti th h Sep 1988 Jun 1988
Mar 1988
Amgen–1990 Weekly Chart Dec 1987
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

76 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 12,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc. Mar 1992




S&P 500 Add: Shakeout t e h Ad Ad A A e + 3 rule +3 rule r + 5 weeks tight during 8 weeks k e 8 w g g i ht d ti ig i k k k 5 we w 5 w below 10-week line, stock o , i e - o b b les ales sales e has huge earnings and sal has huge earnings and sa s s a g n











n General market t e a l p s : A A A A A week 10-we w li Add: coming through h gh g o g t verage e g e ve 10-week moving av i m e l Mar 1991 Dec 1990
Market t t Mk r correction correction c r e G turns up turns up u y Buy B o : Ad Ad A A e w 1 line on volume l 2/1 Sep 1990

Jun 1990

m
Add Add Mar 1990
Buy Buy B 16-week week w double bottom
16
eout keout k n upper- in upper- n k p Dec 1989 Amgen increased 681% in 96 weeks.
Stock in shake Stock in shake Stock in shake oc o o closes in closes in closes in area closes area c e half for week, shows or week r wee f volume support volume support Sep 1989


St
Jun 1989
Mar 1989 Dec 1988



New drug for cancer c u chemotherapy patients. chemotherapy patients. t i i ti th h Sep 1988 Jun 1988





Mar 1988
Amgen–1990 Weekly Chart Dec 1987





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

© 2009 Investor’s Business Daily, Inc.
1,960,000
1,120,000
360,000
200,000
640,000
Volume
10
7
8
6
5
Mar 1992
Dec 1991
Sep 1991
2/1
Jun 1991
Mar 1991
closes at peak and
d
Volume support t
anged
about unchanged
d
n
Shakeout week:
Shakeout week:
g
p
p
pp
k
e
2
Breakout week: note also 2
about uncha
Dec 1990
of 3 prior weeks have big
of 3 prior weeks have big
o
w
h
s
p
l
m
o
u
v
te
h
l
s
Vo
a
Sep 1990
k
a
S
c
k
k
volume clues
w
t w
u
u
e
Jun 1990
k
2/1
B
Mar 1990
Market Price S&P 500 140 Market k eaks Sell: breaks Sell: breaks k k re Sell: l l S correction e Market e a 120 channel line channel line n e a c correction o e o 100 80 Buy y B 70 60 t t 4 weeks tight 4 weeks tight h t e w 50 40 Buy Buy B B B 12 weeks in a
Dec 1989 United States Surgical increased 786% in 93 weeks.
Sep 1989
Jun 1989
Mar 1989
Dec 1988 Sep 1988
United States Surgical–1990 Weekly Chart Jun 1988 Mar 1988 Dec 1987
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 77





Price 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 Volume 1,960,000 1,120,000 640,000 360,000 200,000 © 2009 Investor’s Business Daily, Inc.
Mar 1992


k k e o Dec 1991
S&P 500 eaks Sell: breaks Sell: breaks k k re Sell: l l channel line channel line n e a k - s d a p p n Sep 1991
Add: off 10-week e 0 moving average g g g e Add: big volume off 10-week Add: big volume off 10-week m o moving average and base- g a ve on-base is being created (correction stopped at prior (correction stopped at prior t n base’s pivot buy point b o 2/1 Jun 1991
c
S
Buy y B f g g g v i d g g v s b c r e
Add
Add
m
A
d d Mar 1991
t t h t e w closes at peak and n k p about unchanged anged g h 2 o l Volume support t pp p p s
Market e a correction o e o 4 weeks tight 4 weeks tight e w Buy Buy B B B Shakeout week: Shakeout week: o a S s c about uncha u a Breakout week: note also 2 te k k of 3 prior weeks have big of 3 prior weeks have big v h k m l Vo Dec 1990 Sep 1990
Buy a Buy u t w u k B w volume clues u e 2/1 Jun 1990




Market Market k correction e 12 weeks in a i k 12 row stock is w up in price ice pinp Buy Mar 1990
Dec 1989 United States Surgical increased 786% in 93 weeks.

Sep 1989

Jun 1989

Mar 1989

Dec 1988 Sep 1988

United States Surgical–1990 Weekly Chart Jun 1988 Mar 1988 Dec 1987













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

78
A WINNING SYSTEM
1,120,000
1,940,000
640,000
360,000
200,000
Volume
Price
1.7
2.0
2.4
3.2
2.8
4.5
3.8
12
22
10
14
16
34
50
40
26
30
19
7
8
6
S&P 500
p
Volume up
p
t closes
closes
e
e
2/1
lu
l
Tight c
ht c
Tight c
V
V
Volume up
p
p
T
T
T
T
e
erage line
e
week moving average line
bounce back above 10-
Add: 8-week base and
u
0
d
Add: 8-week baseand
a
e
a
V
week moving ave
s
v
b
2/1
to 10-week moving
g
g
g
g
above 1st pullback
above 1st pullback
k
n
k
on volume
on volume
Volume up
p
Volume up
m
correction
n
o
b
w
o
se
e
Add: recovers
i
e
8
e
e
Buy: base-on-ba
a
average line
l
Market t
p
c
c
k
formed during
general market
g
li
u
s
u
n
n
e
r
k
c
e
r
g
V
V
correction
correction
m
v
0
d
o
Add:
s
r
b
c
o
v
e
r
A
Earnings acceleration
Earnings acceleration
n
t
s
Sep 1989 Mar 1992 Dec 1991 Sep 1991 Jun 1991 Mar 1991 Dec 1990 Sep 1990 Jun 1990 Mar 1990 Dec 1989 © 2009 Investor’s Business Daily, Inc. Healthcare Compare increased 540% in 61 weeks.
Jun 1989
Mar 1989
Dec 1988 Sep 1988
Healthcare Compare–1990 Weekly Chart Jun 1988 Mar 1988 Dec 1987
Price = 20*eps 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 0.10 0.09 0.08

78 A WINNING SYSTEM





Price 50 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 Volume 1,940,000 1,120,000 640,000 360,000 200,000 © 2009 Investor’s Business Daily, Inc.

Mar 1992

Dec 1991

S&P 500 p p Sep 1991
closes t closes e l ht c Volume up e lu 2/1 Jun 1991


e 0 e e erage line a Tight c Tight c T T T T V V p p Volume up u Mar 1991
d
Add: 8-week base and Add: 8-week baseand s bounce back above 10- b k week moving average line v g k g g g n V 2/1
a
n i w b week moving ave o m o e se p Dec 1990
Market t r correction c r 8 c u e on volume on volume l Add: recovers e c Add: above 1st pullback above 1st pullback p s v to 10-week moving k e 0 e average line li g r v a Buy: base-on-ba n s formed during g n d general market k m o c Volume up Volume up e
correction
correction
e
o
b
A
r
Earnings acceleration Earnings acceleration s Mar 1990 Dec 1989 Healthcare Compare increased 540% in 61 weeks.
n t Jun 1990

Sep 1989

Jun 1989

Mar 1989

Dec 1988 Sep 1988

Healthcare Compare–1990 Weekly Chart Jun 1988 Mar 1988 Dec 1987












Price = 20*eps 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 0.10 0.09 0.08

© 2009 Investor’s Business Daily, Inc.
4,000,000
2,000,000
7,000,000
12,000,000
Volume
Price
4.0
3.4
2.6
3.0
5
Mar 1994
Dec 1993
Sep 1993
S&P 500
Jun 1993
2/1
Mar 1993
Dec 1992
Cisco Systems increased 1602% in 169 weeks.
Volume up
p
Market
Sep 1992
k
M
V
Jun 1992
2/1
Mar 1992
Dec 1991
Volume up
Market 70 correction correction i e o Buy u a 60 correction correction r 50 40 Tech stock built lots of bases f l u k t h T T Buy y 34 and had numerous pullbacks and had numerous pullbacks p e n a d 30 gy y y 26 22 19 16 Buy 14 12 10 8 7 6 America’s Greatest
m
0 0 m 1990 e r s Sep 1991 Jun 1991
Cisco eventually topped in 2000 Cisco eventually topped in 2000 d a s with over a 75,000% move from m 7 t the intial buy point in 1990 t i i y l b ti i the Market t Mke correction c America leads the world in technology. w l Nothing is impossible and problems i py new opportunities.
Cisco Systems–1990 Weekly Chart Cisco at first buy had: y u o 33% Pre-tax Margins i M x 33% P % 36% Return on Equity 36% Return on Equity % 9 quarters of large EPS growth S f q 396% Sales growth for year 396% Sales growth for year 6 ended July 1990 ended July 1990 y
Price = 20*eps 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 0.12

America’s Greatest Stock-Picking Secrets 79





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 12,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc. Mar 1994
Tech stock built lots of bases f l u and had numerous pullbacks and had numerous pullbacks p e Dec 1993




Buy u k t n a
S&P 500 h T T d Sep 1993
Jun 1993
2/1
Mar 1993

Dec 1992

Market k M correction correction i e o Buy y p Volume up Sep 1992
V
Jun 1992
2/1
Mar 1992


Market a correction correction r gy y y Buy Volume up m Dec 1991 Cisco Systems increased 1602% in 169 weeks.


Cisco eventually topped in 2000 Cisco eventually topped in 2000 d a s with over a 75,000% move from m 7 t the intial buy point in 1990 t i i y l b ti i the Market t Mke correction c America leads the world in technology. w l Nothing is impossible and problems i py new opportunities.
0 0 m 1990 e r s Sep 1991 Jun 1991










Cisco Systems–1990 Weekly Chart Cisco at first buy had: y u o 33% Pre-tax Margins i M x 33% P % 36% Return on Equity 36% Return on Equity % 9 quarters of large EPS growth S f q 396% Sales growth for year 396% Sales growth for year 6 ended July 1990 ended July 1990 y









Price = 20*eps 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 0.12

80
A WINNING SYSTEM
3,000,000
8,000,000
5,000,000
1,800,000
Volume
Price
3.2
2.4
3.8
2.8
4.5
40
16
14
50
12
19
22
70
60
30
34
26
10
7
6
8
10-week moving average
e
Add: 2nd pullback below
w
(+650% EPS growth for
g
line and recovers back
above line on volume
above line on volume
m
v
b
t
g
g
gro
o
current quarter)
)
a
r
t
n
v
l
o
S
m
u
e
e
E
2
e
n
n
0
e
2/1
d
6
o
e
-
r
(
d
Gartner (page 82)
Gartner (page 82)
n
Gas (page 59) an
2
channel line just
channel line just t
e
Sell: goes above
like Texas Oil &
)
e
o
9
n
p
p
g
S&P 500
o
e
p
e
(p
e
l
a
r
s
e
Big volume
olume
S
S
G
S
S
G
c
m
l
stock pulls back to old high
o
Add: 3 weeks tight closes,
Add: 3 weeks tight closes,
g
ff
of base and bounces off
e
10-week line on volume
10-week line on volume
g
g
g
Dry-ups
s
y-ups
f
s
week base
u
u
s
o
Buy
y
c
a
B
k
week
g
D
D
k
22-wee
b
a
db
w
s
n
e
2
p
3
e
fb
Sep 1991 Dec 1993 Sep 1993 Jun 1993 Mar 1993 Dec 1992 Sep 1992 Jun 1992 Mar 1992 Dec 1991 © 2009 Investor’s Business Daily, Inc. Newbridge Networks increased 699% in 49 weeks.
Jun 1991
Mar 1991
Dec 1990
Sep 1990 Jun 1990
Newbridge Networks–1992 Weekly Chart Mar 1990 Dec 1989 Sep 1989
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 O O IPO IPO P 0.35 * * 0.30 0.25 0.23 0.20 0.18 0.16 0.15 0.14 0.13 0.12 0.11

80 A WINNING SYSTEM





Price 70 60 50 40 34 30 26 22 19 16 14 12 10 w e g 8 7 6 4.5 3.8 3.2 2.8 2.4 Volume 8,000,000 5,000,000 3,000,000 1,800,000 © 2009 Investor’s Business Daily, Inc.

Add: 2nd pullback below a l 2 10-week moving average v g g v m e line and recovers back b r o e n above line on volume above line on volume m o n e e (+650% EPS growth for t gro S E 0 current quarter) ) t u n Dec 1993 Sep 1993






d d - e o 6 ( r 2/1 Jun 1993
e o n ) 9 2 e Mar 1993
S&P 500 Sell: goes above o l S S S S channel line just t channel line just n e a c like Texas Oil & e e l Gas (page 59) an g (p p s G Gartner (page 82) Gartner (page 82) p p e r G g ff e Big volume olume m o Dec 1992

Add: 3 weeks tight closes, Add: 3 weeks tight closes, s c g s e 3 stock pulls back to old high o k a p of base and bounces off f s b db n fb 10-week line on volume 10-week line on volume u e y Buy B week base a week k 22-wee w 2 g g g s y-ups Dry-ups u








Dec 1991 Mar 1992

Sep 1991 Newbridge Networks increased 699% in 49 weeks.

Jun 1991

Mar 1991

Dec 1990

Sep 1990 Jun 1990
Newbridge Networks–1992 Weekly Chart O O Mar 1990 Dec 1989 Sep 1989













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 IPO IPO P 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 81
1,600,000
400,000
800,000
200,000
Volume
Price
2.2
1.9
1.6
3.0
4.0
3.4
2.6
1.4
1.2
16
14
10
12
22
19
30
26
34
5
7
8
6
k
k
ck
corrected sharply and stoc
Be careful to avoid getting
Be careful to avoid getting
n
Add
Add
d
t t
shaken out on 4th week
shaken out on 4th week
A
d
d
e
0
out of base, S&P 500
e
e
and extended from last base
ase; stock is up 13 to 36
ck is up 13 to 36
a base; stock is up 13 to 36
Do Not Buy! 3 weeks is not
Do Not Buy! 3 weeks is not
h
a
ly
n
i
2/1
&
r
a
12-week cup-
s
i
p-
with-handle
was off 18%
%
h
f 18%
was off 18%
%
k
td s
c
t
e
p
w
e
e
b
e
s
s
r
was off f
Buy
e
d
k
o
k
h
u
k
c
-
; sto
and extend
w
o
1
1
t t
w
w
n
o
B
ex
o
bas
e
Low volume
e
and
Low volume
o
3/2
n
shakeout
u
ou
u
9-week double
week double
b
b
k
ow
h
o
L
bottom
m
y
Buy
Buy
Huge volume
Huge volume
Huge volume
w
w
m
m
btt
9-w
9-w
o
9
b
i increase
e
o
o
g
g
r
H
n
H
H
S&P 500
Sep 1991 © 2009 Investor’s Business Daily, Inc. Dec 1993 Sep 1993 Jun 1993 Mar 1993 Dec 1992 Sep 1992 Jun 1992 Mar 1992 Dec 1991 EMC increased 471% in 56 weeks.
Jun 1991
Mar 1991
Dec 1990
Sep 1990
Jun 1990
Mar 1990
Dec 1989
EMC–1992 Weekly Chart Sep 1989
Price = 20*eps 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 0.06

America’s Greatest Stock-Picking Secrets 81





Price 34 30 26 22 19 16 14 12 10 8 7 6 5 4.0 3.4 3.0 2.6 2.2 1.9 1.6 1.4 1.2 Volume 1,600,000 800,000 400,000 200,000 © 2009 Investor’s Business Daily, Inc.

Dec 1993
k k ck
Add Add A Sep 1993
d n t t
e a s p- Be careful to avoid getting Be careful to avoid getting e i a e h 0 & corrected sharply and stoc d d ly r 2/1
Do Not Buy! 3 weeks is not Do Not Buy! 3 weeks is not k w o o ase; stock is up 13 to 36 a base; stock is up 13 to 36 ck is up 13 to 36 p s s k k ; sto t t bas and extended from last base r d and extend n ex and Buy u 12-week cup- c e - 1 1 with-handle h w t e c B shaken ou
n
i


n
9-week double week double b b o Low volume Low volume ou u ow L shakeout u k h 3/2 Dec 1992 Sep 1992
Buy Buy 9-w w w 9-w bottom btt o m m
y m
Huge volume Huge volume Huge volume o o g g i increase e r n Jun 1992
b
9
H
H
H
Mar 1992
S&P 500 Dec 1991
Sep 1991 EMC increased 471% in 56 weeks.

Jun 1991

Mar 1991

Dec 1990

Sep 1990

Jun 1990

Mar 1990

Dec 1989
EMC–1992 Weekly Chart Sep 1989




Price = 20*eps 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 0.06

82
A WINNING SYSTEM
Price
22
26
19
40
30
34
10
14
12
16
50
60
8
potential shakeout
potential shakeout t t
k
k
h week has
h
h
h
h
oses with
h
ih
S&P 500
l
closes w
closes w
w
e
Sell: goes through
Sell: goes through
h
tti
or week
4 h w
w
4th w
channel line and
w
d
u
e
e
e
or w
4 weeks tight clos
po
lo
p
p
p
h
tiny spreads for
climax top
climax top
o
e
h
h
s
ax
i
g
a
n
t
k
k
p
yp
p
e
h
4 w
n
y
Buy
y
Buy
Shakeout
Shakeout t t t
ut
out
out
B
a
S
n
n
Market correction
Market correction
Buy
Buy
B
e
Buy
B
a
ht closes 7 Add once back k a c o Add Add d d s 6 over 10-week line kline over 10-week e - v 5 week k 6-week 6-wee flat base fl 4.0 Potential shakeout to avoid, if you u y d v o u k h i e P 18-week cup- week cup w 18 3.4 o o pyramid
4 weeks tight closes 4 weeks tight closes gh Dec 1993
IPO IPO * *
Sep 1993
Jun 1993
Mar 1993
Dec 1992 Sep 1992
Gartner Group–1994 Weekly Chart Jun 1992 Mar 1992
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

82 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 4,000,000 1,400,000 600,000 200,000 Jun 1996 © 2009 Investor’s Business Daily, Inc.




S&P 500 h u d h week has h e w 4 h w w 4th w potential shakeout t t potential shakeout k k h h l tti e h ih oses with h w closes w closes w e or week e 2/1 Mar 1996
Sell: goes through Sell: goes through h e g e channel line and n h climax top climax top o ax po p p p 4 weeks tight clos lo h h i t k k or w tiny spreads for s a p p yp u y o o t a t you y If so o c s r n 2 huge volume e m p u u Dec 1995






Buy kline Potential shakeout to avoid, if you u e o sell last stock if down 8%. If so, you ck if down 8% d must buy it back if it recovers back k a over 10-week line on volume increase e Jun 1995
y 4 w n d v o pyramided properly you might have to properly you might have to u y 8 v c t m o n 2/1 u 2 weeks up e w Sep 1995
Buy y B ut out out k a over 10-week line e k h sell last stock o t y e r t o
Shakeout t t t Shakeout a S Add once back c o Add Add d d over 10-week - v i e P pyramided p i a p s s b s m 0 r o Volume up after Volume up after a u m o possible shakeout a s b o Mar 1995



week k 6-week 6-wee flat base fl 2/1 Dec 1994 Sep 1994
Market correction Market correction e B Buy B 18-week cup- week cup with-handle Jun 1994
n
n
Buy
Buy
a
4 weeks tight closes 4 weeks tight closes gh Dec 1993
ht closes s w 18 - Mar 1994 Gartner Group increased 667% in 98 weeks.


IPO IPO * *
Sep 1993
Jun 1993

Mar 1993

Dec 1992 Sep 1992

Gartner Group–1994 Weekly Chart Jun 1992 Mar 1992









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.
12,000,000
2,000,000
4,000,000
7,000,000
Volume
Price
3.8
3.2
2.4
2.8
4.5
19
30
34
26
60
22
70
40
50
Mar 1997
Dec 1996
2/1
S&P 500
Sep 1996
Jun 1996
price closes down
Volume increase
w
e
a
a
d
Mar 1996
n
s
n
n
weeks big volume with price dow
w
h price dow
c
m
weeks is not a base, 2 out of 3
2 out of3
u
u
e or sell: new high off 2
2
c
e
Dec 1995
2/1
weeks big volume with pr
g
w
w
e
eeks is not a base
Sep 1995
m
3 weeks volume
PeopleSoft increased 1145% in 129 weeks.
b
uce or sell:
m
ell
decline while
decline while
k
o
pulling back
l
t
l
Reduce or s
g
g
w
g
o
b
b
tight closes
s
Jun 1995
weeks
3 weeks
3 weeks
week
to cross line
to cross line
on volume
we
w
u
g
g
s
increase
increase
Mar 1995
Volume
oc
Buy: 9-week cup p- p week cup Buy: 9 y 16 with-handle and d a t 14 e base-on-base b s b 12 10 und n bou bo Add: rebo d 8 in price above in price above e e v b price rice rice i week line e 0-week line k 0-w w 10- 0 10 0 7 on volume m o on
2/1
Dec 1994
Sep 1994
n
n
d
s
IPOs are young entrepreneurial innovators l i i i e y that help drive every new market cycle and that help drive every new market cycle and r y d increase our standard of living. g g r o Market correction Market correction r Buy Buy Faulty base aulty base y y 20-week cup- 2 with-hand
d
p
a
c
l
t
IPO
Faulty base aulty base a Sep 1993 Jun 1993
PeopleSoft–1994 Weekly Chart IPO O * * Mar 1993 Dec 1992
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 83





Price 70 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 12,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc.
Mar 1997

Dec 1996
2/1
S&P 500 Sep 1996





n n h price dow w e Volume increase e a a n m u u price closes down w d s c c Jun 1996 Mar 1996
e or sell: new high off 2 g w uce or sell: ell Reduce or s o 2 out of3 weeks is not a base, 2 out of 3 e eeks is not a base b t weeks big volume with price dow weeks big volume with pr w m o g g g s und n bou bo Add: rebo d in price above in price above e e v b price
2



tight closes
weeks
3 weeks
3 weeks
week
we
w
g
g
p- p d a e ound d Add: rebound ound d d d Add: rebo e Ad A from below m bel e m b -week line e 10-wee 10- to cross line to cross line s oc on volume u Volume increase increase Jun 1995 Mar 1995
Buy: 9-week cup week cup Buy: 9 y with-handle and t base-on-base b s b y y p l 2/1 Dec 1994 Sep 1994 PeopleSoft increased 1145% in 129 weeks.
n
n
d
d
IPOs are young entrepreneurial innovators l i i i e y that help drive every new market cycle and that help drive every new market cycle and r y d increase our standard of living. g g r o Market correction Market correction r Buy Buy Faulty base aulty base y y 20-week cup- 2 with-hand
s
a
c
t


IPO
Faulty base aulty base a Sep 1993 Jun 1993
PeopleSoft–1994 Weekly Chart IPO O * * Mar 1993 Dec 1992








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

84
A WINNING SYSTEM
3,000,000
1,600,000
800,000
400,000
200,000
Volume
Price
2.4
4.5
2.8
3.8
3.2
12
22
30
40
50
70
34
60
26
16
10
19
14
6
7
8
line on volume closing near
ine on volume closing near
f
g
g
g
3/2
10-week moving
Add: rebound of
e
10-week moving average
rebounds off pullback to
o
3 weeks tight and stock
ov
c
g
k
r
average line
peak, so could hold
o
b
a
o
l
S&P 500
k
o
Volume up
p
g
e
u
n
a
r
p
p
e
8 weeks more
8 weeks more
m
e
h
o
u
f
o
0
d
o
k
v
d
o
s
s
Big volume
u
o
,
m
w
k
3/2
0
correction
n
pe
n
e
l
After third round of holding for 8 weeks, stock
ti
k
, ,
Market
could try to hold for 12-month long-term gain
n
n
e
c
is up from 7 to 24, over 240%, due to results
c
After third round of holding for 8 weeks, stoc
is up from 7 to 24, over 240%, due to results
Big
s
last 2 weeks, so must hold
g
After holding for 8 weeks,
almost 12 and big volume
almost 12 and big volume
u
t t
a
r
s
s
o
ks
u
p
r
p
Vo ume up
e
r
k
stock is up from 7 to
stockisupfrom7to
m
g
7
e
8 w
8
m
another 8 weeks.
another 8 weeks
o
olu
u
23-week cup-
o
m
8
d
8
8
o
8
k
p
p
p
Dry-up
p
ek
with-handle
handle
%
from buy point, must hold
Stock is up 20% in 1st we
Buy
Market correction
Market correction
n
w
y
f f f f
n
n
a
w
y
l
o
k
u
n
m
ldin
e
c
e
h
1
s
2
ldi
weeks then reassess.
weeks then reassess.
with
2
s
u
e
s
t
f ho
n
h
r
k
2
or possible climax top
f h
%
n
o
l
a
t
t
,
d o
A
a
t
d
d
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o
lim
r
n
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u
h
c
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y
d
d
b
d
m
d
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s
b
thi
thi
IPO
Aft
Aft
*
*
Jun 1993 Sep 1995 Jun 1995 Mar 1995 Dec 1994 Sep 1994 Jun 1994 Mar 1994 Dec 1993 Sep 1993 © 2009 Investor’s Business Daily, Inc. Alliance Semiconductor increased 539% in 47 weeks.
Mar 1993
Dec 1992
Sep 1992 Jun 1992
Alliance Semiconductor–1994 Mar 1992 Dec 1991 Sep 1991 Jun 1991
Price = 20*eps Weekly Chart 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

84 A WINNING SYSTEM





Price 70 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 3,000,000 1,600,000 800,000 400,000 200,000 © 2009 Investor’s Business Daily, Inc.


f o g g g ov c k e r g 3/2 Sep 1995

S&P 500 Add: rebound of o r d 10-week moving k e 0 average line l g e 3 weeks tight and stock a h s rebounds off pullback to b p p f d 10-week moving average a n o k line on volume closing near ine on volume closing near o e v peak, so could hold o u o


n ti u e w 0 o n , k pe 8 weeks more 8 weeks more Big volume m l 3/2 Mar 1995
Market e a correction c r k c t t s ks k 8 w 8 8 8 , , s u r e d n n g r g o s e 8 o 7 m u o m o k p Big p Vo ume up p m u olu Dec 1994 Sep 1994



Market correction Market correction n o c r t r M After third round of holding for 8 weeks, stock After third round of holding for 8 weeks, stoc f f f f ldin ldi f ho f h d o d n o d d d d is up from 7 to 24, over 240%, due to results is up from 7 to 24, over 240%, due to results





thi
thi
Aft
IPO
Aft
*
*
Sep 1993 Dec 1993
Jun 1993 Alliance Semiconductor increased 539% in 47 weeks.
Mar 1993

Dec 1992

Sep 1992 Jun 1992


Alliance Semiconductor–1994 Mar 1992 Dec 1991 Sep 1991 Jun 1991














Price = 20*eps Weekly Chart 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

© 2009 Investor’s Business Daily, Inc.
13,000,000
2,000,000
7,000,000
4,000,000
Volume
3.0
2.6
2.2
3.4
4.0
Jun 1996
Mar 1996
Dec 1995
2/1
Sep 1995
Jun 1995
2/1
p
p
p
p
Volume up
p
Mar 1995
e
u
V
America Online increased 570% in 75 weeks.
Dec 1994
2/1
Sep 1994
d
price closes unchanged
t
Stock was declining bu
with increased volume
with increased volume
and no further decline
g
n
v
d
Jun 1994
w
c
n
o
Mar 1994
e. Price y c y S&P 500 60 o n Market correction o ke e 50 or or a a 40 34 30 First 2 times base is faulty, First 2 times base is faulty y u s s b rs by 3rd time it has tightened e e g i a t y 26 h up and formed properly with w y p p e a shakeout and handle area a sh
Innovators drive each new stock market cycle c h s Their new products, services, technology and t p inventions are bought by consumers who are nventions are bought by consumers who are h the true boss in a capitalist system as they s p o freely choose to buy the products they want o freely cho
Dec 1993
n
T
n
h
Dec 1992 Mar 1993 Sep 1992
America Online–1994 Weekly Chart IPO IPO O O * Jun 1992 Mar 1992
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 85





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 13,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc.

Jun 1996

Mar 1996

2/1 Dec 1995
S&P 500 b u e k k w Sep 1995
Volume shakeout, but k s m price closes up over u s l c 40% from low of week o w m f 2/1 Jun 1995





h e e w y e a p l ic % Volume up p p p p p e u V Mar 1995
y
u
n o First 2 times base is faulty, First 2 times base is faulty s s b by 3rd time it has tightened g i a t up and formed properly with p p e a shakeout and handle area a shakeout and handle area n h n rather than wedging up g g w Buy u week cup- 11-week cup- u k w e with-hand
Market correction ke rs y s t 11 Wedging t g n d v d Sep 1994


dle o o o n W Stock was declining bu w price closes unchanged c with increased volume with increased volume n and no further decline o Jun 1994

e. y c y o e or or a a Do Not Buy! Chartistoo Do Not Buy! Chart is too C wide and loose and hand s wedges up along lows wedges up along lows o Mar 1994 Dec 1993 America Online increased 570% in 75 weeks.
Innovators drive each new stock market cycle c h s Their new products, services, technology and t p inventions are bought by consumers who are nventions are bought by consumers who are h the true boss in a capitalist system as they s p o freely choose to buy the products they want o freely cho










n
T
n
h
Dec 1992 Mar 1993 Sep 1992
America Online–1994 Weekly Chart IPO IPO O O * Jun 1992 Mar 1992








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

86
A WINNING SYSTEM
Price
3.7
4.3
2.8
3.2
20
23
31
27
17
11
10
15
13
48
42
36
56
8
7
6
4
5
ek moving
g
g
ck above
ck above
e
e line on
elineon
S&P 500
b
o
m
k
i
bac
Add: bac
ge
average
Add: ba
me
e
e
volume
e
10-wee
erag
g
m
volum
m
k still being
g
still being
g
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a big advance
ce
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e
0
d
ted even
A
A
a
v
very
ery
y
a
ve weeks ve
ve
d
d
s
d
k s
v
e weeks v
v
tight, stock
ate
stock
accumulat
a
o
af fter a bi i
r a bi
e
bi
i
m
a
w
r
ight t
Five
ve
Five
c
v
g
t
t tig
tig
p and
nd
6-week cup and
n
n
ase
ase
Buy
Buy
base-on-bas
u
p
a
a
c
-
market turns
market turns
e
e
a
y
-
Buy
General l
General
e
k
Heavy volume withou further price decline is support is support pp Mar 1994 Ascend Communications increased 1384% in 75 weeks.
IPO 2.4 2.1 Volume up Volume up p p p e u 1.8 * n Earnings acceleration Earnings acceleration ra e a g g g n E 1.6 2/1 2/1 2/1 Volume t e d 8,000,000 5,000,000 3,000,000 1,800,000 Jun 1996 Mar 1996 Dec 1995 Sep 1995 Jun 1995 Mar 1995
v
h
u
Dec 1993
Sep 1993
Jun 1993 Mar 1993
Ascend Communications–1994 Dec 1992 Sep 1992 Jun 1992
Price = 20*eps Weekly Chart 2.45 2.25 2.10 1.95 1.80 1.65 1.50 1.40 1.30 1.20 1.10 1.00 0.93 0.85 0.78 0.72 0.68 0.62 0.58 0.50 0.46 0.40 0.37 0.31 0.27 0.25 0.23 0.21 0.20 0.18 0.16 0.15 0

86 A WINNING SYSTEM





Price 56 48 42 36 31 27 23 20 17 15 13 11 10 8 7 6 5 4 4.3 3.7 3.2 2.8 2.4 2.1 1.8 1.6 Volume 8,000,000 5,000,000 3,000,000 1,800,000 © 2009 Investor’s Business Daily, Inc.

Jun 1996

Mar 1996

e g g 2/1
S&P 500 ck above ck above b k ek moving o m e line on elineon i Dec 1995
Add: bac bac Add: ba d e 10-wee 0 average ge erag g e e e me volume m volum m g g e e ce ce e n ra 2/1
A
A
a
very ery y ve v v k still being still being s k s ted even v d a big advance a d d Earnings acceleration Earnings acceleration e a Sep 1995
ve weeks ve e weeks v e w Five ve Five v tight, stock stock o ight t g ate accumulat a m c r a bi af fter a bi i bi i a r t g g g n E 2/1 Jun 1995
Buy Buy u t tig tig p and nd 6-week cup and n n p c ase ase base-on-bas a a - Mar 1995


General l General e market turns market turns k Buy y e - e a Volume up Volume up p p p e u Dec 1994
Sep 1994
t
Heavy volume withou v further price decline is support is support pp Mar 1994 Ascend Communications increased 1384% in 75 weeks.
IPO * e d Jun 1994


u
h
Dec 1993
Sep 1993
Jun 1993 Mar 1993

Ascend Communications–1994 Dec 1992 Sep 1992 Jun 1992















Price = 20*eps Weekly Chart 2.45 2.25 2.10 1.95 1.80 1.65 1.50 1.40 1.30 1.20 1.10 1.00 0.93 0.85 0.78 0.72 0.68 0.62 0.58 0.50 0.46 0.40 0.37 0.31 0.27 0.25 0.23 0.21 0.20 0.18 0.16 0.15 0

America’s Greatest Stock-Picking Secrets 87
Price
4.0
3.4
3.0
14
10
12
16
19
22
30
26
34
40
8
6
5
7
e
e
upper-half for week
k
lume increase
ume increase
n
n
Earnings acceleration
Earnings acceleration
s close in
s
o
n
l
S&P 500
e
c
c
s
per-h
-h
eks
ek
n vol l
vol
2 wee
e
e
p
w
on
n
on
a
high tight flag
g
Buy: 5-week
week
e
g
Buy: 5-
h
y
B
B
h
Tight closes
Tight closes
Tight closes
s
Buy
u
g
Add
market follows-through and
through and
during market corrections?
n
Have you observed almost t
s
A
Breakouts occur once the
Breakouts occur once the
Market correction
n
h
o
o
m
t
creates a new uptrend.
Buy
Buy
all bases were formed
e
B
e
B
e
o
m
n
o
o
v
p
o
t
r
market follows
w
w
e
s
e
r
c
e
e
a
u
a
Pay attention to Initial 2.6 i t y IPO IPO I 2.2 5weeks tight t t 5 weeks tight h s Public Offerings (IPOs) P f 1.9 * s oses oses ses 4 weeks tight closes 4weeks tight clos o o k e 4 s s that show strong earnings that show strong earnings a
Sep 1993
Jun 1993
Mar 1993
Dec 1992
Sep 1992
Accustaff–1995 Weekly Chart Jun 1992 Mar 1992
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 87





Price 40 34 30 26 22 19 16 14 12 10 8 k 7 e e 6 5 4.0 3.4 n n 3.0 2.6 2.2 1.9 1.6 Volume 3,000,000 1,400,000 600,000 200,000 © 2009 Investor’s Business Daily, Inc.



S&P 500 s close in s c eks s ek e 2 wee e w upper-half for week o per-h -h p lume increase ume increase n e n vol l vol on on n Earnings acceleration Earnings acceleration l c a rt Volume support p s m 3/1 Jun 1996 Mar 1996


Buy: 5-week week e Buy: 5- y high tight flag g g h Vo 2/1 Dec 1995


B
B
h
oses s oses ses o o Sep 1995
Tight closes Tight closes Tight closes s g Buy u 5weeks tight 5 weeks tight h s 4 weeks tight closes 4weeks tight clos k e Volume up Volume up p Jun 1995
t t
n o m s o t through and n h Add A Buy Buy 4 handle e n with- Vo V V V V u Mar 1995
Market correction e o e Have you observed almost t v s all bases were formed m o r during market corrections? e o e Breakouts occur once the Breakouts occur once the n r c market follows-through and o t w creates a new uptrend. e p w B B 8-week cup-with-handle w p wee
market follows

IPO
IPO
e
e
a
a
I
u
s P * s a 18-w 18-w 18 Dr and tiny pric Sep 1994 Jun 1994 Accustaff increased 1359% in 68 weeks.
Pay attention to Initial t y Public Offerings (IPOs) f that show strong earnings that show strong earnings w Mar 1994 Dec 1993
i
Sep 1993
Jun 1993

Mar 1993

Dec 1992


Sep 1992
Accustaff–1995 Weekly Chart Jun 1992 Mar 1992






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

88
A WINNING SYSTEM
Price
70
80
Sell rule clicks in
s
ule cli
l
e
Sell rul
S&P 500
S
S
S
es
e
This is all about money management and following sound rule
e
rather than personal opinions, emotions or being lazy and not t
d n
r
n
n
s
z
l
n
doing any homework but just hoping to be lucky
doing any homework but just hoping to be lucky
i i
o
b
ti
n
t
m
j
i i
i
l
w
o
th
s
r
th
4. The next week, the stock has its first 60 the stock has its first t The next week w 20% correction and shakeout that you sit a 0 n n n Market correction c r 50 through and the stock rallies back to 28, through and the stock rallies back to 28 r rection. Here then 30 and starts anothe
J L G Industries–1995 Weekly Chart 4. 1. Stock up 20% in first 3 weeks s Stock up 20% in first 3 weeks s % so must hold for complete 8 e o h weeks from pivot buy point weeks from pivot buy point n v h 2. At end of 8 weeks, stock 2. At end of 8 weeks, stock c w s now up 33% so with more wit
Price = 20*eps 3.50 3.00 S 1 m 2.50 e 2.25 At 2.00 o 1.80 g pro pr 1.60 1.50 1.40 o 1.30 mov 1.20 r 1.10 d 1.00 e 0.90 r 0.80 0.75 0.70 N 3 0.65 t 0.60 k r 0.55 v. 0.50 lit 0.45 b 0.40 Y Y e 0.35 r 0.30 y c

88 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 1,560,000 940,000 560,000 340,000 200,000 © 2009 Investor’s Business Daily, Inc.
or below d d or below w w ine. Buy n in moves moves o ver line with ver line with ase in volume Jun 1996

Sell rule clicks in s ule cli l e Add: second c Add Add d d pullback at or pullback at o k b u 10-week lin k w 0 k m as stock m k m as stock k k t s ve e back ov back ov k a eas increas n o u k k llb e - e moving average line moving average line e a me up Vo


S&P 500 Sell rul S S S d Add Ad Ad n ne ne Volume dry-up on r m l second pullback a u d bit below 10-week l v n Dec 1995
Add: first llba pullba pullb b b bounce off bo bo w 10 eks ks week e e w must hold u u Sep 1995
rst irst s s llback and back and k week line 10-week line k d V c s b o 2/1

ht tig k Up 20% in only 2 wee Up 20% in only 2 wee o o kf
t A p b b 1 mus m buy b b m m
3 of 4 3f 4 4 4 weeks k w close tight e l e g rule e y % 0 rom buy point, mu y b for 8 weeks from e 8 w 2/1 s e Jun 1995
es e e r n s n d n n z l n n n Market correction c r End of 8 week o n holding rule holding r i o Buy B Up U fro fo Volume increases Volume increases Volume increases e n Mar 1995 Dec 1994
This is all about money management and following sound rule o n m rather than personal opinions, emotions or being lazy and not t i i b ti t i i i l o th doing any homework but just hoping to be lucky doing any homework but just hoping to be lucky j w Sep 1994 Jun 1994 Mar 1994 Dec 1993 J














s
r
th
4. The next week, the stock has its first the stock has its first t The next week w 20% correction and shakeout that you sit a 0 through and the stock rallies back to 28, through and the stock rallies back to 28 r rection. Here then 30 and starts another cor rrection. Here ts anothe o here yo






J L G Industries–1995 Weekly Chart 4. 1. Stock up 20% in first 3 weeks s Stock up 20% in first 3 weeks s % so must hold for complete 8 e o h weeks from pivot buy point weeks from pivot buy point n v h 2. At end of 8 weeks, stock 2. At end of 8 weeks, stock c w s now up 33% so with more wit










Price = 20*eps 3.50 3.00 S 1 m 2.50 e 2.25 At 2.00 o 1.80 g pro pr 1.60 1.50 1.40 o 1.30 mov 1.20 r 1.10 d 1.00 e 0.90 r 0.80 0.75 0.70 N 3 0.65 t 0.60 k r 0.55 v. 0.50 lit 0.45 b 0.40 Y Y e 0.35 r 0.30 y c

America’s Greatest Stock-Picking Secrets 89
80,000,000
50,000,000
30,000,000
18,000,000
Volume
Price
4.5
3.8
3.2
12
14
30
10
26
22
16
19
40
70
50
60
80
34
8
6
7
age line with
f 10-week
ff 10-week
k
k
h
w
w
2/1
i
Add: bounce off
Add: bounce of ff
verage
of
moving averag
g
g
g
c
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moving
moving
p
volume up
Add: first bounce
e
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i
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S&P 500
e
n
with peak closes on
n
k mov
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g
Big volume deman
m
off 10-week mo
with peak closes o
off 10-week mo
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m
i
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average line
line
Ad
Ad
d
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s
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p
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Ad
2/1
Ad
Ad
v
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A
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tight closes
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5 weeks
Buy
y
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down...supporting action
n
supporting action
n
rior week on its 3r
h week down, this
r
ior week on its 3r
B
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s
B
vy volume without
avy volume without t
3
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lining
with volume up
cup base
her price progress
ght.
ght.
7-week
3 weeks closing tight
g
sing tight
a
h
h
e
n
e
3 weeks closing tigh
5
e
,
t
e with volum
um
Since stock i is decl
decl
w
w
w
g
p
p
o
t
is de
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n
Buy
Add
y
m
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p
n
Ad
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in price with
i i
c
i
r
w
v
from prio
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h
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from pr
and 4th
h
h
s
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heav
is heav
v
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a e
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2/1
i i
Sep 1995 © 2009 Investor’s Business Daily, Inc. Dec 1997 Sep 1997 Jun 1997 Mar 1997 Dec 1996 Sep 1996 Jun 1996 Mar 1996 Dec 1995 Dell Computer increased 587% in 61 weeks.
Ea
Jun 1995
Mar 1995
Dec 1994
Sep 1994
Jun 1994 Mar 1994
Dell Computer–1996 Weekly Chart Dec 1993 Sep 1993
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 89





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 80,000,000 50,000,000 30,000,000 18,000,000 © 2009 Investor’s Business Daily, Inc.
Dec 1997

ff 10-week f 10-week w of age line with w i verage g g g 2/1 Sep 1997
k k h


S&P 500 Add: bounce off Add: bounce of ff c o d Ad Ad Ad moving averag e g i m p volume up m o e Add: first bounce e e n t b b s fi moving moving i k mov off 10-week mo off 10-week mo m w line e ge line average line d Big volume deman a e e with peak closes




s dd Ad Ad Ad A A 1 o r a u v B e h w 2nd week up e 2 2/1 Dec 1996
5 weeks s e 5 tight closes o g Buy y y y B B e cup base ght. ght. h h lining n e d d r 3 s , t e n. n n o a Sep 1996

Add Ad Buy y u 7-week w p p 3 weeks closing tight sing tight 3 weeks closing tigh t n k Since stock i is decl decl is de e s c s with volume up e with volum um v in price with i i ior week on its 3r rior week on its 3r o e r rio from prio from pr r h

Earnings reaccelerate nings reaccelerate a e e eacce e c gs is hea h furth furth down 2/1 Mar 1996 Dec 1995




i i
Sep 1995 Dell Computer increased 587% in 61 weeks.
Ea
Jun 1995

Mar 1995

Dec 1994

Sep 1994

Jun 1994 Mar 1994


Dell Computer–1996 Weekly Chart Dec 1993 Sep 1993









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

90
A WINNING SYSTEM
Price
180
S&P 500
n 150 c 122 102 Sell: climax top p m e 84 70 58 48 40 33 27 y Buy 22 18 15 12 Buy y Buy u 10 8 7 4 weeks 5 ek k ek 7-week 7-wee 7 s tight closes tight closes tight closes s base base b 4.7 3.9 3.2 2.6 2.1 1.8 1.5 Volume up Volume up p p p 2/1 2/1 2
Market correction r 5 weeks e tight closes tight closes s t Dec 1997
Volume up p p V Dryup Dry-up p p p Sep 1997 Jun 1997
g
3/2
Buy
y
Buy
Another innovator in the new internet. Another innovator in the new internet a h Everyone benefits from incessant new ideas n f y y and concepts on the internet and there is o c more coming in the future. g in the future r n more coming e Market Market correction correction All prices spl
h
n
n
o



Yahoo!–1997 Weekly Chart IPO IPO O * Jun 1996 Mar 1996 Dec 1995





Price = 20*eps 7.00 6.30 5.70 5.20 4.70 4.30 3.90 3.50 3.20 2.90 2.60 2.35 2.15 1.95 1.75 1.60 1.45 1.30 1.15 1.05 0.95 0.85 0.78 0.70 0.63 0.57 0.52 0.47 0.43 0.35 0.32 0.26 0.24 0.22 0.

90 A WINNING SYSTEM





Price 180 150 122 102 84 70 58 48 40 33 27 22 18 15 12 10 8 7 5 4.7 3.9 3.2 2.6 2.1 1.8 1.5 Volume 130,000,000 70,000,000 40,000,000 20,000,000 © 2009 Investor’s Business Daily, Inc.

Mar 2000
2/1

Dec 1999
Sep 1999


Jun 1999
S&P 500 2/1 Mar 1999


Sell: climax top p m Dec 1998


e
s s p p p 2/1 Sep 1998
4 weeks tight closes tight closes tight closes Volume up Volume up Jun 1998
Buy u
y
ek k ek Volume up
n c Buy y Buy u 7-week 7-wee 7 base base b l V Mar 1998 Yahoo! Increased 6723% in 130 weeks.
Market correction 5 weeks e tight closes tight closes s t Dec 1997

Volume up p p V Dryup Dry-up p p p Sep 1997 Jun 1997
r
g
3/2
Buy
y
Buy
Another innovator in the new internet. Another innovator in the new internet a h Everyone benefits from incessant new ideas n f y y and concepts on the internet and there is o c more coming in the future. g in the future r n more coming e Market Market correction correction All prices spl
n
h
n
o






Yahoo!–1997 Weekly Chart IPO IPO O * Jun 1996 Mar 1996 Dec 1995





Price = 20*eps 7.00 6.30 5.70 5.20 4.70 4.30 3.90 3.50 3.20 2.90 2.60 2.35 2.15 1.95 1.75 1.60 1.45 1.30 1.15 1.05 0.95 0.85 0.78 0.70 0.63 0.57 0.52 0.47 0.43 0.35 0.32 0.26 0.24 0.22 0.

America’s Greatest Stock-Picking Secrets 91
12,000,000
7,000,000
2,000,000
4,000,000
Volume
Price
100
120
140
26
19
22
80
50
60
70
30
34
40
14
16
10
12
8
6
5
7
target price
up 50 more
up 50 more
Peak close on
Peak close on
Wall Street
Wall Street
day, major
w
wn 8% below
w
n8%below
f f firm raises
brokerage
huge volume
Largest weekly
Largest weekly
correct over 8–12%
12%
ng as not
pullback
down volume
On top
i
On top
points
if in bear market
b oke
up 50
n bear market
OK for handle to
m
m
m
day
%
your cost
8
v
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a
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pu
OK to pu
s
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you
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at time
O
through day in general market,
through day in general market
m
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Stock breaks out on follow-
ell: cli
3/2
Sell: cl
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beginning of new uptrend
d
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0-week moving average line
a
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avy volume up from
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from buy at 29 until af fter it
wn less and closes
upper-half for week
om buy at 29 until after it
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n
2-week cup-
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or week, but price
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with-handle
with-handle
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Buy
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wab never touches
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as climax top at 150
has climax top at 150
h
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Mar 1997 Jun 1999 Mar 1999 Dec 1998 Sep 1998 Jun 1998 Mar 1998 Dec 1997 Sep 1997 Jun 1997 © 2009 Investor’s Business Daily, Inc. Charles Schwab increased 409% in 26 weeks.
Dec 1996 Sep 1996
Schwab was the pioneer o w of discount brokerages. a k t b u fdi Jun 1996 Mar 1996
Dec 1995 Sep 1995
Charles Schwab–1998 Weekly Chart 3/2 Jun 1995 Mar 1995
2/1
Price = 20*eps 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 0.23

America’s Greatest Stock-Picking Secrets 91





Price 140 120 100 80 70 60 50 40 34 30 26 w w 22 19 16 14 12 10 8 7 6 5 Volume 12,000,000 7,000,000 4,000,000 2,000,000 © 2009 Investor’s Business Daily, Inc.

On top On top day, major Wall Street Wall Street brokerage b oke f f firm raises i m m m target price r up 50 more up 50 more up 50 points pullback ng as not a wn 8% below n8%below % s Peak close on Peak close on c huge volume v e 12% 8 8 r r Largest weekly
p On On O O O day Wa W f ar tar u u u poi OK to pu pu o pu ong as long n n own down n your cost c a g g g OK for handle to n h correct over 8–12% e if in bear market n bear market m m e down volume n Mar 1999
ll: climax top : climax top x m ell: cli Sell: cl Sell: c Se o o o k m a n d p r e OK K O s dow you you o yo O t r c a a n i if in i at time i a a o o e e e 3/2 Dec 1998







S&P 500 Stock breaks out on follow- s r k S through day in general market, through day in general market y u h beginning of new uptrend e f g n g n chwab never touches wab never touches s h t e wa Schw Sc c 0-week moving average line a v g v e 0 10 from buy at 29 until af ft


0
10
10
h
Dec 1997
3/2
Sep 1997
Jun 1997

Mar 1997 Charles Schwab increased 409% in 26 weeks.

Dec 1996 Sep 1996


Schwab was the pioneer o w of discount brokerages. a k t b u Jun 1996 Mar 1996




fdi
Dec 1995 Sep 1995

Charles Schwab–1998 Weekly Chart 3/2 Jun 1995 Mar 1995
2/1









Price = 20*eps 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 0.23

92
A WINNING SYSTEM

The Internet is still a young baby. Price General market t r e G G Sell: : Sell: S 165 The Internet is still a young baby b e T gh f follow-through u h th w ll o climax climax climax m m c c There will be follow-on leaders. o b T 135 top top t S&P 500 115 Add Add Ad












America Online–1998 Weekly Chart 1. Stock on breakout runs up over k k 1 20% in 1st 3 weeks, so rule is must k hold a full 8 weeks from buy point. hold a full 8 weeks from buy point k u 2. End of 8 weeks, stock is now s o up 30 to 52, or +73%, had its first 73% 7 52 30 to pullback from 4









Price = 20*eps 7.25 6.75 6.25 5.75 5.10 4.60 4.10 3.60 3.10 2.60 2.30 2.05 1.80 1.55 1.35 1.25 1.15 1.05 0.93 0.82 0.72 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 2/1

92 A WINNING SYSTEM





Price 165 135 115 92 72 62 46 36 27 23 19 16 13 11 9 7 6 4.6 3.6 3.1 140,000,000 80,000,000 40,000,000 20,000,000 © 2009 Investor’s Business Daily, Inc.

Bottom week has e m shakeout below bl b b o 98 low and June ’98 low and o 9 closes in upper u half of week’s k’ e f range, a good g n heavy volume heavy volume u u u v v Increased volume Increased volume v e without further r t progress down d


Sell: : Sell: S climax climax climax m m c c top top t Add Add Add A A A t hk k k June e J s hlf g sign on n i v v e o w pg g p Mar 1999
r te u r g - - dl d 2/1 Dec 1998
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General market t r e gh f follow-through u h th w 3 weeks tight and 2nd g g k e pullback in ascending n c b base like Redman m R k e Industries 1st quarter t t 1 i tr Idu must hold longe 1968, must hold longe o st m 1968 8 Buy u 14-week cup- e - with-handle h h
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2/1
Mar 1998
S&P 500 Dec 1997
Sep 1997

Jun 1997 Mar 1997 America Online increased 451% in 23 weeks.


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The Internet is still a young baby. The Internet is still a young baby b e T There will be follow-on leaders. o b T 4. Stock now hits a classic S u climax top and must be sold d m t e according to the rules. according to the rules t o y Rules were followed at every o e key stage of th








America Online–1998 Weekly Chart 1. Stock on breakout runs up over k k 1 20% in 1st 3 weeks, so rule is must k hold a full 8 weeks from buy point. hold a full 8 weeks from buy point k u 2. End of 8 weeks, stock is now s o up 30 to 52, or +73%, had its first 73% 7 52 30 to pullback from 4










Price = 20*eps 7.25 6.75 6.25 5.75 5.10 4.60 4.10 3.60 3.10 2.60 2.30 2.05 1.80 1.55 1.35 1.25 1.15 1.05 0.93 0.82 0.72 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 2/1

America’s Greatest Stock-Picking Secrets 93
50,000,000
30,000,000
18,000,000
Volume
Price
125
104
0.9
4.2
2.4
1.1
1.4
2.0
1.6
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3.5
13
15
28
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Mar 1998 Mar 2000 Dec 1999 Sep 1999 Jun 1999 Mar 1999 Dec 1998 Sep 1998 Jun 1998 © 2009 Investor’s Business Daily, Inc. J D S Uniphase increased 1946% in 66 weeks.
2/1 Dec 1997
Sep 1997
Jun 1997
Mar 1997
Dec 1996 Sep 1996
J D S Uniphase–1998 Weekly Chart 2/1 Jun 1996 Mar 1996 Dec 1995
Price = 20*eps 5.20 4.70 4.30 3.90 3.50 3.20 2.90 2.60 2.35 2.15 1.95 1.75 1.60 1.45 1.30 1.15 1.05 0.93 0.82 0.75 0.68 0.60 0.55 0.50 0.45 0.41 0.37 0.30 0.27 0.24 0.22 0.20 0.18 0.16 0.15 0.14 0.12 0.

America’s Greatest Stock-Picking Secrets 93





Price 125 104 86 72 60 49 41 34 28 23 18 15 13 10 9 7 6 5 4.2 3.5 2.9 2.4 2.0 1.6 1.4 1.1 0.9 Volume 50,000,000 30,000,000 18,000,000 © 2009 Investor’s Business Daily, Inc.

r r
OK closes K closes o ht and in uppe t and in uppe i alf of spreads pr p ff 10-week 1 oving average ving average a 2/1 Mar 2000
Still OK OK Still OK K n tight ht t t tight t half alf Add: off d: : off o n ov mov mov o e e e ne line lin d d , ing n u 2/1
ght close ght close s c ght b breakout buy point, add i yp y a s over 10-week moving o eek mo k average line on volume average line on volume v o p p u Dec 1999

Buy Buy u Tight Tig g g areas e ar a dd: crosses over : crosses over e o s week moving i m n Normal pullback to Normal pullback to u a r b when crosses back s c e w 0 10 e e n ge Volume up Volume up m 2/1 Sep 1999
S&P 500 r Add: Add: Add 10-week moving e w average line ge r e w o e a Jun 1999
10
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Market correction Market correction r r 22-week cup-with-handle 22-week cup-with-handle k Sep 1998
n n n n c Buy Buy e n - w p p Volume up Volume up e lu V V V V Dec 1998
w
Jun 1998
Mar 1998 J D S Uniphase increased 1946% in 66 weeks.

Dec 1997
2/1
Sep 1997

Jun 1997

Mar 1997

Dec 1996 Sep 1996


J D S Uniphase–1998 Weekly Chart 2/1 Jun 1996 Mar 1996 Dec 1995










Price = 20*eps 5.20 4.70 4.30 3.90 3.50 3.20 2.90 2.60 2.35 2.15 1.95 1.75 1.60 1.45 1.30 1.15 1.05 0.93 0.82 0.75 0.68 0.60 0.55 0.50 0.45 0.41 0.37 0.30 0.27 0.24 0.22 0.20 0.18 0.16 0.15 0.14 0.12 0.

94
A WINNING SYSTEM
40,000,000
20,000,000
80,000,000
Volume
Price
155
135
114
180
4.2
19
54
16
22
84
98
72
41
47
14
30
35
62
26
12
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leaders that had climax tops.
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Dec 1997 Mar 2000 Dec 1999 Sep 1999 Jun 1999 Mar 1999 Dec 1998 Sep 1998 Jun 1998 Mar 1998 © 2009 Investor’s Business Daily, Inc. Qualcomm increased 2091% in 45 weeks.
2. Do Not Buy! 2. Do Not Buy! t 3 bottoms not a correct pattern correct pattern a and heavy red and heavy red y volume in base n 2 2 3 3 1 Sep 1997 Jun 1997
New leader in cell phone p e e technology. o 1. Do Not Buy! y Most weeks k s M are in lower are in lower i of base half of base half Mar 1997 Dec 1996 Sep 1996
e
Qualcomm–1999 Weekly Chart Jun 1996 Mar 1996 Dec 1995
Price = 20*eps 7.25 6.75 6.10 5.70 5.30 4.90 4.50 4.20 3.90 3.60 3.30 3.00 2.80 2.60 2.40 2.20 2.05 1.90 1.75 1.60 1.45 1.35 1.25 1.15 1.05 0.97 0.90 0.82 0.75 0.70 0.65 0.60 0.56 0.52 0.4

94 A WINNING SYSTEM





Price 180 155 135 114 98 84 72 62 54 47 41 35 30 26 22 19 16 14 12 10 9 7 6 5 4 4.2 Volume 80,000,000 40,000,000 20,000,000 © 2009 Investor’s Business Daily, Inc.

4-week high 4-week high g k k e tight flag ag a t g g o e u Mar 2000


n p p up p p 4 4 i Up off 10-week moving week moving m e 0- 0 average line on volume average line on volume v li i p p Volume up Volume up m 4/1 Dec 1999
S&P 500 Sell: climax top on Sell: climax to x m un-up 4/1 split t t run 4/1 split ru u s s Buy B B Buy B Ascending base Ascending base e e e b n ) (3 pullbacks) s c C C B B A A Up off 10 ff p o p g g ave e V p p Volume up p m Sep 1999

n
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. e p o at t w u Buy Buy u handle e l a Mar 1999
n o you ve seen 23 great x m e o y 4th time: finally y n u ic handle e 24-week cup-with-handle cup-with-handle h with w u Dec 1998
Market correction e o t a So far, you’ve seen 23 great e e u r r r r leaders that had climax tops. d h h r Are you now able to see wha o they look like to guide you in they look like to guide you in o e o the future? the future? e t e t t a classic cup- la with-handl

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3. Do Not Buy! y N 3 bottoms and o mostofpattern most of pattern o in lower half of in lower half of e base Jun 1998 Mar 1998




Dec 1997 Qualcomm increased 2091% in 45 weeks.


2. Do Not Buy! 2. Do Not Buy! t 3 bottoms not a correct pattern correct pattern a and heavy red and heavy red y volume in base n 2 2 3 3 1 Sep 1997 Jun 1997



e
New leader in cell phone p e e technology. o 1. Do Not Buy! y Most weeks k s M are in lower are in lower i of base half of base half Mar 1997 Dec 1996 Sep 1996







Qualcomm–1999 Weekly Chart Jun 1996 Mar 1996 Dec 1995







Price = 20*eps 7.25 6.75 6.10 5.70 5.30 4.90 4.50 4.20 3.90 3.60 3.30 3.00 2.80 2.60 2.40 2.20 2.05 1.90 1.75 1.60 1.45 1.35 1.25 1.15 1.05 0.97 0.90 0.82 0.75 0.70 0.65 0.60 0.56 0.52 0.4

America’s Greatest Stock-Picking Secrets 95
1,340,000
2,500,000
400,000
740,000
220,000
Volume
Price
100
3.6
4.5
12
14
16
10
19
22
30
26
50
40
60
80
70
34
7
8
6
closes in upper half
f
above 10-week line
of price spread and
of price spread and
to 23 in 2 weeks
Big shakeout: 35
Big shakeout: 35
to 23 in 2 weeks
u
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1
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S&P 500
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Market correction
p
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s
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g
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p
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Jun 1999 Sep 2001 Jun 2001 Mar 2001 Dec 2000 Sep 2000 Jun 2000 Mar 2000 Dec 1999 Sep 1999 © 2009 Investor’s Business Daily, Inc. Taro Pharmaceuticals increased 382% in 39 weeks.
Mar 1999
Dec 1998
Sep 1998
Jun 1998 Mar 1998
Taro Pharmaceutical–2000 Weekly Chart Dec 1997 Sep 1997 Jun 1997
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 0.17

America’s Greatest Stock-Picking Secrets 95





Price 100 80 70 60 50 40 34 30 26 22 19 16 14 12 f 10 8 7 6 4.5 3.6 Volume 2,500,000 1,340,000 740,000 400,000 220,000 © 2009 Investor’s Business Daily, Inc.

Big shakeout: 35 Big shakeout: 35 u a s to 23 in 2 weeks to 23 in 2 weeks w n 3 closes in upper half p i e of price spread and of price spread and r e r above 10-week line w 1 v t Sep 2001 Jun 2001



S&P 500 o c B o l of Very important n r p m volume clue u Mar 2001
Market correction o e s s s y y V v Dec 2000


3 tight closes 3 tight closes l gh Buy y s ses s s Sep 2000
a
4 tight t closes 4 tight clos o g i Big cup-with-handle Big cup-with-handle - i p p p p g g Jun 2000 Mar 2000
3 t


B
Dec 1999

Sep 1999

Jun 1999 Taro Pharmaceuticals increased 382% in 39 weeks.

Mar 1999

Dec 1998

Sep 1998

Jun 1998 Mar 1998


Taro Pharmaceutical–2000 Weekly Chart Dec 1997 Sep 1997 Jun 1997












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 0.17

96
A WINNING SYSTEM
Price
100
160
190
120
140
220
S&P 500
9-week double bottom
m
o
t
correct
Buy here: correct
e
r
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B
B
B
9
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Do Not Buy! Stock was not prope
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less volume on
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,
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m
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4 tight weeks: stock still under 80 4 tight weeks: stock still under u s h 70 accumulation even after up 50% accumulation even after up 50% % % u e m from 30 to 45, (note 6 prior up p r 60 ak) weeks that all closed at the pea h c s 50 d bottom undercuts rcuts Second bott
Dec 2001 Mar 2002
Sep 2001
Jun 2001
Mar 2001
eBay–2002 Weekly Chart Dec 2000 Sep 2000
Price = 20*eps 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 0.45 0.40 0.35

96 A WINNING SYSTEM





Price 220 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 Volume 80,000,000 50,000,000 30,000,000 18,000,000 © 2009 Investor’s Business Daily, Inc.




S&P 500 rcuts u Dec 2004
d bottom undercuts Second bottom undercuts d m t d b m t ay m t r r e a Sep 2004 Jun 2004






correct t r 9-week double bottom m o e Second d o S S S first bottom First time a winner splits, it t ma s e w correct, but almost always late correct, but almost always late w a o a u moves higher, but must have s m u strong earnings and sales a d a g n Mar 2004
Buy here: correct Buy here: c c re h u e 1 1 1 2 f f o e g g m t g r g o Dec 2003



r r p o r c st v B B B 9 2 2 2 1 1 : first pullback comes off Add: first pullback comes off m o c l p 10-week moving average line e g g v m o u e s r c o s 2/1 Sep 2003
Do Not Buy! Stock was not prope Do Not Buy! Stock was not prope s u double bottom, did not undercut t n t o less volume on 1st bottom, less volume on o m o m 1st bottom breakout week, 2 for 1 split stock p o , should correct before moves up o o % % p ak) Add: fir Add: fi i i d





4 tight weeks: stock still under 4 tight weeks: stock still under u s h accumulation even after up 50% accumulation even after up 50% u e m from 30 to 45, (note 6 prior up r weeks that all closed at the pea h c s 3 tight closes 3 tight closes t g Buy B week double botto 16-










Dec 2001 Mar 2002

Sep 2001

Jun 2001

Mar 2001

eBay–2002 Weekly Chart Dec 2000 Sep 2000




Price = 20*eps 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 0.45 0.40 0.35