How to Make Money in Stocks Trilogy

22
Price
120
100
70
80
Dow Jones Ind.
n
on
on
Earnings re-acceleration
Earnings re-acceleratio
a
creates 200% price
pr
e
%
a
n
on
Company was responsible for the inventio
Company was responsible for the inventio
r
0
i
of the pyrometer and the thermostat. In
1934, it began an aggressive expansion
it began an aggressive expansion
increase
strategy, including foreign markets.
k
m
x
t
n
g
o
m
c
g
w
1934
t
C
o
Minneapolis-Honeywell Regulator–1933 A WINNING SYSTEM 60 Buy: comes back over k o b m B Market correction causes c o Market correction n c a 10-week moving average e v the base-on-base-on-base o - 50 line on volume increase r i l o i 40 Near low of depression Near low of depression n
Price = 20*eps 6.00 Weekly Chart 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 o 2.00 on Dow Jones Jo o o o 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 g n E 0.45 0.40 0.35 0.30 0.25

22 A WINNING SYSTEM





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 Volume 3,200 1,600 800 400 © 2009 Investor’s Business Daily, Inc.

x. Jun 1937
. e L g e k t n e
Relative Price Strength Line vs. Relative Price Strength Line vs. t e S c Dow Jones Industrial average. t d n Uptrending line means stock is Uptrending line means stock is s m e outperforming the market index a e i o Mar 1937 Dec 1936




Dow Jones Ind. t e o d e p e u Sep 1936



3/1 Jun 1936
on n on a a n a h M Mar 1936


n on i Earnings re-acceleration Earnings re-acceleratio e a r creates 200% price pr % 0 increase e Notice how this 3rd base-on-base e b 3 finally is tighter and less wide and finally is tighter and less wide and s n loose than prior bases in March n e b 1934 4 and September 1934
Company was responsible for the inventio Company was responsible for the inventio t n w C of the pyrometer and the thermostat. In m m o it began an aggressive expansion 1934, it began an aggressive expansion x g g 1934 strategy, including foreign markets. k o c t Buy: comes back over k













Minneapolis-Honeywell Regulator–1933 Market correction causes o Market correction n c a the base-on-base-on-base - Near low of depression Near low of depression n n es Second quarter of huge e q earnings acceleration ti i l s i Buy u Earnings acceleration e e handle Cup-with-handl



















Price = 20*eps 6.00 Weekly Chart 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.25 o 2.00 on Dow Jones Jo o o o 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 g n E 0.45 0.40 0.35 0.30 0.25

© 2009 Investor’s Business Daily, Inc.
Volume
13,800
600
5,000
1,800
Price
260
220
300
17
20
15
11
13
Jun 1937
Mar 1937
Dow Jones Ind.
Dec 1936
Sep 1936
Jun 1936
Mar 1936
Dec 1935
Coca-Cola increased 565% in 165 weeks.
4/1
Sep 1935
Jun 1935
week
Add: 2nd pullback to 10-week
Market correction 190 o e M n 160 140 120 100 80 Buy Buy B 70 Buy Buy Buy 60 y Buy 5-week flat base e e b l e 5-week flat base e se 5-week flat bas k flat ba k week 5 45 38 6-week flat base a 32 28 n n Add: comes back across 10-week line on e - s o s
e
Mar 1935
Add: 2nd pullback to 10
moving average line
k
i
Dec 1934
p
Five cents bought you a Coke in the 1930s. Five cents bought you a Coke in the 1930s e y s Coke was expanding into foreign markets and Coke was expanding into foreign markets and e n s was becoming a bestseller in Western Europe. n e g o Another innovation for the masses. m n i Market corre
e
o
e
n
9
Coca-Cola–1934 Weekly Chart 27 Sep 1933 Jun 1933 Mar 1933
Price = 20*eps 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 23





Price 300 260 220 190 160 140 120 100 80 70 60 45 38 32 28 24 20 17 15 13 11 Volume 13,800 5,000 1,800 600 © 2009 Investor’s Business Daily, Inc.

Jun 1937

Mar 1937
Dow Jones Ind. Dec 1936 Sep 1936





Jun 1936
n n Mar 1936

5-week flat base e e b l e e se Add: comes back across 10-week line on e - s o e w pr m 4/1 Dec 1935


Buy Buy B 5-week flat base 5-week flat bas k flat ba k s volume increase from prior week volume increase from prior week r Sep 1935

Buy Buy Buy week 5 6-week flat base a A o week e Jun 1935
Market correction e M n y Buy Add: 2nd pullback to 10-week Add: 2nd pullback to 10 k n moving average line i o e Mar 1935 Dec 1934 Coca-Cola increased 565% in 165 weeks.
o

p
Five cents bought you a Coke in the 1930s. Five cents bought you a Coke in the 1930s e y s Coke was expanding into foreign markets and Coke was expanding into foreign markets and e n s was becoming a bestseller in Western Europe. n e g o Another innovation for the masses. m n i Market corre
e
9












Coca-Cola–1934 Weekly Chart 27 Sep 1933 Jun 1933 Mar 1933







Price = 20*eps 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

24
A WINNING SYSTEM
on. Price t 160 on e Sell: poor o S Dow Jones Ind. h 140 earnings report t t t o r g i r e 120 e Buy u 100 Add: bounce back u b d above 10-week e 0 e o 80 Buy Buy B moving average line a a n o s s n 70 60 4 weeks tight closes e l l ht h ti k e 4 25-week
One of only a few competitors left standing in the a t w farm equipment industryafter the Great Depressio farm equipment industry after the Great Depressio r af i q Although it was losing money in the midst of the y n g g g Great Depression, Deere gained farmer loyalty by m a n D carryin














Deere & Co.–1935 Weekly Chart Dec 1933 Sep 1933 Jun 1933








Price = 20*eps 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 0.25

24 A WINNING SYSTEM





Price 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 Volume 25,000 10,400 5,000 2,400 © 2009 Investor’s Business Daily, Inc.

Add: bounce back u b d above 10-week e 0 e o moving average line a a n o 4 weeks tight closes e l l ht h ti Sep 1937 Jun 1937








Sell: poor o earnings report t t t o r g i r k e 4 o b n g ease and above o d m Big volume Big volume m l g Mar 1937 Dec 1936
S
e
25-week base e w 25 2 Sell: price closes week below Sell: price closes week below s c r : 10-week moving average line i m e w on volume increase and above on volume incre c u v average weekly volume y l e ge r Add: bounces off 10- f n o week moving average week mo
Buy u eek base a e w a a s o - age e Sep 1936



9-week S e o a A e w i p weeks in a row o a h y y y h Volume up off p o u 10-week line e Mar 1936
Buy Buy B base base Stock up 8 closes, last 2 weeks tiny price spreads from high price spreads from high e up o Dec 1935
Dow Jones Ind. 4 weeks in a row tight 4 weeks in a row tight n t a to low of week w Volume up on e Vou l e breakout week u Sep 1935



on. t on e h e s s n Buy 4 c p t 2 weeks volume 2 weeks volume m y-up dryp u Jun 1935 Mar 1935 Deere & Co increased 307% in 104 weeks.
One of only a few competitors left standing in the a t w farm equipment industryafter the Great Depressio farm equipment industry after the Great Depressio r af i q Although it was losing money in the midst of the y n g g g Great Depression, Deere gained farmer loyalty by m a n D carryin















Deere & Co.–1935 Weekly Chart Dec 1933 Sep 1933 Jun 1933








Price = 20*eps 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 0.25

© 2009 Investor’s Business Daily, Inc.
Volume
40,000
14,000
2,000
6,000
4.0
7
8
5
6
Sep 1946
Jun 1946
10/7
Mar 1946
Volume increases
s
e
to 10-week moving average
e
Dec 1945
n
g
m
v
g
o
Sep 1945
v
4/3
m
e
Schenley Distilling increased 1164% in 185 weeks.
Jun 1945
-
Volume up
Mar 1945
m
Dec 1944
Volume up
u
Sep 1944
In 1941, Schenley Distilling was, by govern- Price n e b a tilli Di i l h S S ment mandate, producing alcohol around d ment mandate, producing alcohol around o u n 120 the clock for wartime use. It also began e f Dow Jones Ind. 100 e mass production of penicillin at this time mass pro
3/2
Jun 1944
Mar 1944
Dec 1943
in-a-row all close at
t
Note: 5 weeks up
peak for the week
k
Note: 5 weeks up
w
c
k
th
1941
k f
m
m
d
a
a
t
t
a
I
Jun 1943 Sep 1943
m m Volume up from Volume up from o prior week Mar 1943
Schenley Distilling–1943 Weekly Chart Vital clue: Big earnings Vital clue: Big earnings i e turn-up leads to giant turn-up leads to giant a e price increase r Buy Buy 12-week cup- k with-handle n u o Note: big increasing volume e l re e on prior uptrend to the base e Dec 1942 Sep 1
-
s
s
Price = 10*eps 11 10 9.00 8.00 7.00 6.00 5.00 4.50 4.00 3.60 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.45 0.38 e p Jun 1942

America’s Greatest Stock-Picking Secrets 25





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 s 12 10 8 7 6 5 4.0 Volume 40,000 14,000 6,000 2,000 © 2009 Investor’s Business Daily, Inc.






g i w e o b a o o a c s moving average line on volume increase r m o o Sep 1946 Jun 1946
Note: tight closing g o weeks along low g s e Add: 2nd pullback to and below line as t a u soon as stock crosses back above the soon as stock crosses back above the c c s moving average line on volume increas e r a e s e 10/7 Mar 1946



Dow Jones Ind. x top x to ell: climax to t lim c - c e without-handle a 2 d a o n o Add: after you have a profit f p e h k and stock has 1st pullback b p p s to 10-week moving average g v g v Volume increases n m o 4/3 Dec 1945 Sep 1945

Sell:
Sell:
Sll
e
Buy u 10-week cup- 10-week cup- e w u h o r a a k s m e - Jun 1945
d
A
Volume up m Mar 1945
t t a
Buy 31-week double bottom, second bottom at 15.90 drops below bottom at 15 90 drops below first bottom on 3rd week down a o beginning of the base beginning of the base 3/2 Sep 1944 Schenley Distilling increased 1164% in 185 weeks.
y m e Volume up u Dec 1944
In 1941, Schenley Distilling was, by govern- b a tilli Di i l h S S ment mandate, producing alcohol around ment mandate, producing alcohol around o u n the clock for wartime use. It also began e f mass production of penicillin at this time mass production of penicillin at this time a p d a
n
d
e
e



in-a-row all close at
Note: 5 weeks up
peak for the week
Note: 5 weeks up
1941
th
k f
m
m
a
a
d
a
I
t
t
m m Volume up from Volume up from o prior week Sep 1943 Jun 1943 Mar 1943
Schenley Distilling–1943 Weekly Chart Vital clue: Big earnings Vital clue: Big earnings i e turn-up leads to giant turn-up leads to giant a e price increase r Buy Buy 12-week cup- k with-handle n u o Note: big increasing volume e l re e on prior uptrend to the base e Dec 1942 Sep 1
-
s
s
Price = 10*eps 11 10 9.00 8.00 7.00 6.00 5.00 4.50 4.00 3.60 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.45 0.38 e p

26
Price
40
50
60
70
Sell: climax top
p
m
c
S
Dow Jones Ind.
Buy
u
II.
I
Condé Nast benefitted as less profitable publications were killed
First publisher of lifestyle magazines such as their trend-setting A WINNING SYSTEM 34 Market corrections Market corrections c a 30 create stock bases create stock bases b e 26 Buy Buy Buy Earnings acceleration n o a 22 starts another super r h o 19 price advance price advance a p -
magazines and books for the troops overseas during World War
setting
e
d W
n
free
off. Additionally, the government paid for advertisement-free
fashion magazine, Vogue. During the 1940s paper shortage,
fashion magazine, Vogue. During the 1940s paper shortage,
e
et
k
e
o
the government paid for advertisement-
e
First publisher of lifestyle magazines such as their trend t
g
t a
c
e
d
s e
a
p
g
g
m
n
e
t
y
b
n
o
n
Additionally,
é
z
d
o
p
p
p
p
g
off
Condé Nast Publications–1944 Mar 1943 Dec 1942 Sep 1942 Jun 1942
Price = 10*eps Weekly Chart 6.00 5.00 4.50 4.00 3.60 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.45 0.40 0.36 0.32 0.30 0.28 0.26 0.24 0.22

26 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 3,200 1,600 800 400 © 2009 Investor’s Business Daily, Inc.

Jun 1946

p
Sell: climax top m c S Mar 1946 Dec 1945



Sep 1945
Dow Jones Ind. - p Breakout Breakout u a B volume u v e e Jun 1945



Buy u 18-week cup- k e with-handle d h Volume Volume l V y-up yp yp dryp y y Mar 1945
II. free e I d W o g 18- t - 12-week cup- 2week cup u e with-handle me me Volum Volum u V Volume e e Volume up p u y-up dryp yup Dec 1944 Sep 1944
First publisher of lifestyle magazines such as their trend-setting First publisher of lifestyle magazines such as their trend t t a s e g g m y o p p p p fashion magazine, Vogue. During the 1940s paper shortage, fashion magazine, Vogue. During the 1940s paper shortage, n o Condé Nast benefitte
setting
e
n
e
et
k
e












Condé Nast Publications–1944 Mar 1943 Dec 1942 Sep 1942 Jun 1942














Price = 10*eps Weekly Chart 6.00 5.00 4.50 4.00 3.60 3.20 3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.45 0.40 0.36 0.32 0.30 0.28 0.26 0.24 0.22

© 2009 Investor’s Business Daily, Inc.
19,400
11,200
Volume
2,000
3,600
6,400
2.6
4.0
3.4
3.0
5
Jun 1946
Mar 1946
3/2
Dec 1945
Sep 1945
Jun 1945
Mar 1945
Gimbel Brothers increased 674% in 103 weeks.
Dec 1944
Volume up
p
Volume up
p
p
Volume up
Sep 1944
Jun 1944
p
olume up
Volume up
Volume up
Gimbel appealed to lower- to medium-price clientele with the barga Price ain r m o p 80 stores and to higher-end shoppers with basement of Gimbel Bros. stores and to higher-end shoppers with s d r basement of Gimbel Bros o Dow Jones Ind. nd their Saks stores. Specialty stores inside the depart
u
Mar 1944
with-handle
handle
Dec 1943
with
Sep 1943
Jun 1943
Mar 1943
r
Dec 1942
Gimbel Bros.–1944 G b h Weekly Chart m o Volume increase on prio e uptrend to first base uptrend to first base b n Sep 1942 Jun 1942 Mar 1942 Dec 1941

America’s Greatest Stock-Picking Secrets 27





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 2.6 Volume 19,400 11,200 6,400 3,600 2,000 © 2009 Investor’s Business Daily, Inc.


Jun 1946

Mar 1946
3/2
Dec 1945
Dow Jones Ind. n n Market correction Market correction i r c k Buy Buy y Sep 1945




M
Mar 1945 Jun 1945

Dec 1944
Market correction c r me me Buy p Volume up Volume up Volume up p p Sep 1944
n
n

ain s d nd , r t y y y y r n o ec k e e o d o t b w Buy Buy 35-week cup- - e handle with-handle Volume up olume up p Volume up u Jun 1944 Mar 1944 Gimbel Brothers increased 674% in 103 weeks.
Gimbel appealed to lower- to medium-price clientele with the barga r m o p stores and to higher-end shoppers with basement of Gimbel Bros. stores and to higher-end shoppers with r basement of Gimbel Bros o their Saks stores. Specialty stores inside the department stores, an p e o y p p s merc




















Gimbel Bros.–1944 G b h Weekly Chart m o Volume increase on prio e uptrend to first base uptrend to first base b n Sep 1942 Jun 1942 Mar 1942 Dec 1941

28
Price
40
50
60
34
p
Sell: climax top
Sell: climax top
x
m
Dow Jones Ind.
e
n
Market correction
o
c
rather than just summer-oriented boating activity.
Materials restrictions were lifted after the Korean
Materials restrictions were lifted after the Korean A WINNING SYSTEM 30 26 22 Buy Buy u 19 16 14 12 10 8 7 You may ask, why shouldn’t you buy here at the t the t r h b b o ’t ’ ld h h hy w k s ay Y Y Y Y Y Y Y Y y y om to get a lower price? You are not trying to bu
n
vity
y
s,
using its motors in snow blowers, lawn mowers,
War ended in 1953. This led to rapid expansion
e
for Outboard Marine. It broadened its base by
and chain saws to increase year-round sales,
o
p
n
n
x
b
a
p
s,
e
e
o
b ow
n
e
t
o
s
m
n
.
s
o o
s m
o
n
a
e
g
us
Outboard Marine–1954 Weekly Chart Prices are adjusted for 3-for-1 stock Prices are adjusted for 3-for-1 stock k o t 0 split, so price at breakout was $13.50 0 split, so price at breakout was $13.50 5 w s n Earnings acceleration a g Add: 4 weeks s w tight closes s l ih g Buy B Big
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 Mar 1953

28 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 30,000 16,000 8,000 4,000 2,000 © 2009 Investor’s Business Daily, Inc.
y y s ’s k ht g se se Sep 1957

p Sell: climax top Sell: climax top x m t the t r h t o e t When it h r n 0 0 s w e b w 1 o e breaking out of a sound bas u . a e n f t g r b w o y e that s why they t h s h n m 3/1 Jun 1957

Dow Jones Ind. e You may ask, why shouldn’t you buy here at the b b o ’t ’ ld h h hy w k s om to get a lower price? You are not trying to bu bottom to get a lower price? You are not trying to bu Y ? Y Y r e o a g at the cheapest price, but at the time the stock has t u











n o c Buy Buy u ay Y Y Y Y Y Y Y Y botto t b h h a a t n l d g v m s s b ’ n e w n r n b i d g n g m k m Jun 1956 Mar 1956
Market correction s, e y vity . . g a s n x. x x outperforming the market index m Volume up Volume up Volume up Dec 1955 Sep 1955





Materials restrictions were lifted after the Korean Materials restrictions were lifted after the Korean t n War ended in 1953. This led to rapid expansion p x p o . e for Outboard Marine. It broadened its base by b e o using its motors in snow blowers, lawn mowers, o n a s, e b ow o s
n










g
us

0 k 0 5 n Add: 4 weeks s w tight closes s l ih g Buy B Volume up p Volume up Volume up u Big increase in volume Big increase in volume v Jun 1954 Mar 1954 Dec 1953
Outboard Marine–1954 Weekly Chart Prices are adjusted for 3-for-1 stock Prices are adjusted for 3-for-1 stock o t split, so price at breakout was $13.50 split, so price at breakout was $13.50 w s Earnings acceleration a g c Sep 1953 Jun 1953










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 Mar 1953

© 2009 Investor’s Business Daily, Inc.
30,000
18,000
Volume
80,000
50,000
4.5
6
7
8
Dec 1956
Sep 1956
Jun 1956
Mar 1956
Dec 1955
Sep 1955
Kaiser Aluminum increased 379% in 93 weeks.
3/1
Jun 1955
e
down from week before, the
n
Volume is up, if it had been
h
Mar 1955
,
stock could have failed
b
f
t
Dec 1954
g Price w e r r 120 Dow Jones Ind. n 100 80 70 60 50 40 e. l 34 h 30 This is the 200-day day a 0 This is the 200 e s T moving average line. e l g g v g g v m 26 A longer-term line. e e n A 22 19 Buy 16 14 10-week moving n o w 0 1 12 age line of prices ave
Reynolds Aluminum broke out to new highs a few Reynolds Aluminum broke out to new highs a few h u m weeks earlier and Alcoa broke out after Kaiser, meanin e A this was an industry turnaround for the leaders in the e u y group. Reynolds advanced a similar amount. group. Reynolds advanced a simil
e
c
f
Sep 1954
u
r
e
e
Re
a
p
group
Jun 1953 Sep 1953 Mar 1953
Kaiser Aluminum–1954 Weekly Chart 107/100 Dec 1952 Sep 1952 Jun 1952

America’s Greatest Stock-Picking Secrets 29





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 Volume 80,000 50,000 30,000 18,000 © 2009 Investor’s Business Daily, Inc.


Dec 1956

Sep 1956


e
This is the 200-day day a 0 This is the 200 e moving average line. l g g v g g A longer-term line. e e s s Jun 1956 Mar 1956
Dow Jones Ind. s T v m n A n age line of prices c Dec 1955

10-week moving o w average line of prices e l a avera Sep 1955


0
v
1
3/1
Jun 1955
n e h , Mar 1955

g w e r r n e. l h Buy 15-week cup- u k 15-w 15-w e with-handle Volume is up, if it had been t e down from week before, the b f stock could have failed f c Dec 1954 Sep 1954 Kaiser Aluminum increased 379% in 93 weeks.
Reynolds Aluminum broke out to new highs a few Reynolds Aluminum broke out to new highs a few h u m weeks earlier and Alcoa broke out after Kaiser, meanin e A this was an industry turnaround for the leaders in the e u y group. Reynolds advanced a similar amount. group. Reynolds advanced a simil










u
a
r
Re
e
e
p
group
Jun 1953 Sep 1953 Mar 1953
Kaiser Aluminum–1954 Weekly Chart 107/100 Dec 1952 Sep 1952 Jun 1952

30
A WINNING SYSTEM
Price
80
70
60
40
50
p
climax top
Dow Jones Ind.
t
Sell: clima
e l: clima
m
m
Buy D
D
c
c
u
n.
because the market is in a correction
on
n
n
c ion
leaders…so don’t get discouraged
w
corrections. These will be the new
handles are formed during market
handles are formed during market
and stop looking for winners just t
e
and stop looking for winners just
e
Remember 90% of all cup with
t
e
o
m
g
e
a
c
p
m
n
g
e
%
r
m
o
s
s
c
e
1957 bear market 34 m 30 26 22 Buy C y 19 16 Buy B y d: first pullback k a p p s Add dd 14 10-week moving g n o k e 0 o 1 to 1 12 e average line average line a av av v a 10 attern. tt weeks tight closes along bottom of pa f p o m tt bo g l e lo h
Maker of rocket motors m o and rocket fuel and rocket fuel c Market correction Market correction t k creates base creates base t Acceleration in earnings ning e A Buy A B B handle 53-week big cup-with-handle n with p week big cup al Yo Y Y Y Y v prior up p p p prior up e:
s
Thiokol Chemical–1957 Weekly Chart e growth rate growth rate t e 53 53 53 Note: big volu e: big g trend to the cup-with- t Volume dry-up at d Vo bottom of base of b ott btt Jun 1956 Mar 1956 Dec 1955
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

30 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 150,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Mar 1960

attern. tt f p o m Iron’s n C of of at the bottom m t b e the e h 1 e in n s d g’s ’ illin Di D d ould h u y e ture u e Dec 1959 Sep 1959



d: first pullback k a p p s 10-week moving g n o k e e average line average line weeks tight closes along bottom of pa tt bo g l e w that at bottom of Tennessee Coal & s e e o up in October 1898 (page 11), at the bottom t 1 g S.S. Kresge’s cup in June 1922

p
Dow Jones Ind. climax top t e l: clima Sell: clima m m c c Buy D D Add dd 0 o 1 to 1 a av av v a lo ht t ti t k k m t t October 1898 (page 11) 9 ’ r s o 17) ) a p 5 1 s learn to recognize this accumulation in the fut s t g ) u want to win) ) w w Mar 1959



n. n n c ion on o u Note: 3 we we 3 w Nt o a w You saw s o b c cup in O up in O upinO n u cu Kresge sc s K SS S S S f o h 1925 ( 9 h Ma u n u o re a (if you want to win). a a u (if you Volume up p u m l Dec 1958 Sep 1958
w
e
e
Remember 90% of all cup with p % m handles are formed during market handles are formed during market g m e corrections. These will be the new e c leaders…so don’t get discouraged c n s and stop looking for winners just and stop looking for winners just t e g o because the market is in a cor
t
m
e


1957 bear market m Buy B y l V You always want a ant a s s a e volume increase on the volume increase on the t c buy week breaking out g o b Dec 1957 Sep 1957 Thiokol Chemical increased 860% in 109 weeks.



s
Maker of rocket motors m o and rocket fuel and rocket fuel c Market correction Market correction t k creates base creates base t Acceleration in earnings ning e A Buy A B B handle 53-week big cup-with-handle n with p week big cup al Yo Y Y Y Y v prior up p p p prior up e:







Thiokol Chemical–1957 Weekly Chart e growth rate growth rate t e 53 53 53 Note: big volu e: big g trend to the cup-with- t Volume dry-up at d Vo bottom of base of b ott btt Jun 1956 Mar 1956 Dec 1955











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

© 2009 Investor’s Business Daily, Inc.
160,000
Volume
80,000
20,000
40,000
Price
3.4
3.0
4.0
2.6
60
14
50
26
30
22
70
34
40
19
16
5
Jun 1961
tight closes
tight closes
e
3 weeks
Mar 1961
l
Sharp pullback
k
Sharp pullback
k
c
e
c
and possible
w
ih
o
shakeout to
top
b
op
Sell: climax top
p
top
b
Sell: climax to
u
p
s
2/1
Dec 1960
p
avoid
avoid
m
k
i
Volume up
p
S
s
a
a
m
Se
15-week cup-
-
5-week cup-
S
with-handle
Sep 1960
c
d
V
e
a
Dow Jones Ind.
t tight closes
15-w
15-w
-
s
t
15
3 weeks
3 weeks
Jun 1960
k
k
c
h
w
w
Mar 1960
Brunswick increased 1500% in 162 weeks.
to their earnings. July quarters were
Dec 1959
e
r
Some companies have seasonality
Some companies have seasonality
3/1
always Brunswick’s best quarters
w
r
a
o
e
q
Sep 1959
q
q
h
J
’
p
Volume up
Jun 1959
l
Vo
B
e
o
Mar 1959
y
y
y
Buy 12 Buy u 10 es es 3 different cups-with-handle 3 different cups-with-handl l a h w p e i 3 ote: peak closes Note: peak closes e No No N are shown in this chart a t o a 8 s 4 weeks tight closes 4 weeks tight closes s e in low of handle in low of handl
13/10
Dec 1958
g
Sep 1958
Company has new product - t p e py a automatic pin-spotters for bowling p a alleys. Consumer wins again. Consumer wins again a r alleys 1957 Bear Market 1957 Bear Market a Buy y Buy Buy a k Base-on-base Base B p p Volume up Volume up e 25-week cup-with-handle e h c 2/1 Jun 1
Brunswick–1958 Weekly Chart Big earnings gs n g acceleration a quarter quarter q Heavy volume supportat u v H closes in upper part bottom, closes in upper part t t n m bottom b b of price range for the week of price range for the week r e Sep 1957 Jun 1957 Mar 1957
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 31





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 160,000 80,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Jun 1961
e
3 weeks e tight closes tight closes l c k k c es es Mar 1961
Sell: climax top Sell: climax to m Se S - c S d and possible p a shakeout to k s avoid avoid i a 3 different cups-with-handle 3 different cups-with-handl l h w p are shown in this chart a t Volume up p m V 2/1 Dec 1960
op top top p w ih Sharp pullback Sharp pullback b p b s o u a



Dow Jones Ind. 3 weeks 3 weeks k k w w t tight closes s c h 5-week cup- 15-week cup- e 15-w 15-w - 15 with-handle a t e i 3 o a Sep 1960 Jun 1960



Mar 1960
e o r w e r a e s s e 3/1 Dec 1959
Some companies have seasonality Some companies have seasonality h o to their earnings. July quarters were J e always Brunswick’s best quarters q q q ’ B ote: peak closes Note: peak closes No No N 4 weeks tight closes 4 weeks tight closes in low of handle in low of handle f p Volume







y
y
y
Buy Buy u k cup- k cup- 16-week cup p week cu k 16 1 1 h-handle h-han n with-ha Vo 13/10 Mar 1959 Dec 1958 Sep 1958

g
Company has new product - t p e py a automatic pin-spotters for bowling p a alleys. Consumer wins again. Consumer wins again a r alleys 1957 Bear Market 1957 Bear Market a Buy y Buy Buy a k Base-on-base Base B p p Volume up Volume up e 25-week cup-with-handle e h c 2/1 Jun 1










Brunswick–1958 Weekly Chart Big earnings gs n g acceleration a quarter quarter q Heavy volume supportat u v H closes in upper part bottom, closes in upper part t t n m bottom b b of price range for the week of price range for the week r e Sep 1957 Jun 1957 Mar 1957







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

32
A WINNING SYSTEM
Price
160
190
140
120
100
260
220
60
45
80
70
38
32
No volume coming
g
n
into stock near
nto stock nea
o
a
e
o
u
o
Sell: climax top
p
Dow Jones Ind.
m
c
5-week high
high
igh
Buy
y
y
Se
g
g
g
lag
tight flag
g
ag
ag
tight flag
g
e
5-w
s
5-w
not a climax top, it is
only out of the high
5 g
This is
Do Not Sell! This is
t
5
i
g
tight flag 8 weeks
i
t
k
p
Buy
y
e
Do Not Sell! Th
x
l
g 8
m
S
g
g
ght fl
o
o
f
s
tight closes
tight closes
s
tight closes
o
g
tig
ks
o
4 weeks
D
e
t
4
n
n
Market correction
Market correction
Two quarters earnings acceleratio
Two quarters earnings acceleratio
o
i
e
Zenith is about to emerge from 2+ year base Buy y uy 28 bottom of base bottom of base s m t a o e 24 20 n each of first 3 pullbacks to t c b p p t f o a d on Add on n d 17 11-week cup- 11-week cup- p c e h 10-week moving average line, which h
s
w
T
T
Jun 1956 Sep 1956
Mar 1956
Zenith Radio–1958 Weekly Chart Dec 1955 Sep 1955 Jun 1955
Price = 20*eps 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 0.45 0.40

32 A WINNING SYSTEM





Price 260 220 190 160 140 120 100 80 70 60 45 38 32 28 24 20 17 15 13 11 9 Volume 80,000 50,000 30,000 18,000 © 2009 Investor’s Business Daily, Inc.


g n Sep 1959
No volume coming o e u into stock near a nto stock nea o o bottom of base bottom of base s m t t h h h dry-up n r 3/1 Jun 1959


p
Dow Jones Ind. Sell: climax top m c Se y Buy y igh high g g n each of first 3 pullbacks to c b p p t 10-week moving average line, which g v creates an ascending base s e Note: extreme volume dry-up Note: extreme volume dr e lu v m at end of base meaning no n a m a furth



s This is i t p g k y 5-week high e 5-w 5-w 5 g 5 lag tight flag ag ag g g tight flag g i t f o a g v m also creates an ascending base a a t t t Nt f d t s e u o Dec 1958
Do Not Sell! This is Do Not Sell! Th l S o not a climax top, it is x m only out of the high o tight flag 8 weeks e g 8 g g ght fl f Buy s s d on Add on n d e 10-we - 10- also cr s Big volume Big volume u v i n increase on e e n breakout t u k k br



g
tig
o
4 weeks ks e 4 tight closes tight closes tight closes o t p c handle d ng ng g y 2/1 Jun 1958 Mar 1958
D
n
n
Market correction Market correction o e Two quarters earnings acceleratio Two quarters earnings acceleratio i s Buy y uy a 11-week cup- 11-week cup- e with-handle h with to the base, , ior to the bas a o k professional buyin professional buyin o This is large i Dec 1957 Sep
Zenith is about to emerge from 2+ year base o e Note: many big volume spikes up prior to t o m ke little skyscrapers. This is large profe like little skyscrapers. This is large prof pers. T ike little skyscrapers p p e Jun 1957 Mar 1957 Dec 1956



w
T
T





Jun 1956 Sep 1956

Mar 1956 Dec 1955

Zenith Radio–1958 Weekly Chart Sep 1955 Jun 1955








Price = 20*eps 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 0.45 0.40

© 2009 Investor’s Business Daily, Inc.
Volume
2,000
4,000
16,000
8,000
Price
120
300
100
140
190
160
260
220
19
80
16
10
14
12
200-day moving
at over 500 in Jan. 2008 when it
at over 500 in Jan. 2008 when it
deceleration to 39% from earlier
deceleration to 39% from earlier
showed 4 quarters of earnings
Sep 1960
a
o
n
average line
h
m
li
r
d
f
0
f
a
Jun 1960
s
v
0
J
t
trend of 129%.
trend of 129%. .
9
n
q
0
Mar 1960
5
a
e
w
d
l
e
h
t
r
Dec 1959
Sep 1959
Volume up
p
Texas Instruments increased 772% in 116 weeks.
Jun 1959
k
pullbacks to 10-week
u
moving average line
e
e
Can add at first 3
w
V
t 3
3
l
Mar 1959
Dow Jones Ind.
g
g
s
t fi
e
t
Buy
Buy
y
d
dd
B
g
g
c
Dec 1958
C
p
Sep 1958
through precise buy point,
through precise buy point,
Buy 70 y 60 week 14-week week e e 50 base base s s bas b Two quarters of deceleration in n at e e o e a q Tw 40 rate of quarterly earnings per share rate of quarterly earnings per share e s a y r q o a 7-week ek e th growth from the earlier major gr
Volume up as stock goes
also closes week at peak
p
p
y
k
t
Jun 1958
Dallas-based leader in new e a semiconductor industry semiconductor industry d d — 1957 Bear Market— k B creates new bases creates new bases s e Buy y u Note volume Note volume handle e 35-week cup-with-handle e h with week cup c 35 treme volume note extreme volume note extreme v
Texas Instruments–1958 Weekly Chart Again note ext n dryup ne dry-up ne p p selling in stock g selling Mar 1957 Dec 1956 Sep 1956
Price = 20*eps 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 Jun 1956

America’s Greatest Stock-Picking Secrets 33





Price 300 260 220 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 Volume 16,000 8,000 4,000 2,000 © 2009 Investor’s Business Daily, Inc.
th t
200-day moving o d average line li a n at e e s o m i i ti b +21% versus +59% + u u v s e % r a g g p g h 0 n r f a m f Sep 1960
Two quarters of deceleration in e o e a rate of quarterly earnings per share rate of quarterly earnings per share a y r q growth from the earlier major growt e h m f trend rate frequently can be a time tl t u fr t t to sell +22%, +21% versus +59%, % + % to sel

0
v

q
e
u
o
wt
d
d
d
l
w
w
l
Tw
h
e
t
o
a
o
n
r
tr
Dec 1959
Sep 1959
p Volume up u V Jun 1959
k
e
e
w
l
Dow Jones Ind. y Buy Buy B week 14-week week e e base base s s bas b Can add at first 3 t 3 3 s t fi dd d pullbacks to 10-week t c moving average line g g e g g Mar 1959 Dec 1958
7-week ek e ase C p
Buy y base base base b Volume up as stock goes k through precise buy point, through precise buy point, y also closes week at peak p p t Sep 1958 Jun 1958 Texas Instruments increased 772% in 116 weeks.
Dallas-based leader in new e a semiconductor industry semiconductor industry d d — 1957 Bear Market— k B creates new bases creates new bases s e Buy y u Note volume Note volume handle e 35-week cup-with-handle e h with week cup c 35 treme volume note extreme volume note extreme v
Texas Instruments–1958 Weekly Chart Again note ext n dryup ne dry-up ne p p selling in stock g selling Mar 1957 Dec 1956 Sep 1956











Price = 20*eps 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 Jun 1956

34
A WINNING SYSTEM
120,000
70,000
Volume
40,000
20,000
Price
100
4.5
3.8
70
80
14
40
10
12
60
50
22
26
16
19
30
34
8
7
6
you hesitated to sell
stock on the way up
stock on the way up
yp
ll
climax top, sell if
10-week line
ittd t
pullback to
Fast drop after
k li
d
Add: first
Add: first
s
t
k
s
k
e
a
ta
e
t
f
p
o
ks
weeks
6 weeks
he
r
0
10
pu
x
d
k
k
Sell: climax top, price
price
A
s
o
doubles in last 6 w
w
r
yo
F
c
dry-up on pullback, no
o
o
e
e
Note: extreme volume
Note: number of tight
Sell: climax top
w
week from hi to low
g
u
a
t
k
weekly closes and
d
selling coming in
selling coming in
tiny spreads each
tiny spreads each
high tight flag
2/1
v
Buy: 4-week
v
o
b
o
htfla
k
m
a
a
m
e
c
i
h
t
e
w
p
s
t t
with tight
with tigh
t base
t base
10-week
k
hti
flat bas
l
g
s
e
o
t
e
o
o
u
c
x
e
c
s
weeks
hig
h
e
Buy
y
Buy
Bu
s
kl
-
: :
n
u
k
k
:
h
h
w
w
1
o
e
e
e
o
f
n
r
Dow Jones Ind.
Add
Add
y
Huge volume—supply
A
y
e
e
43-week cup-with-handle
handle
and demand at work
and demand at work
Buy
Buy
y
p
l
r
n
Market correction
w
a
—
t
with
h
e
r
c
a
p-
l
week cup
e
k
43
4
Mar 1957 Jun 1959 Mar 1959 Dec 1958 Sep 1958 Jun 1958 Mar 1958 Dec 1957 Sep 1957 Jun 1957 © 2009 Investor’s Business Daily, Inc. Universal Controls increased 645% in 51 weeks.
Dec 1956
Sep 1956
3/1
Jun 1956
Mar 1956
Dec 1955
Sep 1955 Jun 1955
Universal Controls–1958 Weekly Chart Mar 1955 Dec 1954

34 A WINNING SYSTEM





Price 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 ll yp 3.8 Volume 120,000 70,000 40,000 20,000 Jun 1959 © 2009 Investor’s Business Daily, Inc.


Add: first Add: first s f d A pullback to k a pu 10-week line k li k e 10 0 Fast drop after t p r s climax top, sell if s x you hesitated to sell ittd t d ta he stock on the way up stock on the way up e t o o Mar 1959
6 weeks
weeks
ks
k
k
Sell: climax top, price Sell: climax top t m c e doubles in last 6 w a o Buy: 4-week k w high tight flag htfla t hti t hig y k 10-week e - t base t base flat bas s with tight t t with tigh g h s weeks e Note: number of tight g o e u : weekly closes and d a
price
w
r
Dow Jones Ind. n Bu h h Buy Buy Add Add A y Buy Buy 1 f w w handle e e l o k e n k e y y p r w o r e Jun 1958 Mar 1958


Market correction t r c k 43-week cup-with-handle a with h p- week cup Huge volume—supply — e l and demand at work and demand at work a e Dec 1957 Sep 1957




43
4
Jun 1957
Mar 1957 Universal Controls increased 645% in 51 weeks.

Dec 1956

Sep 1956
3/1
Jun 1956

Mar 1956

Dec 1955

Sep 1955 Jun 1955
Universal Controls–1958 Weekly Chart Mar 1955 Dec 1954

© 2009 Investor’s Business Daily, Inc.
Volume
18,200
10,600
6,200
2,000
3,600
14
12
10
8
Mar 1962
Dec 1961
Sep 1961
Jun 1961
Mar 1961
from Jan. 1954 - Jun. 1961; ;
Dec 1960
9
9
Traded Over-The-Counter
e
n
u
t available
volume not available
b
J
C
Sep 1960
4
4
h
v
e -
1
e not
Xerox increased 1201% in 188 weeks.
a
volume
Jun 1960
Mar 1960
Dec 1959
4/1
ers Price e r r tc 220 ers p Dow Jones Ind. Market correction o r r r 190 creates new bases creates new bases e o 160 140 120 A A B B 100 80 Key point: Dow Jones at point B Key point: Dow Jones at point B B s D e makes a new low below point A, A o w m 70 but Xerox diverge
The world’s first fully-automated, plain paper photcopier. The p e y s 914 model revolutionized the industry as previous photocopie 914 model revolutionized the industry as previous photocopie s n n required either special chemically treated paper, or were too p p d y a a p t time-consum
Sep 1959
Xerox–1958 T 9 q re Weekly Chart i Market correction r M creates new bases b w t c y Buy y 40-week cup-with-handle e i e Jun 1958 Mar 1958 Dec 1957 Sep 1957
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

America’s Greatest Stock-Picking Secrets 35





Price 220 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 Volume 18,200 10,600 6,200 3,600 2,000 © 2009 Investor’s Business Daily, Inc.
Mar 1962

Dec 1961
Dow Jones Ind. Sep 1961


Jun 1961

Mar 1961 Dec 1960

9
9
Traded Over-The-Counter u C h e - from Jan. 1954 - Jun. 1961; ; n J 4 4 1 a t available volume not available b v e not Sep 1960
e

Market correction o creates new bases creates new bases e B B B A B by i A Buy Buy 19-week cup-with-handle h-handle ith h h p B B volume Jun 1960 Mar 1960





ers e r r tc ers p r r r o A A Key point: Dow Jones at point B Key point: Dow Jones at point B s D e makes a new low below point A, o w m but Xerox diverges at point B by di X bu holding above its low at point A. holding above its low at point A o o A sign of power and strength.
The world’s first fully-automated, plain paper photcopier. The p e y s 914 model revolutionized the industry as previous photocopie 914 model revolutionized the industry as previous photocopie s n n required either special chemically treated paper, or were too p p d y a a p t time-consum



















Xerox–1958 T 9 q re Weekly Chart i Market correction r M creates new bases b w t c y Buy y 40-week cup-with-handle e i e Jun 1958 Mar 1958 Dec 1957 Sep 1957





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

36
A WINNING SYSTEM
Price
40
50
19
22
26
34
30
12
10
16
14
7
6
8
a
961 sell was precedent for Amazon
n
for next 3 years to 25 before it built
61 in Oct. 2003. Amazon declined
going above channel line to sell at t
ll
A
s
c
d
o
f f t t
o
b
n
l li
m
c
n
new base in 2007
new base in 2007
ha
0
.
s
2
a
0
a
bo
3
e
t
l
O
b
e
961
1961
w
6
6
i i
r
g
Sell
Sell
Dow Jones Ind.
S
s 4.5 s o 3.8 e w w m 3.2 r 2.8 Stock t 2.4 tops on to 3/1 split t s / 2.0 3/1 Volume 80,000 50,000 30,000 18,000 Dec 1961 Sep 1961 Jun 1961 Mar 1961 Dec 1960 Sep 1960 Jun 1960 Mar 1960 Dec 1959 © 2009 Investor’s Business Daily, Inc. American
e e o i 3 weeks tight closes 3 weeks tight closes Earnings accelerate— Earnings accelerate— n vertical slash marks show c earning’s report week earning’s report week n Sep 1959
Predecessor to the Predecessor to the Xerox dry copier x Buy Buy k Note: extreme volume e v e dry-up at end of base e dry-up at end of base o u e e s 3/1 Jun 1959 Mar 1959 Dec 1958
American Photocopy Equip.–1958 y Buy k cup- cup 13-week cup p 13- handle ndle hand with-han han with t Big volume increase Big volume increase m Sep 1958 Jun 1958 Mar 1958 Dec 1957
Price = 20*eps Weekly Chart 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

36 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 Volume 80,000 50,000 30,000 18,000 © 2009 Investor’s Business Daily, Inc.

a c
961 sell was precedent for Amazon f f t t n c a l going above channel line to sell at t l li n ha bo 61 in Oct. 2003. Amazon declined d o m . 0 t for next 3 years to 25 before it built o b s a 3 new base in 2007 new base in 2007 0 2 e Dec 1961 Sep 1961
n
ll
A
s




Sell Sell S 961 1961 6 6 i i g O e r b w Stock t tops on to 3/1 split t s / 3/1 Jun 1961 Mar 1961
Dow Jones Ind. Dec 1960



Sep 1960

Jun 1960

Mar 1960
w w
s s o e m r Dec 1959 American Photocopy Equipment increased 696% in 133 weeks

e e o i 3 weeks tight closes 3 weeks tight closes k Earnings accelerate— Earnings accelerate— n vertical slash marks show c earning’s report week earning’s report week n Sep 1959
Predecessor to the Predecessor to the Xerox dry copier x Buy Buy Note: extreme volume e v e dry-up at end of base e dry-up at end of base o u Big volume increase e Big volume increase e s 3/1 Jun 1959 Mar 1959 Dec 1958





American Photocopy Equip.–1958 y Buy k cup- cup 13-week cup p 13- handle ndle hand with-han han with t m Sep 1958 Jun 1958 Mar 1958 Dec 1957
















Price = 20*eps Weekly Chart 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.
8,000
4,000
2,000
16,000
Volume
10
14
12
8
Sep 1960
Jun 1960
Mar 1960
Dec 1959
2/1
Volume up
e up
Sep 1959
u
V
Fairchild Camera & Instrument increased 582% in 73 weeks.
Jun 1959
Volume up from
m
m
Volume up from
m
m
r
Mar 1959
prior week
k
p
w
e
o
l
Dec 1958
p
In 1957, its subsidiary Fairchild Semiconductor Price Dow Jones Ind. to d i m hild S i F idi bs it I1957 5 developed the planar process which led to mass- - developed the planar process which led to mass a h c l o w manufacturing of silicon transistors. Within a few r o f 190 yea
d
volume on prior uptrend
Sep 1958
Note: big accelerating
Note: big accelerating
e
i
Jun 1958
e
u
Mar 1958
Dec 1957
Sep 1957
Fairchild Camera & Instrument–1959 Weekly Chart Jun 1957 Mar 1957 Dec 1956 Sep 1956 Jun 1956 Mar 1956

America’s Greatest Stock-Picking Secrets 37





Price 190 160 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 Volume 16,000 8,000 4,000 2,000 © 2009 Investor’s Business Daily, Inc.

Sep 1960

Jun 1960


ek cup-with-handle - p k ba b b age line age line l g e up 2/1 Dec 1959
e e n ack to 10-week back to 10-week k k e - o e Mar 1960


Buy Buy y eek c 15-week c 5 Add: 1st pullba Add: 1st pullb p s d A moving avera moving avera moving avera v g v m m g osing osing ht closing g g n o ht clo ht cl h n handle dle n handl d d h h-handle e e h-handle Volume up u V Sep 1959

Dow Jones Ind. ote: tigh Note: tigh t No No o N weeks in e a h w th cup-with k cup-with u k c k m Volume up from Volume up from m m m r p e k prior week w Jun 1959 Mar 1959



Buy Buy t 10-week c 10-week w l o p d Dec 1958 Sep 1958
w
-
In 1957, its subsidiary Fairchild Semiconductor i m hild S i F idi bs it I1957 5 developed the planar process which led to mass- developed the planar process which led to mass h c l o manufacturing of silicon transistors. Within a few r o f years the company created the first integrated
to
o
a
d
d








Fairchild Camera & Instrument–1959 Weekly Chart Jun 1957 Mar 1957 Dec 1956 Sep 1956 Jun 1956 Mar 1956

38
A WINNING SYSTEM
Price
140
100
120
Dow Jones Ind.
Sell: heavy volume v 80 no price progress up no price progress up u p 70 60 Buy Buy u 50 back a 40 200-day moving m a - 2 34 average line lin e r a 30 Buy Buy y 26 Cup no up no up no n n u n 22 andle handle d ha ha ha 19 Buy Buy y k k 6-week 6 f
36-week cup-with-handle 36-week cup-with-handle with-h p Note: volume accumulation Note: volume accumulation e up weeks on volume n Sep 1962 Jun 1962

e c Bear market 6 i o p Mar 1962 Dec 1961
Third largest motor vehicl o g producer in the U.S. u p Earnings acceleration Earnings acceleration to a new high to a new high g Sep 1961 Jun 1961







Chrysler–1962 Weekly Chart Mar 1961 Dec 1960






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

38 A WINNING SYSTEM





Price 140 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 5 Volume 1,300,000 800,000 500,000 300,000 180,000 © 2009 Investor’s Business Daily, Inc.

Mar 1965
t
o
k
k
200-day moving m a - 2 average line lin e r a Heavy volume increase without w e r n m o same progress as prior week w io e o was the top of the stock c t p o t Dec 1964 Sep 1964


h
y
e
a
a
Mar 1964 Jun 1964
Dow Jones Ind. m m e v i e s s g p Dec 1963
2/1


Buy Buy u back a Cup no up no up no n n u andle handle d ha ha ha Sell: stock doubles from Sell: stock doubles from u o 15 to 34 and heavy h n 4 increased volume with u v e no further price progres c h closing at 32 3 3 g a Sep 1963

k k flat base bas s cos k stock d o 2/1 Jun 1963
Buy Buy y 6-week 6 16 weeks 16 w 6 up in a row p in a row p p up After shakeout, stock e closes mid-range and n range and vi irtually unchanged on huge volume support huge volume support t pp m Mar 1963
u
Sell: heavy volume v no price progress up no price progress up p 36-week cup-with-handle 36-week cup-with-handle n with-h p Buy Buy y After shakeout A closes mid- l g n Note: volume accumulation Note: volume accumulation n l e up weeks on volume n Dec 1962 Sep 1962 Chrysler i









e c Bear market 6 i o p Jun 1962 Mar 1962 Dec 1961
Third largest motor vehicl o g producer in the U.S. u p Earnings acceleration Earnings acceleration to a new high to a new high g Sep 1961 Jun 1961







Chrysler–1962 Weekly Chart Mar 1961 Dec 1960






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

© 2009 Investor’s Business Daily, Inc.
70,000
130,000
40,000
20,000
Volume
Price
120
100
4.5
70
80
50
60
34
40
26
30
6
7
8
Sep 1966
Jun 1966
4 weeks closing
g
me
relatively tight
Enormous institutional volum
m
m
supportafter shakeout below
w
w
i
w
w
support after shakeout below
h
Mar 1966
l
t
l l
l
low of first week of April
S&P 500
k
e
r
l
n
A
o
e
t
ti
Dec 1965
4
a
r
ititu
k
2/1
s
e
r
s
s
a
Sep 1965
r
m
Market correction
Market correction
o
o
p
w
E
e
o
Jun 1965
Shakeout below
o
e
National Airlines increased 1004% in 179 weeks.
a
Mar 1965
o
a
Dec 1964
Sep 1964
Base-on-base 22 35.75 low in April 35 75 low in Apri r A w l 7 o 19 16 14 12 10 America’s Greatest Stock-Picking Secrets 39
Buy
Buy
Jun 1964
al
et et e . s d p p p g Mar 1964 Dec 1963
Whole airline industry leads this marke Whole airline industry leads this marke s i cycle due to jets replacing prop planes r e e Consumers’ living standard rises. Consumers’ living standard rises r e No bull market has ever begun No bull market has ever begun v r without a follow-through day
Sharp sha
Sharp s
Chapter 9.
Crisis
Crisis
Y h
o
n
w
Y
p Volume up u Mar 1963 Dec 1962
National Airlines–1962 Weekly Chart Market correction ti o t Mk 28-week cup-with-handle u 2 Sep 1962 Jun 1962 Mar 1962
Buy
Buy
a
u

America’s Greatest Stock-Picking Secrets 39





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 Volume 130,000 70,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Sep 1966

Jun 1966
g i l h t me m m l l w w w w l

S&P 500 4 weeks closing k e 4 relatively tight e t r Enormous institutional volum l n ti ititu s s supportafter shakeout below support after shakeout below o a r a low of first week of April r A k e s 2/1 Mar 1966 Dec 1965



Market correction Market correction o e o e a Shakeout below o o 35.75 low in April 35 75 low in Apri r A w l m o E r p w Sep 1965 Jun 1965





7
a
Dec 1964 Mar 1965

Base-on-base o National Airlines increased 1004% in 179 weeks.
Buy Buy Sep 1964



al Jun 1964
et et e . s d p p p g Mar 1964 Dec 1963
Whole airline industry leads this marke Whole airline industry leads this marke s i cycle due to jets replacing prop planes r e e Consumers’ living standard rises. Consumers’ living standard rises r e No bull market has ever begun No bull market has ever begun v r without a follow-through day





Sharp sha
Sharp s
Chapter 9.
Crisis
Crisis
Y h
o
n
w
Y
p Volume up u Mar 1963 Dec 1962 Sep 1962
National Airlines–1962 Weekly Chart Market correction o t Mk 28-week cup-with-handle u 2 Jun 1962 Mar 1962
Buy
Buy
a
u
ti

40
A WINNING SYSTEM
Price
140
100
120
60
30
70
50
80
40
26
34
19
22
16
12
14
e
e
See volume
u
v
e
correction
Buy
y
u
o
o
Market
Market
c
e
ec
a
co
S&P 500
7-week base-
t t t
straight up) and handle area does not
week base
s
v-shaped 2 weeks down and 2 weeks
o
s
k
up off low (straight down and then
on-base
e
Do Not Buy! Faulty base, narrow
w
Do Not Buy! Faulty base, narrow
w
k
h
s
d
d
7-we
7-we
d
b
r
y
Buy
y
y
y
y
w
B
n
7
o
7
7
r
a
drift down along its lows
dri ift down along its lows
w
s
w
o
dl
d h
w
s
)
ht
i
s
o
p
tr
Buy: pullback to Buy: pullback to c 10 10-week moving o average line 8 Huge volume after stock has h o t u v u 7 d shakeout below 38 low and n w 38 l bl e t o hk h day moving g pulls back to 200-day moving v d pulls back to 200 0 o b u
s
n
jet planes
New product: jet planes p ct od o p and new route to Japan and new route to Japan J w Market Market k correction o ec e e co u 0 v Add: pullbacks to a 10-week moving week moving m e average line g g g Sep 1963 Jun 1963
s
n
Ne
10
a
A
Mar 1963 Dec 1962
Do Not Buy! Stock is
Northwest Airlines–1962 Weekly Chart 1962 bear market 1962 bear market 1 Do Not Buy! Stock is B B extended straight up d d td from 8 to 14 and it s from 8 to 14 and it’s o a third stage base a third stage base t t Buy y u Huge volume demand e Volume up u Sep 1962 Jun 1962
ht u
t
i
t
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 Mar 1962

40 A WINNING SYSTEM





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


2/1
Jun 1966
Mar 1966


See volume e e u v e h o t d n w 38 l day moving g v d 0 s Volume up p Volume up e u V Dec 1965 Sep 1965




Market Market e a correction o o ec c co Buy y u Huge volume after stock has u v shakeout below 38 low and bl e t o hk pulls back to 200-day moving pulls back to 200 o b average line for first time g Jun 1965
S&P 500 s k t t t o s u h u v n Mar 1965

Do Not Buy! Faulty base, narrow Do Not Buy! Faulty base, narrow s v-shaped 2 weeks down and 2 weeks w w s up off low (straight down and then o s straight up) and handle area does not dl d h ) ht i dri ift down along its lows drift down along its lows w 2/1 V Sep 1964 Jun 1964 Northwe
w r n w a h d e d d r y y Buy y y y B 7-week base- week base k 7-we 7-we w 7 7 7 on-base s b o Big volume on v k down week e n do p Volume up e u Dec 1964






tr
p
o
Buy: pullback to Buy: pullback to c 10-week moving o average line Volume up Mar 1964 Dec 1963
s
jet planes
New product: jet planes p ct od o p and new route to Japan and new route to Japan J w Market Market k correction o ec e e co u 0 v Add: pullbacks to a 10-week moving week moving m e average line g g g Sep 1963 Jun 1963
n
n
s
Ne
10
A
a
Mar 1963 Dec 1962
Do Not Buy! Stock is
ht u
Northwest Airlines–1962 Weekly Chart 1962 bear market 1962 bear market 1 Do Not Buy! Stock is B B extended straight up d d td from 8 to 14 and it s from 8 to 14 and it’s o a third stage base a third stage base t t Buy y u Huge volume demand e Volume up u Sep 1962 Jun 1962
t
i
t





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 Mar 1962

© 2009 Investor’s Business Daily, Inc.
150,000
350,000
30,000
Volume
70,000
Price
140
120
100
260
300
340
220
190
160
15
17
60
45
24
13
38
20
80
70
Sep 1966
Jun 1966
Mar 1966
S&P 500
Dec 1965
Sep 1965
Jun 1965
er
de
de
st t
and loose to safely buy on the attempted breakout 9 weeks late
e
normal handles correct only 8–12%, which makes this too wid
d
12%, which makes this too wid
Stock just corrected 32 to 26, almost 20% in handle area. Mos
s
M
s
o
Mar 1965
t
e
e
h
Xerox increased 660% in 168 weeks.
st
st
ne and whole base is tight holding almos
and whole base is tight holding almos
dl
e
pullback to 10-week moving average
n
u
e
a
m
red week huge volume but gives up small amount, 3rd week up big on huge volume
3rd week up big on huge volume
h
Huge volume support: 1st red week closes in upper half of week’s price range, 2nd
Dec 1964
all of its gain since advancing 100%
all of its gain since advancing 100%
t 20% i
e
v
o
n
e
w
2
Sep 1964
l
a
8
normal handles correct only 8
s
a
-
b
6
26
e
Jun 1964
d 32 t
Add: pullback to 10-week
w
d
b
w
r
w
g
g
l
pull
1962
in December 1962
Add: pull
t
moving average line
Mar 1964
g average line
line a
ine a
red week huge volume but gives up small amount
line
g
mou
5/1
5/1
5/1
5/1
5/1
5/1
u
b
u
5/1
u
a
o
t
a
m
e
c
r
s
Dec 1963
k j
moving
D
St
Add:
Add:
o
3 more tight 32 3 more tight t 3m 3m closing weeks g o 28 America’s Greatest Stock-Picking Secrets 41
k
d
d
m
Sep 1963
t
u
Buy B 12-week cup-with-handle i p- cup- p- p p cup -w r marke u v v e Jun 1963 Mar 1963
3 weeks 3 tight closes s g i along lows e ndle similar to 44-week cup- 68-week cup-with-handle similar to 44-week cup 44 milar ndle sim m with-handle Xerox formed in 1957 bear market n 1957 bear market n 1957 bear mark Hug Hug Dec 1962 Sep 1962
e
Xerox–1963 Weekly Chart 1962 bear market creates 1962 bear market creates r 2 the Xerox base e X Do Not Buy! Straight Do Not Buy! Straight a up from 17.5 to 32, 3 m too obvious and v market is correcting market is correcting t h p c ndle Xerox for f d n Jun 1962
Price = 20*eps 18 16 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

America’s Greatest Stock-Picking Secrets 41





Price 340 300 260 220 190 160 140 120 100 80 70 60 45 38 32 28 24 20 17 15 13 Volume 350,000 150,000 70,000 30,000 © 2009 Investor’s Business Daily, Inc.

Sep 1966

Jun 1966

Mar 1966
S&P 500 Dec 1965



Sep 1965


st t s M e dl n de de d o t h e er e s e u Jun 1965 Mar 1965

st
st
pullback to 10-week moving average v - ne and whole base is tight holding almos and whole base is tight holding almos o e all of its gain since advancing 100% all of its gain since advancing 100% a a Stock just corrected 32 to 26, almost 20% in handle area. Mos h t 20% i
e
m
a



Add: pull b pull w ine a line a line g g a Add: pullback to 10-week w c moving average line g average line g r d 32 t d t t s k j normal handles correct only 8 r a e 1962 in December 1962 b m Huge volume support: 1st red week closes in upper half of we


moving
Add:
Add:
o
3 more tight 3 more tight t 3m 3m closing weeks g o St D k t red week huge volume but gives up small amount u Sep 1963
d
d
m
Buy s B 12-week cup-with-handle i p- cup- p- p p cup -w r marke u v v e Jun 1963 Mar 1963

3 weeks 3 tight closes g i along lows e ndle similar to 44-week cup- 68-week cup-with-handle similar to 44-week cup 44 milar ndle sim m with-handle Xerox formed in 1957 bear market n 1957 bear market n 1957 bear mark Hug Hug Dec 1962 Sep 1962
e
Xerox–1963 Weekly Chart 1962 bear market creates 1962 bear market creates r 2 the Xerox base e X Do Not Buy! Straight Do Not Buy! Straight a up from 17.5 to 32, 3 m too obvious and v market is correcting market is correcting t h p c ndle Xerox for f d n Jun 1962





Price = 20*eps 18 16 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

42
A WINNING SYSTEM
Price
100
120
50
40
60
80
70
34
16
14
12
19
30
26
22
accelerate
accelerate
t
s
Earnings
e
a
c
correction
o
o
o
Market
Market
ec
Buy
Buy
y
e
re
k
u
co
M
Dow Jones Ind.
t t 10 High tight High tight 8 Became precedent for o r 7 high tight flag in Rollins high tight flag in Rollins f r that appeared 1 year late r y r pp 6 (see chart below) 4.5 2/1 3/1 Volume 800,000 500,000 300,000 180,000 Mar 1966 Dec 1965 Sep 1965
Sell: climax top Sell: climax top m d d d 4 4 flag base B h t ( Huge earnings s i Dec 1963 Sep 1963
New product “The Pill,” Syntex was on the S The Pill T New product p American Stock Exchange when they liste e k i a number of different growth stocks gow ee f d o be um n o o Stock prices adjusted for 3/1 Stock prices adjusted for 3/1 s t and 2/1 stock splits. Syntex was S c n ac
e e Syntex was on th s ed e s s s oc Market M M orrection orrection o ec o o co c c Syntex doubled on a when issued Syntex doubled on a when issue h e 3 for 1 new stock run-up from 44 u t to over 90 on this chart t n s Buy y y H growth growth go g g Jun 1963
Syntex–1963 a Weekly Chart Jun 1962 Mar 1962 Dec 1961
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 0.20

42 A WINNING SYSTEM





Price 120 100 80 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 6 4.5 Volume 800,000 500,000 300,000 180,000 © 2009 Investor’s Business Daily, Inc.



s t Mar 1966
Earnings a accelerate accelerate e 2/1
Dec 1965
c

Market Market k M correction o o o ec e re co Buy y Buy u Sep 1965 Jun 1965


Dow Jones Ind. Mar 1965


Dec 1964
Sep 1964


r r Jun 1964
Became precedent for high tight flag in Rollins high tight flag in Rollins that appeared 1 year late y Mar 1964
o
t t r f r pp (see chart below) 3/1 Syntex increased 451% in 25 weeks.
Sell: climax top Sell: climax top m d d d 4 4 High tight High tight flag base B h t ( Huge earnings s i Dec 1963 Sep 1963




e e Syntex was on th s ed e s s s oc Market M M orrection orrection o ec o o co c c Syntex doubled on a when issued Syntex doubled on a when issue h e 3 for 1 new stock run-up from 44 u t to over 90 on this chart t n s Buy y y H growth growth go g g Jun 1963
New product “The Pill,” Syntex was on the S The Pill T New product p American Stock Exchange when they liste e k i a number of different growth stocks gow ee f d o be um n o o Stock prices adjusted for 3/1 Stock prices adjusted for 3/1 s t and 2/1 stock splits. Syntex was S c n ac












Syntex–1963 a Weekly Chart Jun 1962 Mar 1962 Dec 1961





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 0.20

America’s Greatest Stock-Picking Secrets 43
Volume
80,000
18,000
30,000
50,000
Price
2.6
3.4
3.0
4.0
16
19
10
12
14
22
34
30
40
60
50
26
70
6
5
8
7
ollins became a perfect precedent
for Simmonds Precision next year
nother 3 week high tight flag and
in Nov. 1965 when it broke out of
weeks. Of course you had to use
dvanced 5 times in the next 22
Of course you had to use
harts to see the comparisons
t
o
o
a
x
x
t
e
h
a
o
t
p
b
ii i
m
u
t
t
f
3/1
Dow Jones Ind.
y
g
n
c
i
p
P e
e
m
k
t flag base
d w
e
r
k high
high
5
a
n
w
e
g b
c
g
Buy
Buy
d
g
k h
m
3
o
O
B
B
1
b
3 week
3week
t t f
tight f
eeks
n
h
t
o
Si
e
k
S
a
g
Ro
o
we
we
ch
h
d
ad
an
n
fo
3
n
Buy
y
Buy
y
on prior uptrend
d
d
on prior uptrend
d
Huge volume
Huge volume
e
e
r
r
acceleration
t
o
u
u
u
u
v
o
o
r
v
i
c
u
u
Mar 1963 Jun 1965 Mar 1965 Dec 1964 Sep 1964 Jun 1964 Mar 1964 Dec 1963 Sep 1963 Jun 1963 © 2009 Investor’s Business Daily, Inc. Rollins increased 254% in 36 weeks.
Dec 1962
Sep 1962
Jun 1962
Huge acquisition of Huge acquisition of o e Orkin exterminator Orkin exterminator n n Mar 1962 Dec 1961
Sep 1961
Rollins–1964 Weekly Chart Jun 1961 Mar 1961
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 43





Price 70 60 50 40 34 30 26 22 19 16 14 12 10 8 7 e 6 t x x o 5 a t 4.0 o 3.4 3.0 2.6 Volume 80,000 50,000 30,000 18,000 Jun 1965 © 2009 Investor’s Business Daily, Inc.





Dow Jones Ind. Buy Buy k high high g e t flag base g b g ollins became a perfect precedent t f p e a for Simmonds Precision next year ii i P e d w n m in Nov. 1965 when it broke out of o b n 5 nother 3 week high tight flag and h t g k w 3 dvanced 5 times in the next 22


B
B
3 week k h 3week e t t f tight f g b n o Si S 1 o h a O eeks k o t
Sep 1964
we
Ro
we
an
n
h
d
ch
ad
3
fo
n
Buy Buy y y e e d d d r r Jun 1964
Huge volume Huge volume u u v v acceleration o r c on prior uptrend on prior uptrend t u u o o i Mar 1964
u
u
Dec 1963
Sep 1963
Jun 1963 Rollins increased 254% in 36 weeks.
Mar 1963
Dec 1962
Sep 1962
Jun 1962


Huge acquisition of Huge acquisition of o Orkin exterminator Orkin exterminator n Mar 1962 Dec 1961



n
e
Sep 1961
Rollins–1964 Weekly Chart Jun 1961 Mar 1961





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

44
A WINNING SYSTEM
Price
30
34
26
39
50
23
44
20
58
17
Sell: climax top
C
C
C
o
x
y
Buy
y
uy
lim
B
Sll
S
S
’
Key precedent for Simmonds
s
Key precedent for Simmonds
n
high tight flag was Rollins in
s
o
1964 and Syntex in 1963
9
l
m
Market corrects
Market corrects
S
n
t
s
g w
r
e
f
c
a
y
y
y
d
k
gh
c
S&P 500
M
t
p
g
g
9
e
With this chart, you’ve now seen 15 y Buy B B B B B Earnings g i n E E E A A A A With this chart, you ve now seen w y 13 accelerate accelerate a e a more than 30 cup-with-handle p u 12 ending base pulls s i Asce e e A A A chart bases. Are you now ab
New product computers New product computers used in space program e Dec 1963 Sep 1963
s s r m h t b recogni n i independent? e Mar 1964
w
e
Jun 1963 Mar 1963
Simmonds Precision–1965 Weekly Chart Dec 1962 Sep 1962 Jun 1962
Price = 20*eps 2.45 2.30 2.15 2.00 1.85 1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.93 0.85 0.80 0.75 0.70 0.65 0.61 0.57 0.50 0.47 0.41 0.35 0.31 0.25 0.24 0.22 0.20 0.19 0.17 0.16 0.16 0.15

44 A WINNING SYSTEM





Price 58 50 44 39 34 30 26 23 20 17 15 13 12 10 9 C 8 7 6 5 4 4.3 3.8 3.3 2.9 2.5 2.2 Volume 80,000 50,000 30,000 18,000 © 2009 Investor’s Business Daily, Inc.
ending base pulls s i e e k 3 times each k 3 times each e e t k h a higher low h a higher low h h nt from A to B to C t o All prices e p p A adjusted for r o d a 3/1 split 3/1 split p i s 3 3/1 Sep 1966 Jun 1966




Sell: climax top o x lim Buy uy y y B C C C B B A A A A Asce A A A back back b with with h h h w gh h n poin n p p p e p Volume up Volume up e u Mar 1966

Sll
S
S
’ s o m n s l 9 y Buy B B B y Buy Buy u High Hi Hi H H tight t tight i t t flag l k cup- p w handle ek c k e handle n k k e r ses in upper r p u n e me Volume up Volume up lu Volume e m o dryp y-up y y Dec 1965 Sep 1965
Market corrects Market corrects t r c k Key precedent for Simmonds Key precedent for Simmonds S f high tight flag was Rollins in s g w a 1964 and Syntex in 1963 n e y y y d g a 19-week c 9 9 19 with-ha -ha with-h - Bottom week m Btt ot t closes in upper s s clos


S&P 500 M c p e gh t g g 9 Earnings i n E E E accelerate accelerate e a p Volume up Volume up e l V V V Mar 1965

Dec 1964 Sep 1964
e
e
e
y
y
see it? Are
With this chart, you’ve now seen With this chart, you ve now seen w y more than 30 cup-with-handle p u chart bases. Are you now able to a recognize one when you see it? Are e o hen e one w you willing to study cup-with-handle you willing to study cup-with-handle w u bases i

New product computers New product computers used in space program e Sep 1963
s s r m h t b recogni n i independent? e Mar 1964 Dec 1963



w
e
Jun 1963 Mar 1963
Simmonds Precision–1965 Weekly Chart Dec 1962 Sep 1962 Jun 1962













Price = 20*eps 2.45 2.30 2.15 2.00 1.85 1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.93 0.85 0.80 0.75 0.70 0.65 0.61 0.57 0.50 0.47 0.41 0.35 0.31 0.25 0.24 0.22 0.20 0.19 0.17 0.16 0.16 0.15

America’s Greatest Stock-Picking Secrets 45
120,000
Volume
20,000
40,000
70,000
Price
4.0
3.4
2.6
3.0
26
22
30
40
34
12
10
14
19
16
70
50
60
6
7
8
5
Simmonds Precision
Ascending base like
Ascending base like
precedent in 1966
6
precedent in 1966
s
i
3/1
Sell: climax top
p
Sell: climax top
top
e
o
s
(see page 44)
l l: climax
max
l max
ax
ax
4
with-
-
cup-with
with
10-week
i i h
h
with
e
e
ndle
dle
e
e
a
e
handle
e
m
w
y
Buy
Buy
e
cup
c
p
S
1
h
c
s
S
A
Volume up
p
p
e
C
C
lu
B
B
Buy
Buy
y
u
V
V
A
A
A
Volume up
p
u
p
Volume up
p
Volume up
Add
17-week base
V
A
s
m
b
4 weeks tight
Buy
4 weeks tight
V
B
g
e
-
s
closes
e
s
1966 Bear market t
k
r
S&P 500
1966 B
1
Dec 1965 © 2009 Investor’s Business Daily, Inc. Mar 1968 Dec 1967 Sep 1967 Jun 1967 Mar 1967 Dec 1966 Sep 1966 Jun 1966 Mar 1966 Monogram Industries increased 891% in 57 weeks.
. . e y a
Supplier to Boeing jet airliners Supplier to Boeing jet airliners g r New management in company. t a 1/5 Sep 1965 Jun 1965
Dec 1964 Mar 1965 Sep 1964
Monogram Industries–1966 Weekly Chart Jun 1964 Mar 1964 Dec 1963
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 45





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 120,000 70,000 40,000 20,000 © 2009 Investor’s Business Daily, Inc.

Mar 1968

6
i
Sell: climax top Sell: climax top top p o l l: climax l max ax ax max Buy Buy y 10-week e w - with- with cup-with with h i i h p cup e dle e e handle ndle e Ascending base like Ascending base like s e Simmonds Precision s e m precedent in 1966 precedent in 1966 e c

1
S
c
C h C A S p s p Volume up e Jun 1967
Buy Buy y u B B lu V V
A A A Mar 1967
p
Add A s b Volume up u V p Volume up p Volume up m Dec 1966
4 weeks tight 4 weeks tight g s e closes s Buy B 17-week base e - V Sep 1966


1966 Bear market t k r Jun 1966

S&P 500 1966 B 1 Mar 1966

Dec 1965 Monogram Industries increased 891% in 57 weeks.
. . e y a
Supplier to Boeing jet airliners Supplier to Boeing jet airliners g r New management in company. t a 1/5 Sep 1965 Jun 1965








Dec 1964 Mar 1965 Sep 1964
Monogram Industries–1966 Weekly Chart Jun 1964 Mar 1964 Dec 1963













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

46
A WINNING SYSTEM
Manufacturer of high-speed digital mini-computer Price rs, t test equipment o s 190 computer accessory equipment, test equipment, p computer accessory equipment, q s 160 S&P 500 140 120 100 80 Do Not Buy! Do Not Buy! t Handle wedges s Handle wedges e 70 up along lows n 60 50 40 g





and modules.
e
c
m
d
a
y k 7-week e base base e bas b Mar 1967
Buy 7 Dec 1966
IPO O IPO O I * * p g volume up Big volume up Big B B B Sep 1966
Digital Equipment–1967 Weekly Chart Heavy volume without t t Heavy volume withou h l further price declines n r Jun 1966 Mar 1966 Dec 1965









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

46 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 140,000 80,000 40,000 © 2009 Investor’s Business Daily, Inc.


S&P 500 Mar 1970

Dec 1969
Sep 1969
g g n 3/1
day moving 200-day moving o y average line e e Jun 1969

200-
r
Mar 1969
av
2
Dec 1968
Sep 1968


Jun 1968
rs, t test equipment o p Do Not Buy! Do Not Buy! t Handle wedges s Handle wedges e up along lows n Mar 1968 Digital Equipment increased 743% in 156 weeks.
Manufacturer of high-speed digital mini-computer s computer accessory equipment, test equipment, computer accessory equipment, q s Dec 1967 Sep 1967 Jun 1967









and modules.
c
e
m
d
a
Buy 7 Dec 1966
y k 7-week e base base e bas b Mar 1967
IPO O IPO O I * * p g volume up Big volume up Big B B B Sep 1966
Digital Equipment–1967 Weekly Chart Heavy volume without t t Heavy volume withou h l further price declines n r Jun 1966 Mar 1966 Dec 1965









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