A Rising Market Next, we take up the action of an industrial index as it rises out of a period of reaccumulation. Prior to the action shown on the chart, the index rose within a well-established uptrend. The index has shown evidence of accumulation since April. At A the price shakes out below minor support. […]

Mark Up We established our long position by increments at I, J and M. Now GE rallies into a range of supply which extends from about 11 to just over 12 before settling into narrow trading just above 11. The stock is now in strong hands, and residual supply at 11 is easily absorbed. We […]

Module 3 – Distribution The Art of Selling Trading is a business of merchandising. As in any such business, the objective is to merchandise inventory at a price above cost. Successful traders accumulate positions at wholesale, when public interest is low. Once prices have been marked up, positions are distributed at retail to a public […]

Point & Figure Targets 2 Additional accumulation on the retest of support at 10 has broadened the row of x’s at the 10 1/2 level, requiring us to adjust our point & figure counts. The point & figure chart below now indicates 13 as our first objective. Again, we have used one-half point reversals to […]

Testing Support 2 Our initial position in GE was taken in two parts, the first just after the evidence of a shakeout at I and the second at J. Our approach to accumulating a position is to make adjustments based on the evidence of the tape. Shares are added only when evidence builds that strong-handed […]

Point & Figure Targets The point & figure chart below gives us some sense of the near-term rally objective we may expect for GE. Because of the low price of GE, a one-half point chart is used. The vertical drop from 15 1/2 to 10 (A) frames the horizontal trading range on the left. The […]

Testing Support Volume on the decline to F is light, a good sign. Sellers are not aggressively pursuing the price down. After the test at F, the stock rallies on moderate volume and widening spread. We are encouraged by this action, and now expect bidding to breach supply at 12. However, the decline at G […]

Shakeout The shakeout was a tactic often employed by trading pools. Harriman, in particular, favored the shakeout as a device for forcing traders to part with shares cheaply. His method was to first gather in all the ready supply within a trading range. The stock was held to a narrow range for weeks at a […]

Selling Climax The selling climax at point A in the chart below is typical; volume increases dramatically as the spread from high to low widens. Such action indicates that panicky sellers are getting out at any price. With prices at immediate and substantial discounts, strong hands now hold the bag for cheap stock. Experienced traders […]

Module 2 – Accumulation The Art of Buying These days, investors rarely form together into groups for the purpose of manipulating stock prices. Nevertheless, the aggregate operations of independent buyers and sellers are in many ways indistinguishable from the outright manipulations so common in the past. Suppose the stock of XYZ has fallen to a […]