A man has to buy and sell to make a profit, that is, he has to get in right and get out right. Then he must watch for the proper time to start his trade and the proper time to close it. Getting in right does not help if you fail to get out right. The time to act either when buying or selling must be determined by the condition of the market at the time and by the position of the individual stocks that you intend to trade in. You might be able to buy and make profits in some stocks after a bull campaign has about finished, while others you might be able to sell short and make profits after the major swing of a bear market has finished.
Do not buy a stock of one group just because some stock in another group goes up. Neither sell a stock of the same group because some one of that group has already started down. Analyze the position of the stock you intend to trade in. Find out if it has passed out of the accumulation or
distribution zone. Stop to think before you act; look before you leap; examine before you buy and remember that it is always better to be safe than sorry. It is much better to take a small loss quickly than to hold on and hope and take a big one later.
POSITION OF GROUPS OF STOCKS
It is very important to watch the position of the different groups of stocks. To be a success you must keep up with the times and follow the leaders.
GENERAL TREND OF THE MARKET
There is always a certain group of stocks, which will follow the general trend up or down, while others for a long time will work opposite to the general trend. Therefore, it is necessary to make a close study of the individual stocks and determine their trend regardless of the trend of the general market. Always sell the weak stocks and buy the strong ones, which is really following the trend of each individual stock. By watching closely the daily high and low, weekly and monthly charts, you will be able to determine when each individual stock has changed its position from strong to weak.
HOW TO TELL THE STOCKS IN STRONGEST POSITION
If you are waiting for an indication to buy stocks, you want to select the strongest stock in a certain group, as the stock which is in the strongest position is naturally the one that will lead in a Bull market and the one in weakest position will lead in a Bear market.
BUYING AND SELLING POINTS
You follow this same rule in any group of stocks in order to locate the strongest or weakest individual stock of the group. When you have the record of a stock for a long number of years back and see where it gets its support in extreme panic years and where it meets with resistance in boom years, you can easily tell the levels where it is safe to buy or sell with a risk limited to two or three points.
HOW TO TELL WHEN STOCKS ARE IN WEAK POSITION
You always want to know the stocks that are in the weakest position, because they are the safest to sell short in a Bear market. The ones that show weakness first naturally will be leaders in a Bear market. After the trend turns down from the top and stocks have declined for quite awhile, the next thing which will show that a bigger decline will take place is the breaking of important support points.
JUDGING FINAL TOPS AND BOTTOMS
Before any stock, or group of stocks, starts on a big advance or decline, a long period of time is required for preparation, or accumulation or distribution. It requires time to prepare and lay the foundation for a building. The larger the building, the more time required to construct the foundation. It is the same with stocks. The greater the advance or the decline, the more time required in preparing for it.
PROGRESSIVE TOPS AND BOTTOMS
It always pays to keep a chart of Averages of any group of stocks, as you can then judge when they have reached a level where they are receiving support or being distributed. But, of course, you cannot trade in Averages; therefore, must keep a chart of some of the individual issues of each group in order to determine the best ones to trade in and the right time to buy or sell. On active stocks 5 to 10-point moves will help to show when tops or bottoms are being made. On stocks selling 25 to 6o per share 3-point charts will show best, but on stocks selling 100 to 300 per share 5 and 10-point moves are much better because it requires a wider range in which to buy or sell a large amount of stock. Sometimes stocks require several years to lay a foundation for a big Bull or Bear campaign.
Do not buy a stock of one group just because some stock in another group goes up. Neither sell a stock of the same group because some one of that group has already started down. Analyze the position of the stock you intend to trade in. Find out if it has passed out of the accumulation or
distribution zone. Stop to think before you act; look before you leap; examine before you buy and remember that it is always better to be safe than sorry. It is much better to take a small loss quickly than to hold on and hope and take a big one later.
POSITION OF GROUPS OF STOCKS
It is very important to watch the position of the different groups of stocks. To be a success you must keep up with the times and follow the leaders.
GENERAL TREND OF THE MARKET
There is always a certain group of stocks, which will follow the general trend up or down, while others for a long time will work opposite to the general trend. Therefore, it is necessary to make a close study of the individual stocks and determine their trend regardless of the trend of the general market. Always sell the weak stocks and buy the strong ones, which is really following the trend of each individual stock. By watching closely the daily high and low, weekly and monthly charts, you will be able to determine when each individual stock has changed its position from strong to weak.
HOW TO TELL THE STOCKS IN STRONGEST POSITION
If you are waiting for an indication to buy stocks, you want to select the strongest stock in a certain group, as the stock which is in the strongest position is naturally the one that will lead in a Bull market and the one in weakest position will lead in a Bear market.
BUYING AND SELLING POINTS
You follow this same rule in any group of stocks in order to locate the strongest or weakest individual stock of the group. When you have the record of a stock for a long number of years back and see where it gets its support in extreme panic years and where it meets with resistance in boom years, you can easily tell the levels where it is safe to buy or sell with a risk limited to two or three points.
HOW TO TELL WHEN STOCKS ARE IN WEAK POSITION
You always want to know the stocks that are in the weakest position, because they are the safest to sell short in a Bear market. The ones that show weakness first naturally will be leaders in a Bear market. After the trend turns down from the top and stocks have declined for quite awhile, the next thing which will show that a bigger decline will take place is the breaking of important support points.
JUDGING FINAL TOPS AND BOTTOMS
Before any stock, or group of stocks, starts on a big advance or decline, a long period of time is required for preparation, or accumulation or distribution. It requires time to prepare and lay the foundation for a building. The larger the building, the more time required to construct the foundation. It is the same with stocks. The greater the advance or the decline, the more time required in preparing for it.
PROGRESSIVE TOPS AND BOTTOMS
It always pays to keep a chart of Averages of any group of stocks, as you can then judge when they have reached a level where they are receiving support or being distributed. But, of course, you cannot trade in Averages; therefore, must keep a chart of some of the individual issues of each group in order to determine the best ones to trade in and the right time to buy or sell. On active stocks 5 to 10-point moves will help to show when tops or bottoms are being made. On stocks selling 25 to 6o per share 3-point charts will show best, but on stocks selling 100 to 300 per share 5 and 10-point moves are much better because it requires a wider range in which to buy or sell a large amount of stock. Sometimes stocks require several years to lay a foundation for a big Bull or Bear campaign.
