PRO )g asm
in the stock marketThis Book is a MUST for all
Serious Stock Investors and Traders
Originally written in 1935, “PROFITS IN THE STOCK MARKET” had become a
classic and a collector's item
H.M. GARTLEY was a renowned market technician. In 1980, he posthumously
received the MARKET TECHNICIANS ASSOCIATION ANNUAL AWARD for
his contribution to technical analysis.
In “PROFITS IN THE STOCK MARKET,” Gartley shares his knowledge of such
topics as—
Mayor, INTERMEDIATE, AND Minor TRENDS
Teners or THE Dow Tukony
TRIANGLES
Movinc AVERAGES
Gars
Vouume or TRapine
BREADTH-OF-THE-MARKET
Ficure Cuarrs
SeLEcTING THE RicHT Stocks
PLUS — Garey cIvEs peraiLep
INSTRUCTIONS ON TRADING WITH Pnuce
Oscu.raTors
Now for the first time, this valuable work is available in this hardbound edition
complete with all of the original charts.
LAMBERT-GANN PUBLISHING CO.
Box 0
Pomeroy, Washington 99347Other stock and commodity
market books available from
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45 Years in Wall Street
W.D. Gann
‘Truth of the Stock Tape—
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Hao M. Garey ng bn wl W.D. Gann Stock Market Course
Harold M. Gartley, 1899-1972
W.D. Gann Commodity Course
How to Make Profits in
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‘A Better Way to Make Money
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aid done mor ‘Traders Instruction Book —
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Born in 189, Garthey grew up Science and Secrets of Wheat
ark, New Jersey, He attended th ‘Trading — Burton Pugh
eratk ‘Teche! School and th
New York where he rected Mastering Cotton —Burton Pugh
Science and his Master's Degree Astro-Cycles and Speculative
Thstecs Admintation, He b Markets—L.J. Jensen
Wall Stet in 1912, Over the sem
broker,» secrly analyst and
by many ofthe prominent peop
Wall St
ember of the New Yor Socket
of Security Analysts. He also founde
the Wall
ints Plus others!
From Send for our FREE catalogue.
Lambert-Gann Publishing Co.
Box O
Pomeroy, Washington 99347PROFITS
in the stock market
by HM. GARTLEY DYCopyright 1935, 1963
by HM. Gartley
Copyright 1981 by Billy Jones
All Rights Reserved
including that of translation
into foreign languages
PRINTED IN U.S.A.
Published by Lambert-Gann Publishing Co.
Bos 0, Pomeroy, Washington 99347INTRODUCTION
ofits in the Stock Market” by H.M. Gartley was originally published in
1035. At this time the book was contained in a three-ring binder. Less than 1000
copies were originally sold.
I purchased the copyrights from Mrs. Gartley in 1979. After a long, tedious job
reprinted, “Profits in the Stock Market” is finally complete in
‘accompanies the book. In order to retain authenticity, we have not redrawn any
of the charts but have made reproductions from the originals.
Tt may interest you to know that the Market Technicians Association, at its
Florida meeting recently, gave its annual award to HM. Gartley for his
contributions to the field of technical analysis,
believe you will find this book was worth waiting for.
Billy Jones, Publisher
Lambert-Gann Publishing Co.
Pomeroy, Washington, 1981TABLE OF CONTENTS
I The Technical Approach to the Problem
of Stock Trading
Il Charts—The Averages
Il A Chart Portfolio
IV_ The Long Term and Major Trends
V_ The Intermediate Trend
VI The Minor Trend
VIL_ The Tenets of the Dow Theory
VIII Tops and Bottoms, Supply and Demand
Areas, Reversals
IX Triangles
X Trend Lines
XI Moving Averages
XII Gaps
XIII Net Change Oscillators
XIV Volume of Trading
XV _Breadth-of-the-Market
XVI Figure Charts
XVII_ Comparative Group and Stock Studies
(Selecting the Right Stocks)
XVIII Profits in the Stock Market
(Summary)
Index
81
91
uw
155
173
237
251
281
291
319
327
389
425CHAPTER I
THE TECHNICAL APPROACH To THE
ProBLEM oF STock TRADING
REFERENCES
“Business and Investment Forecasting”
“Business of Trading in Stocks, The”
“Business Cycles: The Problem and
Its Setting”
“Business Forecasting”
‘Business Statistics”
“Economic Cycle, The”
“Financial and Business Forecasting”
“Forecasting Business Conditions”
“Forecasting Stock Market Trends”
“Interest Rates and Stock Speculation”
“Investment For Appreciation” (1936)
“Practical Application of
Investment Management, The”
“Practical Business Forecasting”
Principles of Investment”
“Scientific Approach to Investment
Management, A’
“Security Analysis’
“Security Price Movements”
“Statistical Methods”
“Stock Market, The”
Stock Market, The”
Stock Market Profits”
fock Market Tactics”
“Stock Market Theory and Practice”
“Tape Reading and Market Tactics
“Truth of the Stock Tape, and the
Wall Street Selector”
This Course, concerning the technical approach to
the business of trading in stocks, isnot to be considered
as the philosophers’ stone of the stock market." It does
not, by any means suggest a perfect solution to the
problem of stock trading which will enable every
reader to begin making handsome stock market profits
1s soon as he has read the last word.
‘The average reader should leave the stock market
alone, or learn enough about its intricacies so that in-
telligent action can be taken in trading stocks. Itis the
purpose of this Course to provide a means of learning
some of the important essentials in a study of the
market
The Primary Objective
It is assumed that the reader takes up this work
"Pmnvosoriuas’ stONE: AN IMAGINARY STONE, OR SOLID SUB.
FASMUTING THE BAS =
R, Vance
J. Durand
W.C. Mitchell
L.H. Haney
J-L. Snider
FY. Presley
W.F. Hickernell
R.N. Owens & C.O. Hardy
KS. Van Strum
R.N. Owens & C.0. Hardy
L.L-B. Angas
D.C. Rose
D-F, Jordan
J.E. Kirschman
D.C. Rose
Graham & Dodd
S.S. Huebner
R.W. Schabacker
L.L.B. Angas
R.W. Schabacker
HB. Neill
W.D. Gann
with one primary objective, namely fo make money by
using intelligent understanding instead of ignorant
gambling. The objective is easy to define. However,
the procedure of accomplishing itis far from simple, in
that it requires a detailed presentation of the factors
which appear to make, as well as the manner in
which, stock prices advance and decline.
Gambling or Speculation
‘There are two channels of approach which may be
taken in attempting to make stock market profits. We
‘may approach the problem as a gambling proposition,
as unfortunately (for them) all too many persons at-
tempt to do. Or we may approach the problem as a
business proposition, involving greater than usual risk,
but paying greater than usual profits to intelligent and
patient participants
In suggesting the second and more logical of these
{ovo approaches, it might be wel to point out the dif-
ference. In a gambling operation, the participant
depends almost wholly upon chance (assuming that itis honestly run), as one of two or more unpredictable
developments governs the determination of profits or
losses. In many gambling operations, the risk is reduc
ced to one of two chances, as both the maker and the
acceptor of a given wager assume exactly the same
risk. For the most part, intelligence is not the gov-
cerning factor. Every time a roulette wheel turns, there
is an equal chance that red or black will turn up.
Quite different from gambling is speculation,
wherein the participant depends (if he is to profit)
upon a reasonably precise knowledge of the condi-
tions which govern price trends. In speculation, the
participant relies upon changes in the price level
(stocks, commodities, services, et cetera), and not the
‘mere operations of chance. These changes have their
root in some specific cause. Many such causes may be
studied and understood, and thus reasonable judg-
ment may be applied.
Unfortunately for most dabblers in Wall Street, the
gambling approach is most often used. The reason is
simple, The average person is too often governed first
by downright laziness, and secondly by the silly desire
to gain something for nothing. The intelligent ap-
proach, wherein stock trading is counted to be a
business, requiring careful attention, robs the stock
market of its romantic appeal to many people. It takes
‘most of the fun out of it, if it becomes a job requiring
patience and application.
How futile it isto enter the stock market without
fully recognizing that profits can be only a matter of
chance, unless the market is patiently and carefully
studied. The market is a complicated mechanism.
Although man-made, and thus logically subject to in-
terpretation by other men, its complex workings re-
quire a systematic study, if losses are to be prevented,
and profits made.
Haphazard or Systematic?
‘The difference between losses and profits frequent-
ly hinges upon trading in a hit-or-miss fashion, or
systematizing one's speculation by studying the prob-
lem, estimating the risks, selecting what appears to
be the mast profitable opportunities, and adhering toa
pre-conceived policy
The difference between the average investment
counsellor and the average customers’ man in a
broker's office, is the fact that the former conceives a
plan of operation, based upon a systematic approach
to all the various angles of the problem including the
requirements of the customer, and consistently pursues
this policy; while the latter vaguely attempts “to make
money.”
Our Purpose
It is the purpose of this course to encourage the
reader to study the market and train himself to arrive
at his own decisions as to the probable future course of
stock prices, by using certain systematic methods
which have proved profitable to successful traders,
Matter has been collected from many sources. The
phenomena explained and illustrated represent many
‘years’ work on the part of many market students. They
Should be the means of saving the reader many hours
‘of personal research.
However, thumbing through the pages which
follow will not make a successful trader of any reader.
‘To take some single idea which is presented, because it
seems to have special appeal, and expect to make con-
sistent profits by using it alone, is a dangerous pro-
cedure. Throughout the chapters which follow, it will,
be noted that there are constant warnings that the
various technical phenomena suggested must be used,
not singly, but as part of a program involving many
different angles.
Two Primary Problems
Reduced to its final analysis, successful. stock
trading boils down to the matter of answering two
questions, namely:
1, WHEN to buy or sells and
2. WHAT to buy ot sell,
At first thought, and to hear some of the hangers-
‘on in the brokerage offices tell the story, making
‘money in Wall Street is all very simple, if you know
“when to get in and when to get out”, Although, as we
shall learn, the solution to the “When” question is ex-
tremely important, itis also a fact that a trader can be
fairly right in judging the reversals in the trends of
stock prices, and yet make only a fraction of the poten-
tial profits available, because he is ignorant of
systematic methods to assist him in the selection of the
right stocks
‘The “When” question may be classified as a study
of trends. Except for short periods of time, usually
ranging for less than two weeks, stock prices have a
habit of going somewhere, During the vast majority of
the time, they are either advancing or declining. The
successful trader must be conscious of a change in
trend. Thus a continual knowledge of stock price
trends is essential to the successful timing of com-
mitments.
‘The “What” question, on the other hand, depends
chiefly on observation of the specific characteristics of
individual stock price movements, and may be
classified as a study of comparisons.
The solution of each of these two problems, which
are about of equal importance, requires equal atten-
tion. However, as the “What” to buy or sell problem
usually covers a much broader scope, it requires a
‘seater amount of time,
Usually, the “When” question, that is the timing of
commitments, is studied by observing the trends in the
market as a whole, or at least its major parts. The
“What” question, which is the selection of stocks, is
observed by studying small groups and individual
issues.
‘Two Approaches
It fs the custom of those interested in stock prices
trends to approach the solutions of these two primaryproblems from two totally different angles, each of
which may be logically subdivided into the same two
categories, namely, “When” and “What”. These two
approaches are:
1, The FUNDAMENTAL approach; and
2. The TECHNICAL approach.
Fundamental Approach
The fundamental approach, which will be re-
viewed only briefly, because this course concerns the
technical approach, may be classified in two general
categories, namely:
1. The ECONOMIC; and
2. The STATISTICAL.
The economic factors may be designated as those
which deal with the “When” to buy oF sell question,
while the statistical factors are those which concern
the “What” to buy or sell question. The broad
economic trends are studied to learn the causes, and
anticipate the reversals instock price cycles, while the
statistical factors are studied to determine the in-
dustries and particular companies which appear more
or less attractive at successive intervals.
Economie Factors
Stock prices are the means by which investors and
traders appraise the effects of prosperity and depres-
sion. During periods of prosperity, when the general
level of trade and industry is high, the prices of shares
rise to reflect that condition. Conversely in periods of
depression, the price level of shares falls to reflect the
converse condition. As the economic cycle goes, so
oes the trend of stock prices,
Primarily, the changes in the economic cycle are
caused by the relation of supply and demand for goods
and services. When these factors are more or less in
balance, the state of trade and industry carries on at a
level often vaguely termed normal.
The factors which make up the economic picture
are both foreign and domestic, and cover a wide range.
‘The average stock trader who has not had the special
training of an economic background, is naturally great-
ly handicapped in being able to reduce the effects of
numerous enonomic changes to a practical working
basis for trading stocks. The economic facts which ap-
pear on the financial pages of the metropolitan
newspapers are hardly sufficient for the purpose,
because they are not sufficiently comprehensive or
related according to their importance.
In combing the field of information available, the
author has found that the most complete presentation
of organized economic facts, in convenient graphic
form, appears in the publications of Economics
Statistics, Inc.?_ Because this service appears to merit
the attention of those stock traders who feel the need
of concisely summarized, but comprehensive
economic data, which have a bearing upon stock
prices, the author presents, in Appendix I of this
#70 Pie Srmezr, New Youx Cr,
ter, a brief discussion of this service, which is
believed to be worthy of the attention of the reader.
Unless some such source of organized information is
employed, the average stock market trader is probably
better off to leave the economic side of the fundamen-
tal approach out of his calculations except in a very
general way.
Statistical Factors
‘The investigation ot che conditions of particular in-
dustries, and companies in such industries, is the
method which the fundamental student employs in
selecting the best mediums for investment or specula-
tion, This study requires trained consideration, a
multitude of facts concerning the management and
‘operation of many large and complex corporations.
To reduce the information to a concrete basis, from
which to make commitments, it is necessary that the
financial history of the various corporations be studied.
In addition, current changes must be constantly
scrutinized, and recognized relations between gross
and net earnings, profits and losses, assets and
liabilities, as compared with stock price trends, must al
bbe carefully considered.
‘A substantial part of this information can be conve-
niently charted. When the average trader starts out to
master this large volume of information, he soon finds
that an intelligent study of itis beyond his ability, unless
the pertinent information is very briefly summarized,
and the refined figures are constantly available.
‘The outstanding service which presents the majori-
ty ofthe statistical factors, customarily used in connec-
tion with judging the advisability of buying or selling
icular issues, is published by Investographs, Inc.
lea of guiding the reader who is interested in
thisbranch of the fundamental approach, a description
of this service, with illustrative charts, appears as Ap-
pendix Il of this Chapter.
Fundamental Approach
A Study of Causes
The fundamental approach receives its name by vir-
tue of the fact that it is a study of the economic and
statistical factors, which are conceded to be the causes
which influence the rise and fall of prices of shares. In-
vestment trust managers and investment counsellors
are constantly pointing out to their shareholders and
clients that the only logical approach to the problem of
successful investment is naturally the study of the
causes which underlie the price changes of investment.
In recent years, particularly since 1927, it has been
found that time and again the fundamental approach
has fallen short of expectations, apparently because of
‘what might be called "poor timing” of buying and sell-
ing, Frequently it has been found that a particular stock
or group of stocks, which from the fundamental facts
appears to be relatively over-priced, continues to rise;
91 Gunns Serexr, Rocursren, New Yor.or conversely, a group or individual stock which seems
to be substantially under-priced refuses to rise for a
long period.
Investigation of numerous. cases, wherein fun-
damental causes which were known required @ con-
siderable time to show before they appeared in a
substantial change in the price of shares, has rather
clearly indicated that, in addition to the fundamental
factors, there are apparently indirect psychological fac-
tors which develop in the marketplace, to delay the im-
mediate effects of fundamental changes. Sometimes
there is a lag, and at other times there is alead — that
{s, on some occasions price trend of shares will con-
tinue on when fundamental factors obviously show
that a change has occurred, while at other times, the
development and knowledge of fundamental changes
appears to have no effect upon the price trend because
such changes have already been registered.
Examination of these variations shows that the
“willingness” to buy or sell, on the part ofthe majority
of persons interested in stock price trends, is not by any
‘means exactly timed to fundamental changes. In some
cases, stock price trends will anticipate or discount a
fundamental change. Thus, when the figures or facts of
the fundamental picture indicate that » change has
cceurred, the stock price trend has already discounted
that change.
In other cases, when a fundamental change has not
been discounted, the price trend accelerates or reverses
to take such changes into consideration.
‘As fundamental factors which affect stock prices
have been more intensely studied by investment trust
managers and investment counsellors during the past
few years, many occasions have developed wherein,
although Fundamental studies in the end prove to antic-
{pate stock price changes correctly, many purchases and
sales based upon fundamental studies have been early,
‘with the result thatthe most has not been made from the
‘opportunities which fundamental studies suggested.
In an effort to meet this problem, increasingly
seater attention has been given to the developments in
the marketplace, on the theory that the supply of and
demand for shares is @ factor which the fundamental
student must take into consideration to improve the
timing of buying and selling based upon the
fundamental approach. The result has been that in the
past few years, a study of stock price trends themselves
hhas received greater attention. This branch of study has
been termed the technical approach.
‘Technical Approach
‘Thus, technical studies are beginning to receive @
place in the consideration of outstanding organizations
which make a business of studying investment
securities, particularly in connection with stocks.
BRIEFLY DEFINED, THE TECHNICAL APPROACH 18. A
STUDY OF RECURRING PHENOMENA WHICH APPEAR IN THE
RELATION OF THE SHARES TRADED ON THE Stock
EXcHANGes. ESSENTIALLY, IT 15 A STUDY OF THE EFFECTS
WHICH FUNDAMENTAL CHANGES CAUSE IN THE PRICE:
“TRENDS OF SHARES.
Just as the supply and demand factors in Industry,
‘Trade and Commodity prices are studied with the objec-
tive of determining the probable future course of
business activity and commodity prices, so the supply
and demand for shares are studied with the objective of
anticipating the price trends of stocks.
Comparatively, because there are so many more
stocks or individual units traded, the problem of study-
ing supply and demand for shares is far more complex
than the study of the supply and demand for agri-
cultural or industrial commodities.
As in the case of the fundamental approach, the
technical approach is divided into two general cate-
‘gories, because the same two primary problems must be
met namely;
1. When to buy or sell; and
2. What to buy or sell.
‘The “When” Question
In the last analysis, the “
problem reduces itself to a matter of studying trends of
stock prices. The successful stock trader ‘must be
conscious of whether an up or a down trend is
progress, in order that the majority of his operations are
n line with the primary movement under way. Equally
important is a consciousness of the development of
reversals in trend. A study of price trends may be
designated as the abstract side of the problem.
Castomarily, technical students study stock price
trends by means of observing comprehensive samples of
the market, which are considered to reflect the main
trends in progress. For this purpose “The Averages” are
studied (see Chapter II).
‘The determination of the direction and reversals of
trends, however, is only haf ofthe problem. Its specific
side is also very essential.
‘The “What” Question
Although the technical student can arrive at useful
conclusions as to the trend by studying the averages,
practical trading in the end requires the purchase and
sale of specific shares. Thus, it becomes necessary to
determine which particular issues are more or less
attractive from time to time, in order to take the greatest
advantage of the timing of buying and selling, which
‘may be suggested by a study of the “When” question,
Essentially, the “What” question is a study of the
relative supply of and demand for shares of specific
companies. If the prices of all shares moved closely to-
gether (percentagewise) in any advance or decline, there
‘would be little need for this department ofthe technical
approach
The wide variations in the fundamental factors
which have a bearing on each individual corporation,
naturally are the primary cause which requires constant.
selection of issues, if the stock trader is to obtain the
‘greatest benefits from the risks he takes when he buys
and sells shares,Fundamental and Technical Approaches Combined
Although some writers concerning technical
studies have chosen to take the attitude that the
technical approach is more direct than the fun-
damental approach, and thus for the average
trader represents the Best means of making
greater profits, the author chooses to take the
stand that a neat combination of the fundamental
and technical approaches forms not only the best
plan of operation for the large investor, but is also
the logical method for the trader of moderate
means.
Although it is true that a study of stock price
trends includes a reflection of all the fundamental
forces, and in addition, the psychological factors
which, it has been argued, can substantially af-
fect the correct timing of commitments, never-
theless there seems to be no justification for
assuming the attitude of an ostrich, and blindly
disregarding entirely the study of causes in favor
of a study of effects.
Practically all of the outstanding technical
students make a careful study, or at least are
broadly conscious, of the fundamental situation.
Take, for example, the typical statement which is
noted below, from the writings of C.J. Collins,
dated September 28, 1935. Collins is noted for the
interpretation of stock price trends in terms of the
well-known Dow Theory.
‘Among those posible near-term developments
‘which would encourage optimism as to the
broader outlook for busines would be strength in
railroad stocks, The rail lit has boen slugtsh
since July 1639 because there has ‘been no
material expansion in the demand for and the
Drodction of hoary or durable goods When this
Somand, 30 necesary to base or sustained
revival inthis country, aserts isl hoavy p>
ttn in carlondings will eventually fallow. Wall
ahead ofthe heavier traf and larger rail eam.
ings, however, would be a vigorous ise In prices
tf vuload shares in andtpation of what i to
tome, ‘The market, it-mist be remembered,
lays loks ahead, Its beease ofthis relation:
Ship between the ralls and the @urable goods
Industri, and the market's habtt of discounting,
that the ral average now takes on an added
tguicenen
‘Technical Studies
‘The Direct Approach
Pethaps the chief reason why the technical ap-
proach has been so much more widely used in recent
years is explained by the fact that the average trader
finds it more direct. Without the necessity of a broad
economic training, or the constant study ofthe fi
cial position of numerous companies, the technical ap
proach, with a few relatively simple studies, enables
the average trader of moderate or small means to be
conscious of the important changes in price trends,
with only a fraction of the effort and knowledge
necessary in the case of the fundamental approach,
Naturally, the technical approach also appeals to
many persons because the vast majority are inherently
lazy. Its relative simplicity, however, is perhaps its
greatest danger. When the average trader gets the idea
that a few technical studies, casually observed, are all
that he needs, he is usually well on the road to ruin, or
at least his capital account is on its way to substantial
depreciation. The trouble in most such cases is that the
trader fails to realize soon enough that, although the
technical approach is direct, and far more simple than
the fundamental, nevertheless, it has its complica-
tions, demands constant study, and the application of
reasonable judgment.
However, the technical approach is ideally suited
for the trader of moderate means as the average man,
engaged in other business, cannot hope to make a com:
prehensive study of fundamentals on which to base the
buying and selling of shares.
Many persons who realize this, assume that the
logical procedure, then, is not to do any of one’s own
thinking, but instead to purchase one of the many in-
vestment bulletins issued by various organizations
which cater to the demand for skilled opinion.
Although such bulletins, particularly those issued by
the more reputable services, can be mighty helpful in
bringing to the attention of the average person both
the fundamental and technical factors which appear
to be influencing stock price trends, such bulletins
‘often fall down because the subscriber is either unable
to interpret them, or cannot fit the suggestions made
therein into his own speculative problem, with any
‘consistent success.
‘Thus, technical studies unquestionably can be of
great value in two ways: first, for that small group of
persons who like to do their own thinking, and second-
ly for the vast group of lazy individuals who choose to
buy their judgment “ready-made”. The latter group
can employ technical studies as a means of making
advisory bulletins more practically useful to them.
‘An examination of methods employed by successful
stock market traders, shows first that they are persons
who do their own thinking, and secondly, that their
success is not mere chance but instead is the result of
arduous and careful study of market conditions. Itis a
sad commentary upon human nature that so many in-
dividuals go into the stock market with surplus funds
which have required considerable effort to amass, and
assume the risk of stock trading, which is far greater
than that in ordinary business, with only a fraction of
the knowledge which they would expect to employ on
the business or profession in which they make their liv-
ing. This is why stock trading, for most people, is
gambling, rather than speculating.
But to return to technical studies — let us proceed
by looking into the materials used by the technical stu-
dent.‘The Elements of Technical Study
The greater simplicity of technical, as compared
with fundamental studies, is emphasized by the fact
that the materials of technical study primarily are only
three in number, as follows:
1, Price
2. Volume, and
3. Time
‘As in other economic relations, the interplay of
supply and demand for shares creates the price level. A
preponderance of demand forces prices upward, while
preponderance of supply depresses them downward.
The change in price levels is a more important factor
than the levels themselves.
Every change of price results from a meeting of
current supply and demand, wherein a transaction
consisting of a purchase and sale is consummated. The
aggregation of such transactions represents the volume
of trading, Such activity is the second factor used by
the technical student.
‘Time or duration of price movements is the third,
‘and least important factor. Its value in technical
analysis arises from the fact that a study of price trends
cover a long period of time clearly indicates that
‘economic cycles, which are the foundation of stock
price cycles, seem to recur within very general time
limits.
‘Of the three primary factors, price is by far the one
given most consideration, Gradually in recent years,
the more profound technical students have been ex-
mining the relation of price and volume, in the hope
of finding some concrete laws which appear to govern
price trends, Although this branch of investigation has
yielded some useful results, itis far to say that it is still
in the development stage, as is the whole art of
technical studies. Nothing which has been presented
thus far, appears to justify the conclusion that the
study of duration has suggested reliable laws
Sources of Information
The information concerning these three primary
elements of technical study naturally arises on the
floor of the Stock Exchange, in the form of transac-
tions which are consummated each moment and is
almost instantly available to all interested persons at
the same time. There is no lag (except when the ticker
isa few minutes late) and there are no “insiders” able
to have “advance information”. The usual sources of
such data might be listed as:
1. The stock ticker tape, which announces each
successive sale;
2. The official sheet, which lists the transactions
that appear on the tape. This is published at the end of
each day;
3. The newspaper tabulations which are sum-
aries also taken from the stock ticker tape; and final-
y
4. Special data services, which cull out the essential
technical information, and arrange it in useful form.
Graphic Presentation of the Facts
‘As a means of facilitating the mental effort
necessary in studying the numerous data which the
technical student employs, charts have been concei
‘ed. As conclusions concerning future price trends are
so dependent upon the previous course of prices, the
technical student, like the fundamental student except
in a different way, finds it essential to have before him
fan accurate, up-to-date, historical picture of the
course of stock prices. As in any other human
endeavor, pictures more strikingly emphasize cold
tabulations of facts or figures.
Thus, charts relieve the memory of arduous work,
and leave the mind free to comtemplate the future.
The mention of charts makes it necessary to
distinguish between the familiarly known Wall Street
character, called the “chartist” and the genuine
technical student. Briefly, we may define the logically
berated chartist as a person who tries to guess the
future trend by insisting upon the fact that some cur-
rent picture in the price trend resembles the past, and
will consequently result in the development of a par-
ticular and specific pattern which followed upon a
previous oceasion. His approach is mechanical. To his,
way of thinking, the market must conform to a
preconceived imaginary pattern, which he arbitrarily,
sets for it.
‘As yet, the “mechanical age” in the stock market
hhas not arrived. Thus, we see many lamentable
characters trudging from one broker's office to the
next, with a few much besmudged charts under their
‘arms, suggesting to any listener they can find, just ex-
actly what the market is about to do. When question-
ed, they have many explanations as to why their
previous judgments were in error. Always it was some
unforeseen event which “changed the market”
The enlightened technical student, on the other
hand, attempts to use chart pictures which portray
trends as instruments which show him either that «
current trend is continuing, or that a reversal is
developing. Unlike the chartist, who attempts to
forecast the extent of a movement, and foretell the
point of reversal, the technical student realizes that the
sequences of events, which cause price changes, con-
stantly vary. As these sequences result in trends of
varying lengths and amplitude, the technieal student
is always alert to the fact that it is only coincidence if
one trend closely resembles a previous trend.
The trained technical student operates on the
premise that his charts are a means of knowing where
the market is, as related to where it has been. On this
foundation, he builds, by various processes of dedue-
tion, a market opinion which he is ready to alter
whenever, and just as soon as, the evidence of the cur-
“Tie Most coMMIENSIVE OF THISE NOW BEING PUBLISHED 15
‘Tue Garttiy Dara Sanvice (see Armexons I, Ciarran I)