THE

POINT &
FIGURE
METHOD
OF
ANTICIPATING
STOCK PRICE
MOVEMENTS

BY VICTOR DE VILLIERS
AND OWEN TAYLOR
 The Point and Figure Method
of Anticipating Stock Price
Movements

Complete Theory and Practice

by

VICTOR DE VILLIERS

and
OWEN TAYLOR

Title and Contents

Copyrighted 1934

Printed in U.S.A.

First Edition July 1933. Second Edition January 1934.

ONLY METHOD IIAJEt O~
LoqlcClI and JCI~t1tllic
MECHANICAL PRINCIPLE!
JI.I c ~ (J'"
THE LEVE~ •••
THE fULCRUM••
THE CATAPULl: •
ThtJ' ~ECHA~ICALJP.I~CIPLEJ' art Gill
Involv~d 111 Jtock I>rlc(, ~ov~tn(,tlt"
PROfiT' ARE AVAILABLE FOil
THOlf WHO WILL AP'LY THE~
 JCIENTIFIC MECHANIC" .P
POINT FIGURE ~ETHOD (HARTl
AND

~ FORCE ~
I FLjVER ~
V
~

LEVERAGE

•
CATAPULT ACTION ·:••
•
••
!:::.
•. JC..
)(; ...•
Q Q

••
•••UI
CATAPULT

•
•••
~:::=
•
:a;••••
..
JIll_

~1Il;·I= ••••
.....--FULCRU.. ---..

LEVERAGE

LEVERAGEANDCATAI>ULT ACTION
CREATE·fROFITt FOR YOU
Copyright © 1934 by Victor De Villiers and Owen Taylor.
Trading Resource Guide and cover Copyright © 2000 by Marketplace Books

Published by Marketplace Books

This publication is designed to provide accurate and authoritative information in regard

to the subject matter covered. It is sold with the understanding that neither the author
nor the publisher is engaged in rendering legal. accounting, or other professional ser-
vice. If legal advice or other expert assistance is required, the services of a competent
professional person should be sought.

From a Declaratlon of Prlnclples jointly adopted by a Committee of the

American Bar Association and a Committee of Publishers.

This book, along with other books, are available at discounts that make it
realistic to provide them as gifts to your customers, clients and staff. For
more information on these long-lasting, cost-effective premiums. please call
John Boyer at 1-800-424-4550 or e-mail himatjohn@traderslibrary.com

ISBN 1-883272-83-1

Printedin the United States of America.

 Contents

Authors' Preface xi

I: The Principles of the Point and Figure Method 1

Logic Is the Basis of This Method 2
Irrelevant Fluctuations Eliminated 3
How the Method Got Its Name 3
Graphs Are Logical and Scientific. . . . . . . . . . . . . . . . . . . .. 4
Introductory Summary of Important Principles 4
Needed Accessories Are Few 5
Plotting a Stock Price Movement. . . . . . . . . . . . . . . . . . . . . 6
One-Point Charts the Basis of the Method 6
Accessories and Working Tools 7

II: The Weight of Authority Behind This Method 9

Refined to Coordinate with Present Day Markets 10
Mystery and Complications Have Been Clarified. . . . . . . . . . 11
Expensive Financial and Economic Reports Unnecessary 11
Certain Factors Taken for Granted 12
Analytical Technic Easy to Master 12
Losses Limited While Profits Accrue. . . . . . . . . . . . . . . . . . 13
Method Weighs Forces of Buying and Selling . . . . . . . . . . . 14

III: Advantages of This Method Over Others . . . . . . . . . 15

Speed and Ease of Recording Data .............. 15
The Method Ignores Volume 16
Price Changes Versus Volume . . . . . . . . . . . . . . . . . . . . . . 16
Supply Versus Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Volume Easily Manipulated 17
Facility of This Method 18

v
 The Utter Simplicity of the Records. . . . . . . . . . . . . . . . . . 18
Manipulation Readily Detected 20
Use All Full-Figure Changes in Making Charts 21
Method Is Superior to Inside Information 22
Isolation Develops Best Results . . . . . . . . . . . . . . . . . . 22
Our Charts Reveal Plans of the Majority 23
How the Move Begins 24
Stock Market Trading Is a Business . . . . . . . . . . . . . 25
Inside Information Unnecessary 25
One-Point Charts Show All 26

IV: The Vital Points. . . . . . . . . . . . . . . . . . . . . . . . Z7

Vital Point I - Recording Full-Figure Changes 28
Vital Point II - Only Full-Figure Changes 29
Vital Point III - Suitable Graph Paper . . . . . . . . . . . . . . .. 29
Vital Point IV - Use of Horizontal and Vertical Columns 30
Vital PointV - Trend Reversals 30
Vital PointVI - Only One Symbol to a Square. . . . . . . . . .. 30
Vital PointVII - Move Over Diagonally 32
Vital Point VIII - Skip No Squares 32
Vital Point IX - Formation of Congestion Area . . . 32
Vital PointX - The Full Fulcrum . . . . . . . . 33
Vital Point XI - First Buying Point. 33
Vital Point XII - The catapult . . 33
Vital PointXIII - Secondary Buying Point. . . . . . . 34
Vital Point XIV - The Semi-catapult 34
Vital Point XV - Third Buying Point. 34
Vital Point XVI - Watch for Distribution. . . . . . . . . . . 35
Vital PointXVII - Trend Lines . . . . . . . . . . . 35
Vital Point XVIII - Forecasting the Extent of the Move 35

V: Approved Method of Assembling and

Maintaining Proper Data. . . . . . . . 37
The Ticker Tape . . . . . . . . . . . . . . . . . . 38
Source of All Data . . . . . . . . . . . . . . . . . . . . . . . 38
Daily Full-Figure Fluctuations Available 39
Method Ideal for Those at Distant Points 40
Application of the Data. . . . . . . . . . . . . . . . . . . . . . . . 40

vi
 How to Prepare and Collate the Needed Data . . . . . . . . . .. 41
Proper Graph Paper Helpful. . . . . . . . . . . . . . . . . . . . . .. 41
Arrange Charts Orderly . . . . . . . . . . . . . . . . . . . . . . . . . . 42
How to Select the Issues to Record. . . . . . . . . . . . . . . . . . 42
Clarifying the Use of the Symbols . . . . . . . . . 43
Moving to Next Vertical Column . . . . . . . . . . . . . . . . 44
Use of Symbol "0". . . . . . . . . . . . . . . . . . . 45
One Cardinal Principle . . . . . . . . . . . . . 46
Gaps Are Not Recorded 46
How the Gap Occurs 47
Plotting the Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
The One-Point Chart 48
The Three-Point and Five-Point Charts 49
Condensing the One-Point Moves 49
Other Helpful Aids. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
The Method Substitutes for Tape Reading . . . . . . . . . . 51
Trend Outline and Geometrical Charts . . . . . . . . . . . . . 52
The Proper Issues to Chart. . . . . . . . . . . . . . . . . . . . . 53
Commodity Price Movements . . . . . . . . . . . . . . . . . . 54

VI: The Scientific Fundamentals 57

The Fulcrum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 57
Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 58
Watch for a Fulcrum. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
The Ideal Full Fulcrum. . . . . . . . . . . . . . . . . . . . . . . . . . 58
Down Trend a Prerequisite to Fulcrum Formation . . . . . . 59
Supply Equals Demand . . . . . . . . . . . . . . . . . . . . . . . . . 61
Advantage of Figure Charts . . . . . . . . . . . . . . . . . . . . . . 61
The Buying Points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
The Broad Fulcrum. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Recoil Fulcrum. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
The Catapult 64
The True Catapult. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
The False Catapult . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
The semi-catapult 67
Use "Stops" to Protect Position 67

vii
VII: The Principles of Charting . . . . . . . . . . . . . . . . 71
The One-Point Chart 71
Move to Next Column. . . . . . . . . . . . . . . . . . . 72
Signs of a Fulcrum . . . . . . . . . . . . . . . . . . . . . 73
Technical Aids. . . . . . . . . . . . . . . . . . . . . . . . . 73
The Three-Point Chart 74
Determining Three-Point Moves 76
The Use of Five-Point Charts 77

VIII: Analyzing Technical Position 79

The Price Path Characteristics. . . . . . . . . . . . . . . ... 79
Patterns of the Leaders Duplicated in the
Secondary Issues . . . . . . . . . . . . . . . . . . . . 79
Solid Formations Give Confidence 80
Watch for Changes in Activity . . 80
Strong and Weak Technical Position 81
Weak Technical Position 81
Gauging the Length and Culmination of the Moves . . . . . . . 82
The Count . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 82
Coordinating Your Studies . . . . . . . . . . . . . . . . . . 82

IX: Anticipating the Action of U.S. Steel 85

The Full Ideal Fulcrum . . 85
The Catapult Position. . . . . . . . . . . . . . . . . . . . . . . . . . .. 86
The Semi-Catapult Position 86
Consolidating the Gains . . . . . . . . . . . . . . . . . . . . . . . . .. 86
The Final Mark Up 87
The End of the Move - A Reverse Fulcrum 88
The Short Positions. . . . . . . . . . . . . . . . . . 89
Geometrical Charts 89
TheTrend Outline Charts. . . . . . . . . . . . . . . . 89
TheThree-Point Figure Charts 91
The Five-Point Charts 92
Summary 92

viii
X: Analyzing a Campaign in Western Union 95
Selecting the Fast Moving Issues . . . . . . . . . . . . . .. 95
The Full Fulcrum Base . . . . . . . . . . . . . . . . . . . . ... 96
The Catapult 97
The Semi-Catapults . . . . . . . . . . . . . . . . . . . . . . .... 97
The Short Positions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Summary 99

XI: Judging the Minor Swings 101

The Half-Hourly Index of the Dow Jones Industrials 101
The Half-Point Half-Hourly Log 102
Half-Point Technic 102
Scientific Tape Reading. . . . . . . . . . . . . . . . . . . . . . . . . . 105
Analyzing the Half-Point Chart 105
Ignore Rumors and Gossip 106
Summary 106

XII: Half-Point Technic in Atlas Tack 107

Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Analyzing the Campaign in Atlas Tack 108
Important Signal During July Break 110
The First caution Signal. . . . . . . . . . . . . . . . . . . . . . . . . 111
Boardroom Observations . . . . . . . . . . . . . . . . . . . . . . . . 111
The Shorts Began to Cover. . . . . . . . . . . . . . . . . . . . . . . 112
Pointand Figure Analysis . . . . . . . . . . . . . . . . . . . . . . . . 112

XIII: The Main Trend and Major Cycle Culminations 115

Critical Culmination Points Easily Detected . . . . . . . . . . . . 115
The One-Point Chart- The Basis for Analysis 116
Interpreting an Intricate Major Culmination 116
The First Temporary Top . . . . . . . . . . . . . . . . . . . . . . . . 116
Semi-Catapult Point- Unusually Bullish Pattern 117
Strength Carries Through Objective Level. . . . . . . . . . . . . 118
The Change Over of Technical Action . . . . . . . . . . . . . . . . 120
The Top of the Move Clearly Indicated 121
Indications of a Major Culmination 122

ix
 Bear Trend Technical Action . . . . . . . . . . . . . . . . . . . . . . 122
The Investor or Long-Term Trader 123

XIV: Technical Indications at a 'furning Point . . . . . 12S

The Change to an Up Trend . . . . . . . . . . . . . . . . . . . . . . 125
The Change to a Down Trend. . . . . . . . . . . . . . . . . . . . . 126

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Compendium of Charts - Figures 1 through 30 . . . . . . ..... 129

Trading Resource Guide . . . . . . . . . . . . . . . . . . . . . . . 1S9

x
 Authors' Preface

xperiences of the recent bear market which had its termination in

E July 1932 caused many former investors and traders to turn to the
literature of economics and markettechnic* in order to get a better
understanding of the principles underlying stock price movements. Many
have come to realize the futility of depending upon tips. rumors and gos-
sip to guide them in their market commitments. Countless others have
come to the conclusion that statistics and fundamentals serve only to aid
the manipulators. banking sponsors and insiders to unload their stock on
the unwary.

All will agree that a correct analysis of the technical position of stocks and
the market in general is the only key to consistent profit from speculative
and trading commitments.

Until the publication of the original edition of this work. it was the privi-
lege of the few who made fortunes from speculation to have the advan-
tage of this. the most logical and pragmatical of all methods used for the
purpose of plotting the price course of stocks and commodities. This
Method has been the keystone and bulwarkof the plans of America's most
successful speculators and commentators. from Charles Henry Dow. the
father of the art of anticipating stock price movements. down to and
including those who have profited most during 1929 and SUbsequently.

We offer you the principles of this tried and proven Method because we
feel that a broad dissemination of this information will do much to prevent
the excesses of bull market peaks and also help avoid the unreasonable

• Technic is the spelling the author used in the original text. Today the more common
spelling is technique(s).

xi
deflation of values. as well as the vicious cycles of forced selling and the
resultant suffering of depression lows which so surely mustfollow.

We desire to express our appreciation to Mr. J. Martiney of the publisher's

technical staff for the many helpful suggestions given and his care in the
preparation of the charts used in this work.

We gratefully acknowledge our indebtedness to Charles Henry Dow. William

Peter Hamilton. James R. Keene and others whose worksand achievements
have been an inspiration and a guide.

Victor de Villiers
Owen Taylor
New York City
January 1934

xii
 I

The Principles of the Point

and Figure Method
ifteen years before the turn of the last century. Charles H. Dow.

F student. scientist and philosopher. a brilliant economist and a well-

respected financial writer. began to observe and study the phe-
nomena of Stock Price Movements. He was the founder of the Wall Street
Journal. His writings. though not prolific. are the beginnings of all price
movement comment, his observations the foundation underlying all tech-
nical methods. and his studies and graphic records the seeds from which
the Pointand Figure Method grew.

The work of Dow was ably carried on by his protege and successor.
William Peter Hamilton. who edited the Wall StreetJournal until hisdeath
in 1929. The writings of Hamilton form the principal source from which
Dow's Theory of Stock Price Movements has become available for study.

At or around the beginning of the present century. when the expansion

era was in full swing, a group of speculators recognized in Dow's re-
search! a clear illustration of price movements portrayed through the use
of figures which showed a repetition of pattern as it unfolded its tracings
on Dow's graphic records. The patterns thus formed were oft-times
repeated. and established a precedent and guide to future price move-

1 See pages 36 and 153 The Stock Market Barometer by W. P. Hamilton

 THE POINT AND FIGURE METHOD - THEORY AND PRACTICE

ments. Here. then. was the beginning of a truly scientific and logical
method of anticipating stock price movements.

Fifty years of background. millions of dollars of profits taken out of the

stockmarket. and thousands of hours of study and development. are his-
torical events which commend this time-tried Method to you.

In explaining the basic principles of the Pointand Figure Method. we will

showthat the full point and full figure fluctuations in variable equities, be
they commodities or stocks. are the vital statistics which hold the key to
technical position and the future price path.

Professionals and others who have been successful in theirjudgmentand

anticipation of market action, have reached their conclusions by aid of
recorded data of one kind or another. In practically every field of endeav-
or, whether it be in the arts or sciences. in the industrial world. or in the
stock and commodity markets. full and detailed records of past and cur-
rent essential data mustbe kept. It is of little consequence whether these
records are maintained as tabulated figures or by means of logs or charts.
which are merely graphic representations and plottings of those essential
records.

Charts of stock price movements are vital. There is an ancient Chinese

axiom dating from the Confucian era which states. "A picture is better
than a thousand words." It is self-evident that a picture conveys a clearer
and more detailed message than a mass of words or columns of tabulat-
ed figures. Since instant comparison and maximum condensation are vital
to the art of anticipating stockprice movements. we endorse the practice
of keeping and maintaining up-to-date charts. Graphic representations of
the fluctuations of stock prices are vitally important to a critical analysis
of technical position and are the keystone of the Pointand Figure Method.

Logic Is the Basis of This Method

Few will dispute the fact that the old-fashioned custom of relying solely
upon published statistics of sales and earnings for market commitments.
must now be relegated to the past. All will agree that by the time these

2
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

statistics become available for public consumption, others, principally the

insiders. the sponsors and the manipulators, have already profited amply
therefrom and are ready to unload their commitments as the news be-
comes public property. We must. therefore, find a method which will show
us when the insiders are buying and also indicate when they are com-
mencing to sell. Given the ability to recognize their acts on our charts, it
follows logically that we will beable to buywhen the insiders buy and sell
out when they sell.

The patterns portrayed on our charts and application of the principles of

the Point and Figure Method will show uswhen buying is overcoming sell-
ing and vice versa. If you are ready to agree that the present movement
of stock prices, as recorded on the ticker tape, is the best and surest indi-
cation of the probable direction of the future price trend, then this Method
can be used to show the way.

It should be needless for us to state that some intensive study and a thor-
ough understanding of the principles are necessary before you can hope to
capitalize on that knowledge. Once a solid foundation is laid, your judg-
ment will develop in a logical manner, and you will quickly begin to recog-
nize many profitable opportunities. You will be more certain of yourself,
and the courage of your convictions will materially increase your capital.

Irrelevant Fluctuations Eliminated

The market fluctuates in countless fractional transactions which, in the
final analysis, have little or no influence on future price paths. One of the
basic principles of the Point and Figure Method is to eliminate the irrele-
vant and regard only the important movements upon which our deduc-
tions are based. Only full-point changes are considered, and fractional
variations are totally disregarded.

How the Method Got Its Name

The Point and Figure Method derives its name from the fact that we
record by FIGURES all full POINT changes. This plan or system of plotting

3
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

and recording the movements of the market in general. and of selected

individual stocks, is a basic principle of this particular Method. In this one
characteristic, it is totally different from any other plan, method or sys-
tem of anticipating stock price movements.

Graphs Are Logical and Scientific

A casual glance at the illustrations in this work will show a new kind of
chart which. in contrast to all others. has a scientific basis to recommend
its use. The Point and Figure graphic records are made up of a series of
symbols composed of X's, fives and zeros. The special design of graph
paper, which we suggest for use with this Method. shows the relationship
of these symbols to each other and to the pastand probable future price
movement. Familiarize yourself with the form and style of these impor-
tant aids, namely, the charts upon which we rely for our conclusions.
Point and Figure charts condense the price fluctuations in such a manner
that you will soon learn to recognize accumulation. mark-up. and distrib-
ution and thus be able to make your commitments more profitable.

Introductory Summary of Important Principles

The Method will befully explained in every detail as we proceed. Each step
will be carefully developed and clarified before we proceed with the next.
All will be illustrated with examples from recent market action, showing
the application of the principles. So that you may have a birds-eye view
of the scope of the work, we list a summary of the important principles
underlying the Point and Figure Method.
1. The Method develops the ability to recognize the technical position of
individual stocks and of the market in general.
2. The Method is consistent and logical, definite and positive, eliminating,
as far as possible. guesswork and emotional influences.
3. The data is recorded in such a manner as to create and force the devel-
opment of true geometrical and symmetrical patterns easily discernible
and classified, and which repeat themselves in the progression of the
price path.

4
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

4. The patterns thusformed create precedents by which subsequent price

movements are easily judged.
5. The Method disregards fractions resulting from minor and irrelevant
fluctuations. It also ignores volume. The Method is simple and com-
plete in itself.
6. The Method dispenses with news, fundamentals, statistics and the rea-
sons for price movements. It concerns itself primarily with cause and
effect.

Needed Accessories Are Few

The data which we record in order to create the basis for the application
of this Method is. primarily. all one-point changes of the price movement
as it fluctuates. This principle is the same whether we apply it to stock
price movements. market indices. or commodities. As a matter of fact,
the Point and Figure Method of anticipating price movements may be
applied to any form of equity for which a free and open market exists,
and in which there are price fluctuations.

When tun-point variations of the price movement are known. they are
recorded by figures. Our records are unlike the conventional vertical line
or bar charts in that they are created through the use of symbols. The
symbol "x" is used to record the digits 1, 2, 3, 4. 6, 7, 8, and 9. The fig-
ure "5" is used to indicate figures ending with digit five. The symbol "0"
is used to indicate figures in multiples of tens. At this point, it would be
well for you to examine the illustrations used in this book in order that
you may have a better understanding of this elementary principle used in
making our charts.

The full figure one-point changes are recognized by the price fluctuations
when they reach each new full one-point change. The change thus noted
is recorded. whether it be the next higher or the next lower figure, and
the change must be recorded each and every time it shows on the tape. At
this point, let usemphasize the fact that herein lies the vast superiority of
this Method over all others. When we record all full figure changes, we are
better able to detect accumulation, distribution and the characteristics

5
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

peculiar to the particular stock or commodity under observation. Note,

here, that we disregard all movements of seven-eighths points or less.
when fluctuations are in eighths. In cases where fluctuations are in tenths
or dollars. we must determine whether we will plot the full one-dollar
changes or whether the changes in tenths would better serve our purpose.

Plotting a Stock Price Movement

After we obtain the full figure changes. we proceed to make our graphic
record from that data. We require for that purpose, graph or charting
paper ruled for quick and easy use. Ideal paper for this purpose is "Ideal
Charting Sheet Number 5001." This paper is ruled with vertical and hor-
izontal columns, arranged with shadowed symbols "a" and "5," and with
the horizontal columns for these important digits accentuated.

The vertical columns on our charts are used to limit the plottings of the
price movement as long as it continues in one direction without a rever-
sal. As soon as a reversal occurs, and we find the needed square already
occupied, we move to the next right-hand vertical column. This vital prin-
ciple must befixed firmly in your mind, as it is the onlyone that may give
you difficulty later on when you proceed to make your own charts.

The Pointand Figure Method relies on price changes. only, and the graph
paper is designed to properly record those changes. The day-to-day time
factor and daily volume are ignored. The columns of squares are scientif-
ically designed soas to permit the plotting of true trend-lines and to force
the development of true geometrical and symmetrical patterns which
facilitate accurate comparisons and dependable diagnosis.

In the case of a stockselling at $20 per share, we would record the zero
in the square on the 20 line. The next record would be made when the
stocksells at flat price 21, or at flat price 19. Should it go down to 191/ 8,
or up to 20 7/8, no change would be made.

One-Point Charts the Basis of the Method

When a series of full figure one-point changes of a price movement have
been recorded, they create a scientific basis from which to draw conclu-

6
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

sions. Because of the fact that similar causes usually create similar effects,
our conclusions have a dependable basis not available through the use of
any other method.

In addition to the one-point charts. one may easily prepare from them
either three- or five-point charts or both. These are helpful for gauging
the technical position of any and all issues, volatile or otherwise, and for
revealing the broader intermediate moves of stocks and the market.

Accessories and Working Tools

In addition to graph paper, one needs a record of the actual full figure
changes garnered from the most accurate source, the ticker tape.2

When using this especially designed paper and the daily service which is
available. it isa relatively simple matter to keep current the needed changes
on one-hundred stocks and the important popular averages or indices, in
about thirty minutes each day. Form this habit. as it will afford you an
opportunity to analyze the patterns as they unfold themselves on your
charts and thus take advantage of the implications which develop, first in
one issue and then in another. The little effort expended in keeping these
charts up to date will soon pay you handsomely, for you will be training
yourself in stock market technic in a way not afforded by any other
method.

2 Full Figure Daily Data puonshed by Stock MarketPublications. New York. N.Y.

7
 II

The Weight of Authority

Behind This Method

he Point and Figure Method has grown from a crude beginning

T which started more than fifty years ago. Charles H. Dow, the
founder of the art of anticipating stock price movements, created
much which led to the development of the technic of this Method. Dow.
in his research, was interested primarily in recognizing the main, broad,
long-term trend which results from the movement of major capital into
or out of common stock equities. This main trend was rightly termed the
"Capital Movement Trend" by Mr. Edwin L. Ayres in hisbook Key to Stock
Price Movements. 3 The secondary corrections to the main trend, though
of interest to Dow, were not the goal of his efforts. He considered the
secondary movements highly misleading and concluded that the shorter
day-to-day swings were unimportant.

However, we must bear in mind that since Dow's work was completed,
the stock market and America's financial structures have undergone rev-
olutionary changes. Common stock equities of American corporations
have attracted a world-wide speculative following, unprecedented in the
historyof finance and of speculation.

In Dow's era, a move of 20 to 30 points in the Industrial or Rail Index con-

summated in a period of a few years was considered a complete bull cycle.

3 Key to Stock Price Movements - Logic of Stock Market Trends. StockMarket

Publications, NewYork, N.Y

9
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Under present day conditions, we note, on occasion, moves of 10 to 20

points in either or both indexes completed in a few weeks. Three-, nine-
or sixteen-million share days, such as were recently witnessed, were un-
dreamed of at the time when ten or a dozen stocks were the active trad-
ing mediums, and volume was limited to a few hundred-thousand shares a
day. One can, therefore, understand why Dow passed lightly over the
minor and secondary movements and sought only to ascertain the main
trend. These minor and secondary movements have now become all
important. Theirstudy, analysis and the understanding of how to use them
form the basis of the mostsuccessful method of stock price anticipation.

It has been intimated that this Method was first successfully used by
James R. Keene during the merger of the United States Steel Corporation
in 1901. Mr. Keene was employed by the sponsors of the Steel Corpora-
tion to distribute to the public the original stock of the corporation, which
its real founder, Andrew Carnegie, refused to take in payment for his
equity and profits resulting from the merger.

Mr. Keene, originally a Western mining promoter, was a skilled tape read-
er, a shrewd observer and a successful market operator. His ability has
never been surpassed and rarely, if ever. equaled. It has been stated by his
close associates that the Pointand Figure Method was known to and used
by him during all of his successful campaigns.

Refined to Coordinate with Present Day Markets

Like all knowledge, the Method has developed with the passing of years
and has been refined, improved and coordinated with the ever-changing
conditions of stockmarket action. The scientific basis of the fundamental
principles underlying the Method alone accounts for its survival while
most other methods have been relegated to the past. You may confident-
ly depend upon the Point and Figure Method knowing, first, that it rests
upon a sound scientific basis and, secondly, that it is vastly superior to any
other plan for anticipating stock price movements. In the past as well as
at present, it has been and is relied upon by many of Wall Street's most
successful interests.

10
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The data which should be kept will be described in utmost detail. Bear in
mind that there is a great weight of authority behind this data. and we
ask of you to respect its implications. We have found by the trial and error
method those refinements needed to fit the basic principles to present day
markets. It was ascertained that a careful checking and rechecking of the
conclusions arrived at by means of this Method is of vital importance and
cannot be overemphasized.

Mystery and Complications Have Been Clarified

The Point and Figure Method. as here presented. is devoid of mystery and
complications and has proven itself of incalculable aid to your authors. We
begin by reducing the vast accumulation of transactions comprising mar-
ket action to the important and relevant moves. which are plotted on
charts. From these graphs showing the present marketaction. we are able
to judge the probable future direction and extent of a stock's movement.

The Pointand Figure Method permits stockmarkettrading to be consid-

ered a serious business with a scientific. substantial and definite back-
ground. based upon actual facts rather than guesswork.

Like all other businesses. it demands the making and preserving of certain
simple and vital records. It demands that you study those records care-
fully and permit your judgment to be based upon solid facts. None will
deny the old copy book maxim "practice makes perfect." The Point and
Figure Method actually compels practice and extensive study which soon
becomes a habitas well as a fascinating hobby.

Expensive Financial and Economic Reports

Unnecessary
This Method dispenses entirely with the expense and labor involved in the
purchase and maintenance of bulky reports. statistics. balance sheets.
earnings statements and other cumbersome paraphernalia hitherto asso-
ciated with trading and investing. The substitution of the simple records
required by this Method is. in itself.animportantconsideration and a wel-
come relief.

11
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Certain Factors Taken for Granted

The following facts aretaken for granted by the Pointand Figure Method:
• That the correct valuation of a stock, at any given time. is the price
paid for it at the time of the consummated sale. This is because the
forces underlying the law of supply and demand and the consensus of
opinion of the buyers and sellers have determined the value at the time
the sale is made.
• That the lastpublished price of a stock reflects all that is known by the
general public at the time when established, as a result of a sale and
purchase which consummates a transaction.
• That the insiders, who are presumed to know more about any partic-
ular stock than the public, cannot completely conceal their future in-
tentions with regard thereto.
• That the plans of the insiders will be revealed in due time by the tech-
nical action of the stock itself.

The Pointand Figure Method is not a system for "beating the stock mar-
ket." It is the result of the rationalization of logical principles successfully
used by important market interests.

Analytical Technic Easy to Master

Assuming that the studentwill keep the required records. there remains
only the need of an understanding of the technic of reading and inter-
preting them. In the pages to follow, we illustrate for you in detail and
with clarity the technic of interpreting the patterns which develop on
your Point and Figure charts. While proficiency may not come at first,
yet, in a short time, through study, practice and observation. the habit
of correctthinking in terms of the Point and Figure Method will become
apparent. and the resulting sound judgment will soon replace uncer-
tainty and confusion.

It is confidently expected that, as a result of this study, observation and

practice. the reader will learn to properly appraise the price movements.

12
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

analyze the technical condition. and deduce therefrom plausible conclu-

sions, the correctness of which will soon exceed the errors you are apt to
make. With proficiency attained, your market operations cannot help but
result in profit.

Losses Limited While Profits Accrue

Success in trading and investing. whether by method or by chance. comes
not as a resultof being perfect, but in consequence of completing a suf-
ficient number of successful transactions netting substantial profits to off-
setthe few errors which may show limited losses.

In order to limit losses and to check possible errors, we employ the sim-
ple technical aid known as "stop orders." It is unnecessary for us to go
into detail here, as the theory and application of stop orders are fully
described in many other works,-

In no other enterprise or business is it possible to protectprofits or check

losses with the same ease and facility as is possible in the stock or com-
modity markets. through the simple expedient of stoporders. We strong-
ly endorse the use of stop orders except where "averaging" or "pyramid-
ing" is resorted to. Many admonitions have been given against averaging
and pyramiding, yet this Method not only tolerates. but. at times. pre-
sents ideal points at which both may be resorted to. for the reason that
each commitment is independent and is made on its own merits. This will
be fully explained in a later chapter.

A pyramid is created when the profits accrued on a position are used to

buy additional commitments. This practice usually develops into an invert-
ed pyramid when it is resorted to in connection with credit- borrowed
funds - used to finance a margin account. An inverted pyramid is exceed-
ingly dangerous because the load gets top-heavy. as the human weakness
to make huge and quick profits invites an overextended commitment,
which, as a general rule, is wiped out on the first technical reaction.

4 Stop Orders-How to Use Them for Profit by Owen Taylor.

13
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

We average a position by buying additional quantities of stock as it sells

lower in the price range. This Method indicates ideal points at which to
make additional commitments for the purpose of averaging ones cost.

Method Weighs Forces of Buying and Selling

The Point and Figure Method actually measures the forces of supply and
demand, and records the support and resistances at all points. It permits
of a wide range of visualization through its lucid, graphic records which
allows quickand ready comparison of one stock with others and with the
market in general. as reflected by a good index and, most important of
all, with its previous technical action. These records, if properly compiled
from reliable sources. will indicate the true trend of the market and of
stocks. and will point out the best trading and investment opportunities.

The Method indicates when and what to buy. It also cautions when to get
out, first. through clear signals to act. then. through definite indications
for the logical placement of stop orders. It teaches you to adopt a pro-
fessional approach to your market transactions. Professionals may be
considered as the insiders. pools. independent operators. stock sponsors.
bankers and others usually referred to as "they" by many market com-
mentators.

14
 III

Advantages of This
Method Over Others

here are certain definite and inherent advantages of the Point and

T Figure Method not possessed by any other method. These advan-

tages are: (a) the elimination of non-essentials, (b) the ease of con-
densation and (c) the speed bywhich results may beachieved. These supe-
rior qualities are again stressed in order to point out that the simplicity of
this Method does not curtail its accuracy and dependability. A simple
machine with a few well-constructed parts will operate far more efficient-
ly than a complicated mechanism with ponderous accessories. So it is with
the Pointand Figure Method.

Speed and Ease of Recording Data

The Method provides, amongst other things, clarity and simplicity in the
keeping of its graphic records. This results in the creation of logical and
clean-cut patterns on the graphs and higher speed in the plotting of the
necessary data. It will enable you to maintain the records of more stocks,
and be a source of checking and correlating all of the facts. with a view
of arriving at a correct interpretation of market activity and profiting
therefrom.

15
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Method Ignores Volume

The Point and Figure Method entirely dispenses with the recording of the
volume of sales. Many have felt this to be a distinct deficiency under the
belief that volume is a dominant factor. We are unwilling to concede that
volume is the vital influence which. in the final analysis. governs the price
movement. It is conceded. however. that volume isan influence when used
as an aid in other methods. In our opinion, the Point and Figure Method
has proven itself so much more reliable. that we are satisfied from our
research and experience to conclude that the number of price changes
andthe manner in which theycombine themselves have a more sci-
entificfoundation than the influence of volume in the anticipation
of price movements.

Price Changes Versus Volume

Let us analyze the effect of the influence of volume as against the effect
of price change only. What is the aim of all methods which seek to antic-
ipate stockprice movements? Do we seek to know how many shares are
exchanged? Or, do we desire to determine whether stocks are passing
from weakholders into strong hands and vice versa? All will agree that it
is the answer to the latter question which will permit us to profit most
from our knowledge. Taking for granted the known fact, namely. that each
transaction printed on the tape is at the same time a purchase by one and
a sale by another, it is of little consequence to know the exact number of
these transactions. Whatwe desire to ascertain is where in the price scale
they occur and their relationship to each other.

Letusapproach the problem in a logical manner by taking note of the def-

initely known elements. in order to determine whether price changes or
volume has most influence.

In a speculative market, where the laws of supply and demand are oper-
ative. we must have fluctuations in prices. These fluctuations are due
mostly to differences of opinion which cause what is technically known as
the bid and asked spread. Experience has taught usthat a great number
of fluctuations in a congestion area usually indicates either accu-
mulation or distribution. When stock is offered for sale at the market,

16
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

we musttake the nearest bid price: and when one is anxious to purchase
a stock and offers to take it at the market. hemust pay the nearest asked
price. The price changes of a stock. as it moves from one price to anoth-
er. are caused by the difference of opinions of those who are buying and
selling. These fluctuations have proven themselves more informative for
our purpose than has volume.

Supply Versus Demand

Furthermore. let us consider the effect of supply and demand on any
product or commodity. be it stock. equities or horseshoes. When demand
isgreater than supply, prices move upward. Should supply begreater than
demand, then prices are forced downward. When demand has absorbed
all the supply at any given price. it will begin to absorb the supply avail-
able at the next higher price at which offerings are available. As the de-
mand increases. prices correspondingly increase. Prices recede as a result
of absence of demand or an oversupply.

These factors show that price. as such, holds the key to supply volume as
well as to demand volume. These fluctuations or price changes. when plot-
ted by means of the principles outlined for you in thisbook. will moreaccu-
rately indicate the technical condition. the relationship of supply to de-
mand. than any other known method which can be used for the purpose.

Volume Easily Manipulated

Volume. as well as price fluctuation. can be artificially manipulated.
Manipulations of volume at any given price level are deceptive and cannot
reveal the difference between true and artificial demand. As contrasted
with that principle. consider how easy it is to detect artificial support
resorted to for the purpose of distribution when many changes in the
price of a stock show that it cannot absorb the supply at the upper reg-
istered level. or that demand is insufficient to reach to the next level of
supply. This principle becomes more clearly apparent as you compare
these conditions in one particular stockwith the marketand other stocks.
Volume indications have a tendency to vary greatly with the changes in the
floating supply of stocks as well as changes due to the open short inter-

17
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

est in the market. We. therefore, conclude that price changes of them-
selves. with their relationship to each other and to the marketand other
stocks for comparison, are vastly superior than is volume, used with any
other combination. Herein, then, lies the vital and vast superiority of the
use of price changes and the Pointand Figure Method.

Facility of This Method

This Method permits and facilitates the easy recording of the essential
data, and a simple and logical method of analysis. The direction of the
trend, the extentof the move and a reasonable approximation of the cul-
mination thereof, are all easily determinable. Through the aid of the one-,
three- and five-point charts, one may be reasonably certain of the short-
er immediate swings and the more profitable intermediate trend moves.
as well as the main broad swings of the bull and bear marketcycles - the
Capital Movement Trend.

We can visualize at a glance. through the aids afforded by this Method,

namely, the one-, three- and five-point charts, the broad zones of accu-
mulation and distribution in the main swings, as well as the closer areas
of supply and demand of the narrower and more speculative intermedi-
ate trend moves. Our data shows, at a glance, the moves by important
areas, by months, by days. by the all important dividend periods. by sea-
sonal influences and by main business cycle influences. It also shows the
results of speculative influences, as well as the effects of long-range
investment buying and selling.

The Utter Simplicity of the Records

Remove now from the rear of your binder* ChartFigure 1 (see page 19).
Examine this illustration of a hypothetical move from a start and low of

* Note from the Publisher: Forthe convenience of the reader, the charts areinserted after
the author refers to them andcaptions have been added. Please note the original edi-
tion was published in binder form and the charts appeared at the end of the text. In
keeping with the spirit of the original edition, we have also added the charts at the end
of this edition as they would have appeared in the original.

18
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 1 One-Point Chart

T I I I I I I I I I I I I I

FIGURE jTREND OUTLINE GEOMETRIC

55
...••, .. ••.
. IA

nla
53

61 8 1 51
.....,
aa
Ilea
I II
I ~ ~
JrTN \J
n
rrn
I n rn
II I IIII

50 • eo

5
OIIaN
..•• . ........ .
54 1414
II
1\1
n
II
III
WI
II I I
.,
1181

50 I.
If

In this one-point chart. we are given two possible price paths-each connoting a different
technical condition. The upper half Is bearish and the lower half Is bullish. Both price paths
are Illustrated using the three separate and distinct methods by which data may be record-
ed: figure (left). trend outline (center). and geometric (right).

50. to a high of 55. and a close at 54. Here we illustrate a one-day move
which by other methods would not permit of technical analysis. yet by the
Point and Figure Method. we are given two possible price paths. each of
which would connote a different technical condition.

Note the upper halfof the illustration. which we diagnose as bearish. Study
carefully the three separate and distinct methods by which data may be
recorded when using this Method. The first plan is recording by figures.
Trace the move. 50. 51. 50. 51. 52. 51. 52. 53. 52. 53. 52, 51. 52. 53.
54. 55. 54. 53. 52. 53. to 54. the close. The pattern just to the right of
the figure chart is called a trend outline chart and illustrated the same
move. On the extreme right you may observe the geometrical chart of
the same move. Note now that all of this action may be recorded by one

19
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

day's market fluctuations in a fairly active issue in normal markets. This

illustration is bearish because it indicates stock in supply around the 52,
and 53, levels with a temporary push through to 55, near the close.

Nowregard the lower half of our illustration Figure 1 (see page 19).Trace
~emove.50.51.52.53.52.53.54.55.54.53.54,55,54.55,54.
53. 54. 55. 54. This move is diagnosed as bullish because it indicates
scarcity of offerings below 55, and its ability to hold the advance above 53.

The analysis above is made on the actual movement of the issue as shown.
If the immediate previous action was plotted and available for compari-
son, our diagnosis might change.

Manipulation Readily Detected

Records of fluctuations, upon careful analysis. reveal the manipulation.
You have seen in the foregoing paragraph how the action which takes
place during any market day is broken up into its importantfluctuations,
namely, its component parts. in order that we may beable to detect what
the manipulators. pool operators. and insiders may be doing with the
issue. No method as yet devised will show manipulation as clearly and as
surely as a diagram made according to the principles of the Point and
Figure Method.

Stock sponsors and operators vary their plans of campaign. Some prefer
to depress a stockand make it look veryweak. even thouqh it istheir aim
to mark it up to substantially higher prices. Otners. whose tactics are
bolder and more open. do not hesitate to bid up the price of a stock very
rapidly. taking all blocks offered on the way up, and thus creating a spec-
tacular move. The latter method is daring but very effective. because
spectacular moves attract wide public appeal through the aid of board-
room traders and others who watch tape action. as well as comments in
the newspapers which usually follow spectacular moves as they develop
on the tape.

When operators resort to such spectacular manipulation. lively tape

action excites gossip in boardrooms and thus attracts a great following
for the issue. No matter what procedure is selected by the insiders in

20
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

any stock. our Point and Figure charts will reveal the areas in which
they are accumulating stock and will. with equal accuracy. show zones
of distribution.

Use All Full-Figure Changes in Making Charts

Build up your Point and Figure data carefully, using for your purpose
either the transactions recorded directly from the tape or the full-figure
daily changes supplied by the publishers of this book. When you plot all
of the full-figure fluctuations, you have a true representation of what is
taking place in the issue. While Point and Figure charts may be compiled
from the financial page quotations of your local newspaper, records thus
compiled are not nearly as dependable for forecasting purposes as are
those with all of the full-figure fluctuations.

The charts built up from authentic data consisting of the actual full-figure
changes. will always develop patterns in the progression of a move which
soon become easy to recognize and classify. A careful study of past per-
formances recorded in the same manner will reveal to the student sever-
al important factors which have vital forecasting significance - in that
they show the proper points at which to make commitments.

These patterns are created as a resultof better buying than selling when
the move is in the upward direction. and likewise. when the move is
down. they reflect the reverse-better selling than buying. Since a simi-
lar cause is always followed by a like effect. these patterns. as they devel-
op. are generally followed by the same type of subsequent action. As we
cannot build a house without some kind of foundation, so a stockcannot
advance materially unless accumulation has first taken place. Since accu-
mulation will always register on our charts. it becomes but a matter of
careful observation and analysis to be able to recognize a move as it is
developing and before it really gets started. In addition. we are able to
know the exact point at which the risk may be limited while the profit
possibilities are preserved to their fullest possible extent.

These characteristic patterns on our Pointand Figure charts always devel-

op. no matter what the condition of the market may be. It is immaterial

21
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

whether it be a slow day with a half-million shares as the average. or a

fast session. with five million shares as the average: our Pointand Figure
charts will reveal, with accuracy. the technical condition of the price move-
ment as plotted and observed.

Method Is Superior to Inside Information

Since it is the purpose of all market analysis to determine the balance
between the forces of supply and demand. we seek a means of accurate-
ly measuring those forces. Whether demand be on the part of the well-
informed insiders. stock sponsors. manipulators or the consensus of opin-
ion; whether it be one or more of the foregoing groups. or whether it
results from sufficient outside public participation. it will bring about the
same result on our Point and Figure charts. By means of the use of the
Point and Figure Method, anyone who will devote sufficient time to the
mastery of its principles can place himself in possession of the knowledge
that will put him on an equal footing with the influential forces. whether
they be insiders or outsiders. No basis for a movement in any stock can
be completed without leaving definite indications in its price path. togeth-
er with their logical implications as the action of the stock traces its move-
ments clearly on our Point and Figure charts.

Isolation Develops Best Results

As a matter of fact. those who apply the principles of this Method and
handle their transactions independently are in a better position than mem-
bers of a syndicate or a pool operation. for reasons later explained. Prices
advance or decline because of the operation of the forces of demand and
supply. While it is true that major interests. large-scale operators, syndi-
cates and pools can temporarily accelerate or retard a movement, we
must. nevertheless, keep in mind that no human force or group can very
long obstruct the real trend of the market as it moves, because of influ-
ences of general economic cycles.

In the last analysis. all speculative operations. whether undertaken for

trading profits or for long-term investment capital appreciation. must be

22
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

in harmony with the main trend of the capital-movement cycle. or they

will result in grief and loss to those who undertake them. Those who
operate with one- to five-hundred share lots of a stock are in vastly bet-
ter position than are the large groups who mustnecessarily employ thou-
sands and perhaps hundreds of thousands of shares in their operation.
The small operator can reverse his position quickly. while the large-scale
operator cannot quickly turn about. by reason of the very size and extent
of his commitment and the inability of the market to absorb so vast an
amount of stock into the floating supply without breaking the movement
wide open and causing a major reversal.

Thus, you see that the use of the principles of this Method is more reliable
than inside information. We have actual knowledge of the mostpotentand
vital influence. namely, the actual price changes, which must be considered
as the verdict of the market resulting from the consensus of all opinions
which influence the issue or commodity in which we are operating.

Adhere to the principle of isolation. Turn a deafear to all gossip, rumor,

inside tips and other information. Your Point and Figure charts are more
reliable than any other source of information available.

Our Charts Reveal Plans of the Majority

Our charts reveal. in a condensed form, all that is known to the insiders
and unknown to others, about the movement of a stock up to the very
last moment. What more can anyone wish to know?

Authentic and reliable inside information must not. and cannot be dis-
closed. Disclosure may wreck costly plans. When such information is dis-
closed, it is no longer inside information, and then it is not worth know-
ing, for it immediately becomes common propertyand usually develops to
be the most costly type of information in Wall Street. It generally leaves
you long of stock while the insiders have sold their stock and are out of
the market. Remember, the news and information you get is only what
the insiders and sponsors wish you to know. and then onlyafter they have
profited therefrom.

23
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

How the Move Begins

In recent years. the markethas more quickly responded to combined pub-
lic sentiment. Millions of investors and speculators comprise that public.
On occasions. their demands have taken the marketcompletely out of the
hands of the insiders. Their inactivity has. at times. upset many well-laid
plans of some of the best banking and financial brains in the country.
When these millions begin to act or show tentative signs of activity. the
alert major interests - the sponsors. bankers. pool operators and insid-
ers-endeavor to anticipate their demands. The insiders and operators
can only anticipate and start the move by quickly completing their posi-
tions and temporarily taking stockout of the floating supply. This opera-
tion is often completed in secrecy during inactive markets. when all offer-
ings are soon absorbed without indications of demand appearing on the
tape. Then follows the demand or the beginning of the demand of the
outside public. After this buying has commenced. sponsors continue to
accelerate the advance in harmony with the trend. buying and selling on
balance. so that the value of their position, completed at the lower level.
increases. as prices are forced higher.

As an illustration. a syndicate operation may own. let us say, 10,000

shares of a certain issue at an average price of $10 per share. As the price
begins to advance. the manager of the syndicate buys and sells on balance.
yet always holds at least the amount originally accumulated. until the mar-
ket price of the stockis far above the average cost of hisposition. At the
predetermined higher price level. he begins to sell more than he buys and
only buys a sufficient quantity to hold the price of the stock at approxi-
mately the level at which he wishes to distribute his inventory. accumu-
lated substantially lower down. These operations are always apparent
from the patterns formed by the price changes and portrayed on
our Point and Figure charts. When you possess this information. re-
member. you. too. may be considered one of the insiders.

Students who take this Method seriously and apply themselves to a bet-
ter understanding of it are in a more advantageous position than the insid-
ers. since. at the first signs of danger. their smaller positions can bequick-
ly liquidated. enabling them to stand aside while the large-scale interests
are struggling to complete their campaign.

24
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Stock Market Trading Is a Business

Again. we wish to emphasize this important fact-stock market trading
or investing is a serious business and requires careful study and applica-
tion. No otherbusiness offers similar opportunities for gain as often or as
quickly as does the stock market. No other business permits one to limit
loss or to insure ultimate success as do your transactions in the market,
when you thoroughly understand markettechnic. Remember. your stock
market transactions may be closed out quickly or you may reverse your
position or protect it by placing strategic stop-loss orders.

In business. it is the major interests who dominate. and the larger the
unit. the more efficient can be its management; yet that is not applicable
to the stock market. Here. a very large commitment may prevent quick
action when speed is essential.

It is wellto remember when you hear of inside information that is unsup-

ported by positive confirmation from your Point and Figure charts that
many insiders have. in the past. made serious errors. Testimony before
governmental committees has revealed only a few of the grave mistakes
made by many well grounded in the fields of finance. economics. and
banking. Inside opinion. inside judgment or so-called inside information,
may on occasion be very good. but if your transaction is not properly
timed. you may be wiped out, notwithstanding the good intentions of
your informant.

Inside Information Unnecessary

It is best. at all times. to rely upon logicaljudgment. the result of conclu-
sions arrived at through a careful analysis of actual facts. It is far more
dependable than guesswork. tips. rumors and so-called inside informa-
tion. Your full-figure changes. your knowledge of their implications. the
direction of the trend and your faith in your own self. isallyou need when
you employ the principles of the Point and Figure Method.

Inasmuch as market knowledge. by and large. is not an exact science.

errors of interpretation cause errors of judgment. and hence faulty con-

25
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

elusions may occur on occasions. The most positive indications may be

reversed almost momentarily. Therefore, if in the beginning you err occa-
sionally, do not bediscouraged. Profit from your mistakes. note the error
carefully and resolve never to commit it again. Bear in mind, as you pro-
ceed, that coming events are usually anticipated or discounted by major
interests and the insiders. When, in the face of bad news on a particular
issue, formations indicative of accumulation develop, despite such adverse
news, it is wiserfor you to follow the insiders than to pay attention to the
news, which may have been deliberately released in order to cause the
uninformed to dispose of their stocks at a low level.

One-Point Charts Show All

The one-point figure changes. as they register on your charts, reflect all
of the buying and selling. When such price changes have completed the
pattern. the picture thus formed is the best sort of inside information,
since it may be indicative of an impending up move or down move, as the
case may be. When your three-point charts confirm the conclusions
reached by a study of your one-point charts, you will then have corrobo-
rative proof, and your judgment is thereupon confirmed. Should the
implications of your one-point charts beconfirmed by the three-point and
also by the five-point charts of the same stock, then you may consider
your knowledge absolute and definite, and you must act accordingly.

Be ever alert and study at all times. Remember, the patterns which are
traced on your charts resultfrom the action of individuals. Your chartdis-
closes the balance of all influences. It tells you what is taking place and
when to prepare for the move as well as how to take advantage of that
information.

26
 IV

The Vital Points

he one-point price fluctuations are the starting base of this reliable

T and time tried Method of anticipating stock price movements. For

the purpose of clarifying the basic principles. we reiterate and cod-
ify these principles so as to avoid any possibility of doubt or question.

The Vital Points underlying the Pointand Figure Method are as follows:
I Record all full-figure fluctuations registered on the tape.
II Plotthese changes on suitable graph paper through the use of sym-
bols representing the full-figure changes.
III Make no record of a transaction unless a flat full-figure change
has actually been registered.
IV Use horizontal columns for specific price levels and vertical columns
for price movements continuing in the same direction.
V When a reversal of the price movement develops, move over to the
first right-hand column and plot the subsequent changes of prices.
VI A square already occupied by a symbol cannot again be used to ac-
commodate another.
VII A move to the next right-hand vertical column must be in a diago-
nal direction, either one square higher or one square lowerthanthe
last recorded full figure.
VIII No square may be skipped: the pattern traced must be a continu-
ous joining of squares.

27
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

IX Be alert to recognize and observe the formations known as con-

gestion areas.
X Analyze congestion areas in order to properly take advantage of a
developing full fulcrum.
XI Make commitment near base of a full fulcrum with a stopjust be-
low lowest point of support.
XII Watch for the development of the full catapult point.
XIII Make commitment at the catapult point with a stop close below.
XIV Watch for the development of the semi-catapult.
XV Make commitment at the semi-catapult point with a stop close
below.
XVI After an extended advance, be on the alert for first signs of distri-
bution.
XVII Learn the technic of the use of trend lines.
XVIII Study and master the principle of the count to gauge the extent of
future moves.

Vital Point I - Recording Full-Figure Changes

We have set forth as Vital Point I the fact that we must record all full-
figure fluctuations which have registered on the tape. Many persons.
after a casual study of the Point and Figure Method. may reach the con-
clusion that Point and Figure charts prepared from newspaper data, that
is the opening, the high, the low and the close which are published daily
in financial sections of newspapers, are sufficient from which to gather
the full-figure changes necessary to prepare our one-point charts. How-
ever, this is not the case. One is not able to obtain all of the full-figure
changes from newspaper quotations. All full-figure changes are necessary
because only by recording all of them are we able to develop the proper
congestion areas, which, in turn, show full fulcrums and subsequent cat-
apult and semi-catapult formations.

There is little advantage to the study and use of this Method unless you
make records of all full-figure fluctuations. Furthermore. it is absolutely

28
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

essential to record all of the full-figure changes if we are to depend upon

the count method for the purpose of anticipating the extentand probable
culminating point of the next move. The technical terms used herein are
more fully explained in subsequent chapters of this work.

While it may be truthfully stated that some of the low-priced stocks do

not fluctuate a full point during the day, and, therefore. the needed data
could be obtained from the newspaper, it must be emphasized that even
though we are interested in a low-priced stockwhich does not fluctuate
actively during a trading day, we must plot the movement of the active
stocks in order to get the pulse of the market and thus be able to judge
the trend and turning points. Even in low-priced stocks, it is difficult to
get an accurate analysis of all full-figure changes unless one has access to
the tape so as to know whether the high or low was first established and
their exact relationship to the close.

Vital Point II - Only Full-Figure Changes

No transaction is recorded on our charts unless it is a flat full-figure
change to the flat full figure above or below the last recorded price. A
stock may fluctuate seven-eighths points above its last recorded figure.
and seven-eighths points below. giving it a total fluctuating band of one
and seven-eighths points, before we enter a new change on our graphic
records.

Vital Point III - Suitable Graph Paper

Graphs or charts, whichever you choose to call them, are absolutely essen-
tial to this Method. These condensed pictorial representations of the course
of the price movement with its oscillations, its advances and declines. are
absolutely essential to a scientific study of stock price movements. Charts
may be made on any kind of paper which is suitably ruled for the purpose.
We especially recommend Ideal Charting Sheets for Point and Figure
Charts. because theyhave been carefully designed in order to facilitate the
preparation of the charts and permit instantaneous analysis after the
records have been completed.

29
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Vital Point IV - Use of Horizontal

and Vertical Columns
The recommended graph paper for use with this Method is laid out in
columns of squares vertically and horizontally arranged similar to a check-
er board. The lines dividing the vertical divisions are all of uniform thick-
ness. These vertical columns are used for containing the price movement
as they continue in the same direction. The horizontal columns of squares
are used to represent specific price levels. The lines dividing the horizon-
tal columns vary in their thickness, for we accentuate the columns for the
"S's" and heavily accentuate the columns for the "IOs." The plan for
accentuating the "5" and "10" squares is very helpful for swift recording
and quick analysis. In addition, this especially designed paper has silhou-
ettedfigures representing the "a's" and "S's.' which facilitate quick place-
ment of these particular price levels on the page.

Vital Point V - Trend Reversals

Vertical columns are used to include the price movements in one direction,
up or down, until a reversal develops. When a reversal does develop and
we require a symbol to be placed in a square that is already occupied, it
is necessary for us to move over to the next immediate adjoining righ-
hand column. After the first figure is recorded in a new column, we may
proceed either upward or downward from that point, but not both. We
must be especially careful to note that in every case we must have more
than one symbol in a vertical column.

Vital Point VI - Only One Symbol to a Square

Since no square can be used twice, it is essential that upon reversal of the
trend of the stock price movement we move over to the next right-hand
column. Each reversal in trend which calls for an "x" to be placed in a
square already occupied requires that we move over to the next right-
hand column. In cases where a reversal requires onlya one-point change,
after which the trend is again established in the previous direction, it is
not necessary to move over to the next column, for the change in trend
would require a plotting in a square above or below the first one used in

30
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

the new column. This square. above or below. being empty. we proceed
to plot our next symbols. Thus. you will see that in no case can we have
only one "x" in a vertical column.

To cite an example. let us analyze the move in XYZ. Figure 2. We start

plotting the action of this stock at full-figure 34. and indicate an upward
move to full-figure 36. After 36. a reversal to 35 is required. but since
the 35 square is already occupied. we move over diagonally (never hori-
zontally) to the nextright-hand vertical column. Nowthe up move is again
established and we continue in the same column plotting our symbols
above the 5. first figure recorded in the new vertical column group.

A similar situation develops on the reaction from 38. back to 37, from
the second column in use to the third column. Another like example occurs

FIGURE 2 XVZ One-Point Chart

0

=
XYZ
5 ONE POINT CHART

FIGURE FIGURE
WITH TREND OUTLINE SUPERIMPOSED

45
X
xx x
XX /IX
XX I~
40 00 0 ]I
x x xxx 1il xl:Ji
xx xx x xiI<
xx xx
xx xx X
35 55 5
t x

30

This chart Illustrates VItal Point VI- only one symbol to a square. Since no square can be
used twice. each time a reversal of the trend of the stock price movement occurs, we must
move over to the next right-hand column - diagonally. never horizontally. The trend outline
superimposed over the figure chart visually emphasizes this movement.

31
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

on the one-point reaction from the first full-figure 40. down to the second
39. Now we come to a difference which develops after the stock rallies
from 39. to 40. A sharp subsequent reaction develops and carries back
down to 35. Here you see how in one instance a one-point change moves
over to the first right-hand column. while another one-point change con-
tinues in the same column with subsequent changes again moving over to
the next right-hand column.

This is one of the most important principles to be carefully observed in

preparing your Pointand Figure charts. Study it carefully and knowit thor-
0ughy before you proceed with the work. Unless you thoroughly under-
stand the principles of making these important one-point records, you can-
not hope to correctly analyze formations which are developed. You cannot
hope to arrive at proper and reliable conclusions if you base analysis and
deductions on incorrectly prepared data.

Vital Point VII - Move Over Diagonally

This point needs very little further explanation. for it is carefully indicat-
ed for you on illustrations throughout the book and fully detailed in our
previous paragraph.

Vital Point VIII - Skip No Squares

In the progression of symbols across our graph paper. no square may be
skipped. The pattern traced must be a continuous joining of squares of
those above. below or adjacent to the diagonal corners. It is onlythrough
the proper development of the price path patterns that the important
zones of accumulation and distribution will become recognizable. More-
over, trend lines cannot be accurately plotted unless the patterns are like-
wise accurate and symmetrical.

Vital Point IX - Formation of Congestion Area

The most importantpattern that will develop on your charts isthat which
is known as the congestion area. It represents what is technically known
as a trading range and shows the struggle between the forces of supply

32
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

and demand, either at the bottom of the move where accumulation is

being completed or at the top of the move where distribution is taking
place. At intervening points on the rallies and declines. congestion areas
of minorsignificance form as a resultof temporary consolidation. You will
soon learn to recognize the importance of the several different types of
congestion areas which are formed on your charts.

Vital Point X - The Full Fulcrum

The most important congestion area to form on your charts will be the
full fulcrum. A full fulcrum congestion area develops after an extended
down move when the forces of demand overcome the forces of supply
and a base is formed. followed by two or moreattempts to rally. The first
indication of strength occurs after accumulation begins at the bottom.
when a sharp up move develops and subsequently fails with a recession
to the previous support point or to a point slightly above the previous sup-
port level. Here. after a little backing and filling. the stock develops tech-
nical strength and a new rally carries it higher than the last previous high
point, at which point, a full catapult develops.

Vital Point XI - First Buying Point

When you are sure that a full fulcrum is in the process of formation. it is
wise to make a commitment as near to the base of the congestion area as
is possible. with a stopplacedjust below the lowest point of support. This
is the best place to establish your long position. for here you have the
opportunity of gaining the greatest number of points advance with the
least possible risk. limited through the employment of a "stop order."

Vital Point XII - The Catapult

The second importantplace to establish your long position "on stop" isthe
full catapult point. The law of probability strongly points to the fact that
you will quickly see profits after establishing your position at this point.
The true full catapult which develops after a full fulcrum has been com-

33
 THE POINT AND FIGURE METHOD - THEORY AND PRACTICE

pleted, normally shows from 3 to 6 points profit before a technical cor-

rection registers a paper loss on your position. The "stop" used to protect
this long position should be placed one point below halfway between the
low of the base in the fulcrum and the full catapult point.

Vital Point XIII - Secondary Buying Point

Never fail to take advantage of every full catapult as it develops on your
chart. Occasionally you may err and suffertemporary paper loss. but in the
vast majorityof cases, the full catapult point always develops quick profits
for a position established there. especially at the inception of an interme-
diate or main uptrend following a protracted period of declining prices.

Vital Point XIV - The Semi-Catapult

The semi-catapult is somewhat similar to the full catapult with the excep-
tion that it develops duringthe advance. After a stock moves off the base
known as a full fulcrum and an extended move is in progress. it hesitates
and forms temporary congestion areas on the way up. These small con-
gestion areas, usually resulting from minor technical reactions during the
advance. create semi-catapult positions as soon as the strength in the
stock registers a new high price over the high previously established
before the technical reaction.

Vital Point XV - Third Buying Point

Make a long commitment at the semi-catapult point each time it develops.
Protect this position with a "stop order" placedjust below the lowest point
established on the technical reaction preceding the semi-catapult figure.
You may occasionally lose one or more of these positions and suffer the
loss of a point or two between the semi-catapult price and your stop order.
However, your losses will be limited while your chances for profits are far
in excess of the probability of loss. Profits will accrue to this position in
more than six out of ten times established. which profits should be far in
excess of losses. especially if the "stop order" suggestion is followed.

34
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Vital Point XVI - Watch for Distribution

After an extended advance. be on the alert for the first signs of distribu-
tion. A trading range or congestion area which is built up after a sharp
advance in price will be the point for you to watch for first signs of dis-
tribution. Use a "stop order" if you are in doubt. or sell on strength soon
after you have recognized the beginning of distribution. Technical aids for
determining signs of distribution will be found in Book 2 entitled Ad-
vanced Theory andPractice of the Point and Figure Method. *

Vital Point XVII - Trend Lines

Trend lines are helpful technical aids to use in conjunction with your Point
and Figure chart. The technic of the use of trend lines is fully described in
the advanced book prepared for students who have already mastered the
principles outlined in this book.

Vital Point XVIII - Forecasting the Extent of the

Move
The "count" principle of gauging the extent of future movements can be
applied by those who have thoroughly mastered the elementary technic of
the Pointand Figure Method. Through the use of certain well-established
scientific principles. your Point and Figure charts will show the probable
culmination point of the next move. The system of the "count" is highly
technical in its character and fully described in the Advanced Theory of this
Method.

* Notefrom the Publisher: This book is no longer available.

35
 v
Approved Method of
Assembling and Maintaining
Proper Data
e have made clear to you the fact that this time-tried Method

W depends for its accuracy upon a radical and entirely different

principle. Price changes, that is the fluctuations in the price of a
stock, are more important as the basis upon which to judge its technical
condition than are either volume or price range. Price range is the zone
between the high and the low which the stock registers each day.

A carefully compiled transcription of these price changes will point the

way to more consistent and greater profits. with less guesswork and
more confidence in your market commitments.

Before we begin to make the chart, it is most important that we obtain

the exact price changes in the order in which they occur, and that we be
certain of the source of our data. It is vital and most important to the
proper application of this Method that we obtain all of the price changes
and plot them all. The most vital signals given by this Method are those
occurring in the trading ranges, the congestion areas, either at the termi-
nation of moves at bottoms and tops, or in the consolidation areas, dur-
ing the advance or decline.

A trading range is the zone in which a stockbacks and fills, i.e. fluctuates
above the level of support where sufficient buying is encountered to

37
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

absorb all offerings and the resistance level above where the demand is
unable to absorb the supply. A trading range is sometimes called a "line
movement" especially when it is used to describe this action on the part of
a marketindex. In the latter case it shows the base, that level at which suf-
ficient capital is available and desirous of being exchanged for stock, and
the resistance level above where the holders of stock desire to exchange
their equities for cash.

It, therefore, becomes evident and is of vital importance that all fluctua-
tions be obtained from reliable sources and that they be carefully record-
ed in the order in which they occur.

The TIcker Tape

Many years ago, Stock Exchange authorities recognized the importance of
creating and preserving actual records of all transactions as they occur on
the floor of the Stock Exchange. It was then that the ticker tape, as we
know it today, was conceived. In the beginning, the records were crude.
but as the market broadened in the number of corporate issues traded
and this country grew in wealth and importance. the ticker became more
highly developed, so that now it is capable of high speed, and the price
fluctuations are printed almost as quickly as they occur. It is only on rare
occasions that the new, high-speed ticker lags, a few minutes at most,
behind the actual transactions.

Source of All Data

The ticker tape is the official Stock Exchange record of all transactions,
and it automatically becomes the source of all data for this or any other
method of anticipating stock price movements. Whether you are guided
by vertical line bar charts. by moving averages, by statistical information,
business conditions or by the actual technical condition of the stock itself,
the source of all information as to the price, the range, the daily closing.
daily, weekly, monthly or yearly, high and low prices, or actual price fluc-
tuations, the ticker tape isthe original source of all information. All errors
which occur in the recording of the transactions effected on the floor of

38
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

the New York Stock Exchange are quickly corrected on the tape, some-
times within a minute or two after the error occurs. The ticker tape, there-
fore, is considered the very best source from which to get the price fluc-
tuations so vitally necessary to the use of the Pointand Figure Method.

Daily Full-Figure Fluctuations Available

It is not necessary for you to be in your broker's office in order to pro-
cure all of the full-figure fluctuations. The publishers of this book provide
that service, and it is published daily. In order to insure the accuracy of
the information, they have a trained and skilled staff of men who read
closely all transactions on the ticker tape.

Each morning, the previous day's changes are carefully checked against
data supplied by the Stock Exchange blue sheet and the three most reli-
able daily financial publications. Errors, if any occur, are carefully noted by
the service on the succeeding day in a special errata column.

In the less volatile issues it ispossible to approximate the full-figure changes

from the stock market quotations as published in your daily newspaper.
Price fluctuations compiled from newspaper openings, highs, lows and
closes, are not nearly as dependable as the information garnered directly
from the tape. In one case, you are assured of all full-figure fluctuations,
while in the other, a great number of full-point changes may be missed.
This is vital and important because as you proceed with your work, you
will soon realize that complete campaigns of accumulation and distribution
can be effectuated in one, two or three market days. f15 a general rule,
Point and Figure charts compiled from newspaper quotations will rarely
show a complete fulcrum, catapult or semi-catapult formation. These for-
mations will develop when you plot all of the full-figure fluctuations.

Justas a house cannot bebuilt unless a foundation or base is first laid, so

a stock cannot rally to any degree, as a general rule, without first creat-
ing a congestion area or base from which to advance. Therefore, you
mustrealize that in order to have fullestadvantage from your knowledge
of the Point and Figure Method it is absolutely essential that you record
all of the full-flqure fluctuations.

39
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Method Ideal for Those at Distant Points

For students and observers at distant points. this Method offers a splendid
opportunity for observation and study. Even though your Full Figure Daily
Data may bethree or four days late in arriving. your charts will always tell
the story in ample time for you to have fullest advantage of moves as they
develop.

If you are a great distance from New York City and cannot get the accu-
rate full-figure changes, we suggest the following procedure. Obtain from
your brokerage office. customers man or daily newspaper, your tentative
full-fiqure fluctuations. and enter them on your charts by making pencil
dots in the squares representing the temporary and estimated changes. A
day or two laterwhen you receive your accurate full-figure changes. carry
forward your chart in ink. Thus. you will have the opportunity of being
right up to the minute on the few stocks in which you may have a com-
mitment, and when authentic figures arrive. you are assured of having the
correct changes for inking in your graphic records for future reference
and study.

Application of the Data

After you are certain that you are obtaining all of the authentic full-figure
fluctuations. it is well for you to form the habit of recording the changes
each day. It is best to maintain charts of at least fifty. and if possible. one-
hundred active stocks. as well as of the following averages. namely. the
Dow Jones Industrials. the Dow Jones Rails. the Dow Jones Utilities and
the New York Herald Tribune Index of 100 Stocks.

A one-half point chart compiled from figures representing the half-hourly

running line of the Dow Jones Industrial Averages is also very informative
of the nearby minor swings. Elsewhere in the book. we supply full detailed
explanations of this half-point, half-hourly running line index.

For the sake of emphasis and clarity and in order to give the student a
proper start. we describe. hereunder. the different types of charts which
may be built up from the basic data. namely the one-point figure changes.

40
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

How to Prepare and Collate the Needed Data

It is of vital importance that you keep allthe needed data in a uniform, neat
and compact arrangement. The authors have devoted serious thought to
this problem and the publishers have designed a series of special charting
papers which are ideal for the purpose.

Proper Graph Paper Helpful

We recommend and use, exclusively. "Ideal" charting sheets #5001. print-
ed onwhite paper. for our one-point charts; #5003, printed on buff paper.
for our three-point charts; and #5005, printed on blue-tinted paper for
our five-point charts. No. 5001.5. our half-point paper, is especially recom-
mended for fractional Point and Figure charts. Nos. 5001, 5003. and
5005, are printed on good quality rag stock, 8Yz x 11. and are perforat-
ed for the conventional three-ring binder. These sheets are convenient to
inspect. easy to remove and ideal for the purpose of study and compari-
son. The ruling. especially designed, presents a simple arrangement for the
digit, ciphers and full-figure fives.

The sheet is so laid out that it may be read at a glance with the minimum
probability of error. The price level is quickly realized, so that in going
through your binders of charts. your attention can be concentrated on a
study of technical conditions rather than on irrelevant details.

All of the charts reproduced in this book were drafted on these special
"Ideal" charting sheets. The sheets are printed in a special color of ink
which permits you to make your charts in pencil or in ink. When using
pencil. the special color of the background graph lines permitsthe pattern
to stand out in contrast to that background. even though you use a hard
#3 pencil. which permits the plotting to be made without smudging. as is
sometimes the case when a softer pencil is used.

As you progress with your work. you will soon be able to keep a graphic
record of the movements of 100 stocks and five averages within the one-
half hour period.

41
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Arrange Charts Orderly

The charts kept in your loose-leaf binder should be segregated into one-.
three-. and five-point groups. Since the sheets are printed on differentcol-
ored paper stock. one may easily differentiate them and quickly select the
desired chart. The arrangements within the binder may bealtered in accor-
dance with your personal preference. We have found it more convenient to
group the charts in alphabetical order according to the name of the stock.
In this way. comparisons and daily changes are made quickly and easily.

One need not feel that the pressure of other affairs will prevent one from
mastering this Method. Primary records. the one- and three-point charts.
can be kept and maintained by any clerk or stenographer. Any intelligent
assistant. after a little preliminary study of the principles of this Method.
can keep all the needed data and pass on the finished work for study and
analysis.

How to Select the Issues to Record

In selecting your group of stocks. it is well to include a minimum of fifty
of the most actively traded issues. Whether or not you intend to trade in
any or all of these stocks is of no consequence. In addition to the individ-
ual issues which it is important for you to keep. it is wise to record the
movements of at least three or four of the important popular averages.
We suggest the Dow Jones 30 Industrials. the Dow Jones 20 Rails. the
Dow Jones 20 Utilities and the New York Herald Tribune Averages. The
Dow Jones Averages are shown and quoted wherever American stocks
are traded in. The Herald Tribune Average is a weighed index of 100
stocks and a better. truer. and more ideal cross section of the market as
a whole. It is less volatile and more dependable due to the fact that it is
not easily manipulated.

In addition to the four indexes suggested above. your authors keep and
observe a one-half point chart of the Dow Jones 30 Industrials. calculat-
ed on a half-hourly interval. The running line half-pointhalf-hourly index
is a very helpful aid in determining the short swing trends and their ter-
minations.

42
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

While at first glance it may appear that the necessary data hereinbefore
outlined will cause an insurmountable amount of work, nevertheless, we
want to call your attention to the important fact that the greatest losses
in the stock market were occasioned by hasty judgment. want of incen-
tive and lack of knowledge of actual market action.

Investment and trading is a serious matter. If you desire to succeed and

take profits from the stock market. you must expect to work and study.
The work is interesting, the necessary materials inexpensive, and the com-
pensation far in excess of the value of the effort and time consumed.

If you want to have the greatest benefit from your knowledge of this
time-tried Method, we urge you. once more, to keep and maintain the
one-point moves in 100 stocks and five averages and the three-point
moves for the same group. Five-point charts, which were mentioned
before, are not absolutely essential. They are helpful and can be used for
the important indices in order to aid in judging the main trend, and as
condensation charts for the more volatile issues.

Clarifying the Use of the Symbols

Recording these price movements, as we have already explained, is done
through the use of three simple symbols, "x." "5," and "0." The symbol
"x." stands for any full figure which does not include a five or a cipher.
Therefore, the symbol "x" maystand for the digits one to four. sixto nine.
eleven to fourteen. sixteen to nineteen, and so forth and so on. The sym-
bol "5" represents all the multiples of five, such as five, fifteen, twenty-
five. thirty-five, etc. Note here. that the figure "5" is used only where the
figure ends in five and not when it ends in zero. The symbol "0" is used
to represent all multiples of ten in the progression of the price movement.
10,20,30,40, 50,60,70, ett.

Examine, now, one or more of the charts included in this book in order
to get a better and clearer understanding of the use of these symbols.
Charts show in clear and simple manner how to use the "x,' the "5," and
the "0," in their proper places in the price progression and the pattern
formation which it creates.

43
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Examine Figure 2 on page 45, headed "XVZ One-Point Chart." Note

how we have illustrated the use of all three of the symbols. The first
and lowest "x" represents the full figure 34. Thefirst figure. "5," imme-
diately above the first "x" represents the full figure 35 and indicates a
progression in an upward direction from 34, to 35. as the stock moves
upward. The "x" above the first single figure "5" stands for 36. This
shows a move of two points from full figure 34, to full figure 36. or a
move to 36 7/ 8 , which would be the fullest extent of an upward move
represented by an "x' in the 36 square. The second full figure "5," indi-
cated in the next right-hand column. again represents the price pro-
gression and a reversal of the former trend.

Moving to Next Vertical Column

Note. here. one of the most important principles in plotting the price
movements by the Pointand Figure Method. When the trend direction of
a stock changes and the required square is already occupied by a symbol,
it is necessary to move over to the nextadjacent right-hand column. This
is very important and one of the principal stumbling blocks which may
give you trouble if you do not thoroughly understand it. The chart of
"XVZ" at this point indicates a move in a downward direction, from the
previous 36 full figure or 36 and a fraction. to the full figure 35 or 34
and fractions above the flat full figure 34.

After plotting the symbol in the 35 square. the trend again changes, and
the price movement progresses in an upward direction. The next full fig-
ure required is a 36. Since the 36 square is open. we may plot this by
recording our "x' just above the "35" most recently recorded. The move
then continues in an upward direction registering 37 and 38, before a
reversal takes place. Thereafter, we are required to indicate a downward
move to 37 or fractionally lower, and since the 37 square in the column
is already occupied, we are required to move over to the first right-hand
column. Again the trend changes. Now we require a 38. indication, and
the symbol "x" is placed in the square just above the 37 most recently
recorded.

44
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 2 XVZ One-Point Chart

0

'- '-"
XYZ '-'-'-

5 ONE POINT CHART

FIGURE r FIGURE
WITH TREND OUTLI NE SUPERIMPOSEO

45
X
xx x
xx I.X
xx I~
40 00 0 I"
X X XXX l\il!x
XX xxx x:«
xx xx Ix
XX xx rI fl<ix
35 5 5 5 rI IV
t X rl

30

This chart Is shown again to Illustrate the recording of price movement through the use of
the three symbols - "x," "S"and "0:' It also shows the symbols In their proper places in the
price progression and the pattern formation which It creates.

Use of Symbol "0"

The move continues upward, 39, and full figure 40, is registered. Here
we have the first opportunity of using the symbol zero. "0," then, is
placed in the square above the 39, on the 40 horizontal line. Thereafter,
a down move to full figure 39, is recorded and we find it necessary to
move over to the next right-hand column, because the 39 square is
already occupied. The stock then rallies to 40, and we plot the 40 above
the 39 already recorded. A sharp down move follows, and the stock reg-
isters full figure 35, before a change in trend takes place. This requires
symbols to be placed in the 39.38,37,36 and 35 squares. Since the 39
square is already occupied, we move overone vertical column to the right
and indicate the down move to full figure 35. The stockthen rallies to 39,
requiring symbols in the 36, 37. 38, and 39 squares in the next adjacent

45
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

right-hand column. Now a one-point reversal is recorded, requiring us to

move over to the next adjacent vertical right-hand column where we plot
an "x" in the 38 square. The stockthen rallies sharply, making full figure
44, and we proceed with our recording, placing an "x" in the 39, "0" in
the 40 square, "x" in 41. 42, 43 and 44 squares. Now a reversal takes
place, and the stock sells off making the full figure 41. Again we are
required to move over to the next right-hand column in order that we
may record our "x" in the square for 44. and we carry to 43, 42, and 41.
terminating the move as indicated.

In order to make it clear for you, we have designated the direction of the
move by showing a black line superimposed over our symbols on this illus-
tration. Note that we have used the symbol "x" to indicate the prices 34,
36, 37, 38, 39, 41, 42. 43, and 44. The symbol "5" indicates the price
35, and the symbol "0" indicates the price 40. in recording the full-figure
changes.

When we commence to plot the movement of a stock with the full fig-
ure 34, no change is made until either full figure 35 or full figure 33 is
registered on the tape. Thus. should the stock go downfrom 34 to 33 1/ 8 ,
no change on our records would be made. Similarly, a move upward to
347/ 8 would be disregarded. You see, therefore. that a stock may fluctuate
17/ 8 points without requiring any change on our Pointand Figure data.

One Cardinal Principle

Fractional fluctuations are disregarded unless a new flat fuJI figure
is completed. We urge you to trace carefully, again, the move in XYZ by
one-point fluctuations as illustrated in Figure 2 (see page 45). Note the
fact that fractional fluctuations are completely disregarded. A move which
fails to record a new flat full figure is considered of no importance and,
therefore, not taken cognizance of.

Gaps Are Not Recorded

Since vertical line bar charts have come into wider vogue, several techni-
cians have laid downcertain principles based upon the phenomena known

46
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

as gaps. Gaps on a bar chart are created as a resultof a thin market and
occur (1) when the high of a day is lower than the low of the preceding
day, and (2) when the low of a day is higher than the high of the suc-
ceeding day. Thus. you see. one gap is created by strength, which leaves
an opening between the low of the new day and the high of the previous
day. and the other by weakness. which leaves a gap between the low of
the preceding day and the high point made after the weakness developed.

In vertical line technic. commentators have noted that gaps created by a

thin or unusual market are. as a rule and in the majority of instances.
closed over sooner or later by subsequent marketaction. The principle of
gaps and their subsequent closings is not to be relied upon in all instances.
While it is customary for gaps to close shortly after they are left by mar-
ket action. it is not a fixed rule, and cannot be thoroughly relied upon.
Gaps exist in many issues. both above and below present market action.
In rare cases, some take years before subsequent action will close the gap.

The Point and Figure Method completely disregards the gap phenomenon
and its theory. Since we are interested in price fluctuations and the record-
ed trail of the price path, the mere fact that no transaction takes place at
any particular point in that path is of little consequence and is not taken
into consideration.

How the Gap Occurs

Let us illustrate and show you an actual example of how the Point and
Figure Method provides for gaps in the price track of a price movement.
Let us assume. for instance. in XYZ. that full figure38. recorded at the bot-
tom of the fifth rally when the stock moves down from full figure 39 to
full figure 38, represents the closing at a particular day. and that overnight
some bullish news is released unexpectedly and a sudden demand is creat-
ed for the stock of the XYZ company. A news item such as "XYZ dividend
rate raised from $2 to $4" might create such a situation.

Let us suppose that some trader wishes to buy one-thousand shares

quickly, believing that subsequent marketaction will show good profit for
a newposition established at this point. He places an order with his bro-

47
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

ker to buy 1000 shares of XYZ. "at the market." The quotation on XYZ,
is: "38Y2 bid. offered at 40."

The block of shares offered at 40 is only200. and. therefore. the broker

musttake200 at 40. 100 at 40%. 100 at 40%. 300 at41. 100 at4111s
and 200 at 41%. This transaction on the tape would appear as follows:

\ XVZ 2540-40% -40% -3541-411/s-2541 % t

With the previous close having been registered at 38. these transactions
shown on the tape would require the following changes in our graph:

Plotting the Gap

Following the 38 in the vertical column and above. an "x." would be plot-
ted in 39. even though no transaction appeared between the previous 38
and the opening 40. The next symbol recorded would be the zero in the
40 square. and then the "x" in the 41 square, representing transactions
up to and including the 200 shares sold at 41%.

Subsequent action of XYZ for the rest of the day included a continuation
of the strength up to 44 7/s. followed by a reaction to 41.0 where the
stock closed. That action on the tape would be illustrated by a continua-
tion of plotting "x's" in the vertical column upto and including the "x" rep-
resenting the figure 44. and then the reversal of the trend showing the
"x" in 43 moving over to the next right-hand column. then 42. and final-
ly 41. where the stock closed.

Thus. you see, in order to develop the proper technic for creating reliable
patterns on our Point and Figure charts, we disregard the theory of gaps
since it has no influence on our conclusions.

The One-Point Chart

Since all conclusions and subsequent records are compiled from your one-
point charts. it is the best policy to keep them with greatest care. One-
point charts should be made in the simplest manner possible and by
means of the "x." "5:' and "0:' symbols hereinbefore described.

48
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

While any square ruled paper may be used for this purpose. it is better to
use the specially designed paper which is available for this purpose and
which will permit the accurate plotting of trend lines and the quickrecog-
nition of the 5 and 10 levels, as well as the full fulcrum, the catapult and
semi-catapult as they develop.

In orderto get a betterand clearer conception of marketaction. it isadvis-

able also to compile asubstantial quota of charts and keep them up to date.
since a comparison of the patterns formed on the individual charts will
enable you better to judge the important trends and the vital turning
points. No matter what your plans may be, whether you trade for the
shorter swings or invest for the longer pull, you will require these one-
point charts. No reliable analysis of technical condition can be made with-
out them.

It is from the one-point charts that we are able to recognize zones of

accumulation. the beginning of the mark-up, the vital points at which to
place long positions. the critical points at which stop orders should be
placed. and. finally, indications of distribution.

The Three-Point and Five-Point Charts

In addition to these one-point charts, we will require, as a check on our
work, three-point charts of the same stocks and averages which we have
plotted by one-point moves. Three-point charts are a resume of the action
and are compiled solely from the moves indicated on your one-point
records. These three-point charts enable you to keep a clear picture of the
intermediate swings of most stocks. They give a true basis for analysis of
the more volatile issues.

Condensing the One-Point Moves

Three-point charts eliminate minor technical fluctuations and show the
broader congestion areas. In making your three-point chart, you must
always remember that your one-point records must show a move of not
less than three points in the opposite direction before it is recorded on
your three-point condensation chart.

49
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

For example: We start with the figure 40. Your one-point chart must
show a move to the figure 43. before any record whatsoever is made on
your three-point chart. This move from 40. to 43. would be plotted on
your three-point chart in the same manner as it is plotted on your one-
point chart. From 43. before we could plot a reversal on the three-point
chart. your stock must register a reaction to 40. or lower. However.
should it react to 42. or 41. no change would be be made on the three-
point chart. Now. in minor technical reactions to 42. or 41. followed by
a subsequent rally. which would go above the previous 43. the move
would be plotted by one-point moves in the same column on your three-
point chart as the price advances above 43. Let us say. for example. that
the stock rallies to 47. without a full three-point reversal from 43. The
added figures on your three-point chart would be 44, 45. 46 and 47.
Thus. you see that your three-point chart will show a straight run from
40. to 47. with no other indications recorded. Temporary declines of less
than three points are ignored on this chart. and continued subsequent
advances above the previous high prices. should they occur. are carried
forward by one-point registrations in the same column. Three-point
charts are plotted only of trend reversals which are three or more points
in extent. In all other respects. your three-point charts are made in the
same manner as are your one-point charts.

The five-point charts condense the price changes to moves of five points
or morebut not less. They arehelpful in connection with the indices when
prices fluctuate broadly and when they register in the higher price ranges.
such as was witnessed in 1929. Five-point charts are also very helpful in
that they simplify the interpretation of the wider moving highly volatile
stocks. Issues which advance or decline thirty to fifty points in a single
intermediate market cycle must be plotted by five-point moves, since
these charts give the mostdependable and satisfactory presentation of the
technical condition of the issue. Five-point charts are also helpful for the
determination of the main and long-term trends. They condense the time
factor and show long-term accumulation and distribution. thus indicating
the trend or movement of capital as it comes into variable equities-
common stocks - near the bottom of a bear market. and as it moves out
of variable equities into bonds or other forms of wealth, at or near the
top of a bull market. Five-point charts are not necessary for all stocks and
need only be kept on the highly volatile issues and the market indices.

50
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The technic of preparing five-point charts is exactly the same as that of

preparing three-point charts with the exception that it requires a reversal
in trend direction of five or more points before that reversal is plotted.
Continuations of direction of trend areplotted by one-point moves until a
full five-point reversal is recorded on your one-point chart.

Other Helpful Aids

The three types of charts enumerated above may be considered the
foundation and scientific keystone upon which this Method is based. In
addition. it is sometimes advantageous to make half-point charts of
complete half-point movements in low-priced stocks which do not fluc-
tuate sufficiently by full one-point moves to give a satisfactory record
on one-point charts. Furthermore. half-point charts are helpful in plot-
ting the Dow Jones Industrial Index on an hourly. as well as on a half-
hourly basis.

The Method Substitutes for Tape Reading

The half-point charts are very helpful for many purposes. They permit
the exponents of this Method to entirelyeliminate from their operations
the need for watching the tape. Under present day market conditions.
half-point charts of individual stocks. as well as half-hourly changes, of
the Dow Jones Industrial Index comprise a better and far more reliable
basis for judgment than can be had from tape reading. Half-point and
quarter-point charts are more sensitive and give an understandable
basis for a detailed record which is vastly superior to the memoryof any
human being.

A running line of the Dow Jones Industrial Index. compiled on a half-

hourly basis. is very helpful as an aid in determining the narrow swings
of the market. The running line index will be fully explained elsewhere in
this work. In plotting commodities. it is sometimes helpful to compile
your charts on the basis of quarter-point moves or half-point moves. as
the occasion requires. In some instances. when the commodity prices fluc-
tuate in money values as expressed in units and tens, our primary data

51
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

charts can be made of each tenth penny fluctuation. Since we ignore frac-
tions when making our one-point primary charts, we would ignore frac-
tions between the full figure and the half figure in making half-point
charts. Quarter-point charts would be made by ignoring all one-eighth
point moves.

We urge you, when making your Point and Figure charts. to be sure to
get all of the fluctuations.

Trend Outline and Geometrical Charts

Students and observers who are beginning to recognize the importance
of a sound knowledge of stock markettechnic will find the trend outline
and geometrical charts exceedingly helpful. Though not absolutely essen-
tial in the application of this Method, they are easy to read and veryhelp-
ful. Geometrical charts are especially helpful since they show the trading
range congestion areas and manipulation. They are also of great assis-
tance to those who wish to use "stop orders," for the reason that a clear
picture of the trading range limitations is always indicated.

Trend outline charts are made by merelyjoining the tops and bottoms, the
extremes of the moves, with a diagonal line. They are illustrated in Figures
2 (see page 45) and 3A (see page 53). These charts differ from vertical
line charts and are sometimes used by vertical line technicians as a con-
densation of the conventional vertical line charts. They enable one to elim-
inate the time factor and showthe importantswings of prices - the trend
of speculation.

The geometrical chart is made by plotting the extremes of moves with

horizontal lines and joining these horizontal lines by vertical lines. thus
creating a geometrical pattern. (See Figure 38 on page 53.)

Both geometrical and trend outline charts may be superimposed upon

your one-. three-and five-point charts by plotting the trend outline or the
geometrical pattern over your symbols either in ink, or in crayon of dif-
ferent color from that which you use for the purpose of recording your
basic data.

52
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 3A Trend Outline FIGURE 38 Geometric

0 0

5 5

XYZ XYZ
0 PC _"R I~ 0 nNl'" l/"IIN_

45 4 5

0 40
III
II

35 V 35
I I

30 30
Trend outline and geometric charts are created using vertical. diagonal. and horizontal lines
Instead of symbols. Trend outlines are made by merely Joining the tops and bottoms. the
extremes of the moves. with a diagonal line. A geometric chart Is made by plotting the
extremes of moves with horizontal lines and Joining these horizontal lines by vertical lines.

The Proper Issues to Chart

When preparing a set of charts. it is natural and wise to plot the foremost
market leaders. From time to time. market leadership will change. There-
fore. as one group or one issue loses its popular investment or speculative
following, it will be necessary to start charts on the new leaders. The fol-
lowing issues are suggested. at this time. as a good grouping. and. if care-
fully compiled and analyzed day by day. will guide the student and observ-
er to a proper and prompt recognition of the vital turning points in the
market:
Air Reduction
Allied Chemical
American Can

53
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

American Smelting
American Sugar Refining
American Telephone
American Tobacco "B"
Atchison
Auburn Automobile
case Threshing Machine
Celanese
Consolidated Gas
Dome Mines
Du Pont
General Motors
International Harvester
National Biscuit
New York Central
Sears Roebuck
Standard Oil of N.J.
Union Pacific
U. S. Industrial Alcohol
U. S. Steel
Western Union
Woolworth

No two technicians would select or agree upon the same list of leaders;
therefore, we leave it to your individual selection to plot and record those
issues which suit you best. However, keep a broad group sothat the influ-
ence of their united action, both from the investment and speculative
angles, will guide you in the recognition of important zones of accumula-
tion, the trend of the market, as well as the zones of distribution.

Commodity Price Movements

In a subsequent volume, the authors of this book will show in full detail,
application of the Point and Figure Method to the analysis of commodity
price movements. The Point and Figure Method has been used success-

54
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

fully as an aid in anticipating the future price movements of wheat. cot-

ton. corn, grain, silver and any other basic commodity dealt in on any
Exchange where a free and open market exists and price change fluctua-
tions are carefully and accurately recorded.

As the work applying to commodities is more highly technical and more

advanced. this subject cannot bediscussed now. Those desiring to use the
Point and Figure Method for the purpose of anticipating commodity price
movements should and must master thoroughly all of the principles
explained in this work as well as in the bookAdvanced Theory andPractice
of the PointandFigure Method.

55
 VI

The Scientific Fundamentals

e have stated that three scientific principles of mechanics known

W as the fulcrum. catapult. and semi-catapult are importantto

this Method and form the keystones upon which it is based.

The Fulcrum
In the science of mechanics, the
fulcrum is defined as "the sup-
port on which a lever turns and
the means by which influence is
exerted." Leverage is defined as
"the mechanical powergained by
LEVERAGE using a lever." A lever in mechan-
ics is any rigid bar capable of
turning about a fixed point and having counteracting forces applied at two
other points.

Since the purpose of all observation and study of stock price movements
is the determination of the important points from which the rallies and
declines have their inception, the pattern known as the fulcrum must be
carefully regarded when it develops on your Pointand Figure chart.

The fulcrum may develop as a base or as a ceiling near the top of the
move where it will form in reverse. It invariably forms at the extremes of
an intermediate cycle.

57
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

s
X
Leverage
1IC
1IC
1IC
o
As in mechanics, where the principle of
)(
1IC leverage is operative through the fulcrum
)(
point. so on your Pointand Figure charts,
!~S=X CATAPULT -~--=-t~~:' leverage is created when a congestion
~X xx~ x
x xxx x area forms a fulcrum after an extended
o 0
x x lC
move in the price of a stock. As the course
xx Xx x XX
lCXlClC lC.!5.lClCXXlC
.!5.lCXlC.!5.lClC~lClClC
III I !!IS S
of the price path builds up patterns on
-FULCRUII-
your Point and Figure chart, you will
begin to notice three types of fulcrums
LEVERAGE which occur and recur at the vital turning
points in the price movement. These pat-
terns repeat themselves very often and with such regularity that you will
soon reach the conclusion that no advance or decline of proportions worth-
while anticipating can occur unless the inception of the move arises from
one of these three types of fulcrums which we will later describe in detail.

Watch for a Fulcrum

After a base has formed and it develops to bea fulcrum, the leverage there
exerted creates a rally of such force and extentthat the stocksoon reach-
es the catapult point from which it quickly develops a further sharp upward
movement. Therefore. it becomes one of the cardinal principles of this
Method to be on the alert and heed carefully the development of a fulcrum
formation on your chart. Three types of fulcrums will develop: (a) the
ideal fulcrum, (b) the broad fulcrum, (c) the recoil fulcrum.

The Ideal Full Fulcrum

The ideal full fulcrum (see Figure 4 on page 59 and Figure 7 on page 63)
always develops at the bottom of secondary culminations and at the top
of major swings in new high territory. It may be considered as the head
andshoulder formation at the top andthe reverse head andshoulder for-
mation at the bottom. It develops as a result of forces, which. when they
occur, always create two ideal positions for students of this Method to
observe carefully and make long commitments from which quickand sub-
stantial profits soon accrue.

58
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 4 The Ideal Full Fulcrum

0

5 THE IDEAL FULCRUM

6 0 0 0
txX x
x x
x X
xxx X
5 5 555 5
XX x
xxx x
x xx x x
xx xx xx
5 0 00 000
xx x x
xx xx XX
xx xx xx xx
x xxx
4 5

40

The Ideal full fulcrum develops at the point where the center of gravity shows the balanc-
Ing of the forces of supply and demand. It may be considered as the head and shoulder for-
mation at the top and the reverse head and shoulder formation at the bottom.

Down Trend a Prerequisite to Fulcrum Formation

The ideal full fulcrum develops after a down trend has been halted and
the price path builds up a pattern which moves over in the trend channel
from the lower trend line to the upper trend line as a resultof a series of
rallies and declines. This action builds up a congestion area with a flat
base. From this series of minor rallies and declines, two to five points in
extent, which halt within a limited range developing a flat base, a sharp,
quick rally occurs that may result either from short covering or actual
buying which creates the short run-up because of the absence of offerings
overhead. This sharp advance isthen usually followed by a temporary cor-
rective decline which is arrested at a point above the low level established
before the first run-up. Subsequent to the second series of rallies and
declines, another sharp advance develops which must exceed the high

59
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

point of the previous rally. The second high point. which is a full figure
above the previous rally top, then becomes a catapult point.

Once the stock has developed sufficient strength to hurdle the catapult
point, it usually and speedily develops a substantial advance to higher lev-
els, and the reverse occurs when this formation appears near the top of
an extended advance.

Supply Equals Demand

The full fulcrum develops at the point where the center of gravityshows
the balancing of the forces of supply and demand.

A down trend channel formed prior to the fulcrum point indicates that
the supply of stockexceeds the demand. At the fulcrum point, the forces
begin to balance. After the first rally where the reaction holds above the
previous base level, equilibrium is regained and a new up trend channel
is in process of being established. Here, demand begins to overcome sup-
ply, and a catapult point eventually develops. At the catapult point,
demand has overcome supply, and the advance to substantially higher
levels begins.

Advantage of Figure Charts

Complete fulcrums may develop in the market action of one or two days
or possibly may take several weeks. On many occasions, Pointand Figure
charts will showthis ideal formation developing while conventional verti-
cal line charts show nothing more than a temporary halt in the down
trend. And, in reverse, at the top of a move such conventional vertical line
charts would show merely a failure to penetrate the previous top, while
your Point and Figure charts would show a complete fulcrum formation
in reverse.

The Buying Points

"TWo important buying points are indicated as the fulcrum develops on
your chart. One is in the base, with a stop order placed to limit loss from
one to three points below, and the second is at the catapult point with a

60
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

stop placed below the 50 percent correction level, which must be consid-
ered a normal reaction.

The Broad Fulcrum

The broad fulcrum (see Figure 5), which will develop on your charts,
requires close observance and careful analysis. It develops as a result of
two or more rallies after the base has been formed and will occur after a
full catapult has developed but failed to carry through. Broad fulcrums may
indicate one of two conditions: either the lack of aggressive sponsorship,
i.e, the absence of aggressive buying, or the close balance between the
forces of supply and demand. It is well to protectclosely a position which

FIGURE 5 The Broad Fulcrum

0

5
THE BROAD FULCRUM

0
x x
x x
x x
x x
5 5 5
x xx
X xx
xx xxx
xx xx xx
40 0 o0 0
x x x x X
xx xx Xx xx xx XX
xx xxx xx xx xx xx xx
X xx xx xx x xxx
35 5 5 5 5

30

The broad fulcrum develops as a result of two or more rallies after the base has been fonned
and will occur after a full catapult has developed but failed to carrythrough.

5 See StopOrders by Owen Taylor.

61
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

has been established in a fulcrum that laterdevelops to bea broad fulcrum.

Seek the first opportunity to close out the position by the "stop-order"5
method after the stock has advanced above your cost price.

The Recoil Fulcrum

The recoil fulcrum (see Figure 6) develops subsequent to a sharp and
direct down move after a base forms with ascending bottoms instead of
flat bottoms. This type of base usually develops a symmetrical triangle
with the vertex occurring just below the catapult point. You will observe
that in the recoil fulcrum a catapult position usually occurs a point or two
over the vertex of the triangle. Note. then. that this formation develops
as a result of a sharp decline followed by sharply descending tops and
sharply ascending bottoms.

FIGURE 6 The Recoil Fulcrum

0

5
THE RECOIL FULCRUM
~ x x
8 0 0 0
x x
x X
X xx
x xx
7 5 5 5 5
x X XX
xx xxx
xxx xx xx
xxx xxx
7 0 00 0 o0
xx xx x x
xx xxx
x x x
Xl(
6 5 5

60

The recoil fulcrum develops subsequent to a sharp and direct down move after a base fonns
with ascending bottoms Instead of flat bottoms.

62
 51 :::!J
-1 C'l
c:
::0
·01 rr1
+Q ~I -,J
-,~<,;~~"'. :c
THE IDEAL FULCRUM rIl
v~ 7151 "ll
x 0
X XX Z
gXXX -,J
XXX ~
7101 (I) :I>
Z
X X DEMAND C
XXX ~ "II
x C»
~
51 - i5
OVE:~E I I I I I 111·11
SUPPLY C
CATAPULT AT 64 ~li£ I ::II
xl~I~' ~ rIl
X :s::
CATAPULT AT 58 l.llLJ.QLj " T01 ~ rIl
b:f l~ ~X -,J
X X .,n :c
XI DEMAND
C 0
~ XX ~ OVERCOMING C
> S 5> ~ !t >1 1>1> > SUPPLY >151 3
X XX I
X X -,J
:c
~1~1~I~rxl~lx!xrx EQUILIBRIUM REGAINED I 1 Istol rIl
s 0 I 0
::II
-<
FULCRUM :I>
POINT 4 151 1 Z
C
~"t-( "ll
~iif ~_ _~-- GR~Q.
. ::II
~~Ci: :I>
~
o ~~ 4JOl I n
~SUI'PL.Y AND DEhlll>N :j
n
rIl
.J I
5
 THE POINT AND FIGURE METHOD - THEORY AND PRACTICE

3' .• The Catapult

...., ~

The next important principle in

the Point and Figure Method is
the catapult which develops after
the formation known as the full
fulcrum.

CATAPULT ACTION The encyclopedia describes a cat-

apult as "an ancient military en-
gine used for hurling missiles." The word "catapult" is also defined: "to
rush suddenly."

A catapult point on your Point and Figure chart is that price from which
a sharp rally should develop. A catapult develops directly as the full ful-
crum is completed and is that pointjust above the previous rally top cre-
ated before the completion of the full fulcrum. catapults are of two types:
(a) the true catapult, (b) the false catapult.

The True Catapult

The true catapult (see Figure 8 on page 65) invariably develops profits
without registering a reaction which would cause loss to a commitment
established at that point. A minor, temporary, technical reaction from the
catapult point or one or morepoints above the catapult position is a nor-
mal occurrence, and tolerable allowance should be made for it when
establishing your position at the catapult point

The False Catapult

Occasionally, during a period of indecision and uncertainty, near thebottom
of a secondary correction or near the top of a major move in a bull mar-
ket, a new high level above previous highs will be established. and either a
false catapult (see Figure 9 on page 66) or a semi-catapult develops. When
a false catapult develops, we must be on the alert. for a stock which cre-
ates false catapults is in the act of changing its technical position. The fail-
ure of a catapult to develop profits immediately is an indication that the
congestion area immediately preceding. which you may have diagnosed to

64
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 8 The True Catapult

0

5
THE TRUE CATAPULT 5

5 5

II
II
II

II II

~
II
111111
X II X
5 5
X
x •• )I
• )I
II
x "X TRUE CATAPULT
II
0

5
THE TRUE CATAPULT 5

45
II

•• TRUE CATAPULT
0
II ••• II
II

• • 5• x...X
.X.X • •
.11
II •

5 5 5
• • • • X ••
• ••
••
0 •

These two examples Illustrate a true catapult-that polntJust above the previous rallytop
created before the completion of the full fulcrum.

65
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 9 The False Catapult

0

5
THE FALSE CATAPULT 5

5 5

FALSE CATAPULTS

II
II

"" II
II I<
IJ )I
1<)1
II
I< XI<
1<1<)1
I<
1<1< I< I<
1<1< )11<1<
)II< I<X 1<1<
.
X
)I
II

I<
- TRUE CATAPULT 5

11)1 )I~
)1)1 )I x ,,~
" 0

II 11)1
"
5

FALSE CATAPULT

5
II
X I
11

I(X X X 1(1(1(
x
X
x _ TRUE CATAPULT
"
11
X I( It 1(" x,.,.
I(
)I "
)I~I( ,.
1t,,1t

"XX Ill-
"
5

THE FALSE CATAPULT

These two examples Illustrate both the false catapult and the true catapult. The false cata-
pult Is a warning and Indicates that the stock Is In the act of changing technical positions.

66
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

be a full ideal fulcrum, is developing into a zone of distribution and must

be carefully watched lestthe previous base level be violated.

In the great majority of instances, your false catapult position will permit
you to close out your commitment without loss. A stockwhich has creat-
ed a false catapult will, in many instances. come back close to that point
so that you can sell out your position with but a fractional loss. This posi-
tion may be protected with a "stop" belowthe congestion area or a "stop"
just below the 50 percent reaction point after the catapult has been devel-
oped. In either case, subsequent strength should be used to move up your
"stop-order" so that the failure of the position to develop into a true cat-
apult will not cause you serious loss.

The Semi-Catapult
In addition to the two important points for establishing commitments,
namely: (1) in the base of the full fulcrum, (2) at the full catapult point;
there develops a third which is known as a semi-catapult position.

The semi-catapult position develops during an advance in stock as a

result of a minor, narrow and limited trading range congestion area usu-
ally built up on your Point and Figure charts and from which a stock has
a minor technical correction. A semi-catapult point, in this instance. devel-
ops after a technical setback when the stockrallies and creates a new high
above the immediate preceding congestion area top. There are both true
(see Figure lOon page 68) and false (see Figure 11 on page 69) semi-
catapults which develop in the price progression.

Use "Stops" to ProtectPosition

The semi-catapult position is the third important point at which to place
your commitment. It usually develops profits quickly for you. The proper
place for "stop-order" protection on this commitment would bebelowthe
low made during the technical correction. After strength develops, the
"stop" thus placed below the technical reaction level should be advanced
to an "at the flat" position, thereby insuring the commitment against loss.

67
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 10 The True Semi-Catapult

5 5

THE TRUE SEMI- CATAPULT

7 5
II
II

-
II

II.

II
•• ••
x
••
II
~ ..
_ _ TRUE
SEMI- CATAPULT
70

II

5 5

-
•
II
II
II

7 5
•• TRUE SEMI- CATAPULT
11111111
II • II

7
~~
5 5

THE TRUE SEMI- CATAPULT

TIle seml-catapult position develops during an advance In stock as a result of a mInor. nar-
row and limited tradIng range congestion area usually built up on your PoInt and Flgure
charts and from which a stock has a minor technical correctIon. In the true seml-catapult.
the stock continues with an upward advance.

68
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 11 The False Semi-Catapult

0

5 FALSE SEMI ColO"APULTS 5

1 X
1
" X"
5 5 .5 5 6 5
xx leX 1I11)! 1I11 lIJe
"
1I JeX lOO(
Jell X It
X X )l
le
l(
"
"
5

THE FALSE SEMI- CATAPULT 0

5 FALSE SEMI- CATAPULT 5

JC
1 If
JCIlX II JC II
Ill( leJC JCXIlJC JC JC
II IlJC JCIl X xx XI(
5 5
l( II .x ICX
JC XK.
K " .X ICK
X

5 5

0
THE FALSE SEMI- CATAPULT

,
A seml-catapult point develops after a technical setback when the stock rallies and creates
a new high above the Immediate preceding congestion area top. When a false seml-catapult
develops. as shown In the above examples. the stock price declines Instead of continuing
upward In Its advance.

69
 VII

The Principles of Charting

or the purpose of giving you a clear understanding of the plan by

F which the charts are made according to the Pointand Figure Method,
and illustrating the coordination of the one with the three point or
the one with the three and five-point charts. we show an hypothetical
move in the common stock of the x:YZ corporation (see Figures 12, 13.
and 14).

The One-Point Chart

The chart x:YZ Figure 12 (see page 72) is a one-point chart illustrating a
theoretical move of the common stock of the x:YZ corporation. The first
full-figure change shown on that chart is the symbol "5" recorded at the
top of the first vertical column. This indicates that the stocksold at 25 or
between 25 and 25 7/ 8, both inclusive, on the first day in January.

In order to indicate that this was the first full figure in the month of
January, instead of using the symbol "5," we substitute therefor the sym-
bol "J." "J" indicates that this transaction is the first full-figure transac-
tion to be recorded in the month of January. You will note. also, that we
have added the year 1933 at the bottom of the column.

From the level of 25, the stocksells down to 21, or fractionally lower, but
not below 201/8. before it rallies. This calls for symbols in the squares rep-
resenting 24, 23. 22 and 21. From the low on this reaction. the stockral-
lies and makes 24, or fractionally higher. but not above 247/8. before a

71
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 12 XYZ One-Point Chart

0

)t
5 5
1111 111111
11)1 Xll)l
)1)1 11K )I
ltx )t

)I )t
II It
II x
It
5 5
ltlt Xlt KX )IX SEMI- CATAPULT
XI( I()lX XX)l
xx It XIt X
I( X X X
0 _CATAPULT
Ill(
1111 11)1 X II II
)IX 1111 )1)1 XI( Itl(ll
xxx XXI( xx ltl(
5

IDEAL FULL FULCRUM XYZ 0

5 ONE POINT

This one-point chart Illustrates a theoretical move of the common stock of the the XYZ
Corporation. Note the fulcrum formation as well as the full catapult and semi-catapult posi-
tion Indicated by arrows.

reversal is recorded. Therefore, to plot the rally, we put the symbol "x" in
the squares for 22, 23 and 24.

Move to Next Column

Note, here, that the rally requires moving over to the nextright-hand col-
umn. because the square 22, in which we were to place the symbol "x"
was already occupied, and we move over to the second vertical column.
We proceed to plot 22. 23 and 24, and then a one-point reversal calls for
a symbol in the 23 square, which, being already occupied, requires us to
move once more to the next right-hand column. Moving up, we place a
symbol "x" in the 24 square, and the symbol "5" in the 25 square. Then
weakness develops which is stopped at 20, or above the flat figure 19.

72
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

This requires symbols to be placed in the 24.23.22.21 and 20 squares.

In the 20 square. we place the symbol "0" as indicated on the chart. From
20. a rally develops to 23 and a fraction, requiring symbols in the 21. 22
and 23 squares. Thereafter. further pressure develops and a reaction dur-
ing the latter part of the month carries XYZ down to 15. We place sym-
bols in the 22 and 21 squares. a zero in the 20 square. "x's" in the 19.
18. 17 and 16 squares. and since the full figure 15. is registered on the
first day of February. we use the symbol "F" to show that the full figure
15. was the first full figure registered in the month of February. A rally
then develops to 18. which is plotted as indicated; a reaction to 15. plot-
ted as shown; another rally to 17; a reaction to 15. which is the first full-
figure change registered in the month of March; a rally to 16; a reaction
to 15; and then a sharp short covering rally to 19.

Signs of a Fulcrum
Here we have the first indication that a fulcrum is forming since the con-
gestion area has moved the pattern over to the upper trend channel line.
A short covering rally carrying the stock to 19. meets the requirements
of our ideal fulcrum formation. After the rally. a sell-off carries the stock
back down to 16. rally to 17, reaction to 15. rally to 18, reaction to 16.
rally to 17. reaction to 16. rally to 19. reaction to 18. rally to 19. reac-
tion to 18. and then a rally establishing a full catapult position at 20.
which promptly carries through to 25. Here develops a minor technical
reaction to 23. a rally to 24. reaction to 23 and another rally establishing
another full catapult position at 26. The stock now rallies sharply from
the full catapult at 26. until it makes a high of 36. for the move. Then
there is a reaction to 31. a rally to 35. reaction to 32. a rally to 34. and
then a reaction to 27. These moves areclearly illustrated on the one-point
chart. Figure 12. which we askyou to study carefully.

Technical Aids
In addition to the symbols. "x.' "5," and "0," we use the first letter of
each month to show the first whole figure recorded in that month.
Dividend payments and ex-dividend dates are registered by plotting a cir-

73
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

cle to encompass the first full figure registered on or after the ex-dividend
date. When the stock sells in a zero square, on or after the ex-dividend
date, instead of using a circle to encompass the square, which mightcom-
plicate matters, we use a dash in the center of the zero symbol used to
indicate the multiplies of tens on our charts. In addition to indicating div-
idend payments with the circle and dash, we make a memorandum at the
foot of the column to showthe amount of the dividend paid, and the date
the stocksells ex-dividend. This principle of indicating dividend payments
and dates is not illustrated on our theoretical charts, but it will be found
on other charts contained in this book.

Examine carefully this one-point chart of XYZ (see page 72) which we
used to illustrate the move and which we have traced with you. Note the
fulcrum formation as well as the full catapult position indicated byarrows.

We shall proceed to show you how a three-point condensation chart is

compiled from the one-point record just completed.

The Three-Point Chart

lake the three-point chart of XYZ. Figure 13 (see page 75), and compare
it with the one-point chart, Figure 12 (see page 72). Let us trace the
move. The three-point chart starts with the first full figure 25, records
the reaction as noted on the one-point chart down to 21, as well as the
rally to 24. The three-point chartdisregards the reaction to 23. but when
the rally from 23, to 25, registers 25, the three-point chart properly
shows the move by adding a 5, above the 24 square already recorded.

The next move which is transferred to the three-point chart is the reac-
tion down to 20, followed by the rally to 23, and then the reaction
down to 15, because each of these moves is three points or more. Since
the rally to 18, is three or more full points. we show it on our three-
point chart and plot the move 16, 17. 18. This is followed by a decline
to 15. again, which is also plotted. Then comes a series of minor rallies
and declines less than three points in extent which are ignored by our
three-point technic.

74
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 13 XVZ Three-Point Chart

0

Ie
5
XX XX
X)l XX
XX xx
xx )l
)t X
XYZ :2
X x
x
x
x THREE POINT
5 5
X Ie X
)lXX X
llXXX x
xxx x
'1
X X X
XX xX
X )l )ex
X xx X
5

ThIs Illustrates the same move of the common stock of the the XYZ Corporation as the one
in Figure 12 on page 72. Note that on the three-point chart, only rallies or declines which
are of three or more full points In extent are plotted.

The nextmove of importance which is plotted on the three-point chart is

the rally which terminates at the figure 19. Notice that we plot 16. 17.
18. and 19. The reaction from 19. to 16. is also plotted on the three-
point chart. but the subsequent rally to 17. is disregarded. Where the
reaction from 17. to 15. occurs. the fact that the 15. is lower than the
16. plotted on the three-point chartcauses us to add the 5. below the last
16. recorded. The rally from 15. to 18. being three or more points in
extent. is plotted and we add the squares 16. 17. and 18. There follows.
then. a decline to 16. a rally to 17. another decline to 16. all of which are
disregarded until the subsequent rally to 19. This requires that we put an
"x" above the previously recorded 18. and our three-point chart now
shows a rally from 15. up to 19. The minor rallies and declines of one

75
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

point from 19. to 18. and up to 19. down to 18. up to 19. again are all
disregarded. However. the move from 18. up to 25. is plotted on the
three-point chart. but the reaction on the one pointfrom 25. down to 23,
rally to 24. the nextreaction to 23. allaredisregarded. and the nextmove
which carries through the catapult point to 36. is plotted.

The decline to 31. is recorded. likewise the rally to 35. also the decline to
32, but the rally to 34. being less than three points. is ignored. The
decline which follows carries down to 27, requiring on our three-point
chart the added figures of the last decline calling for symbols in the 31.
30. 29. 28. and 27 squares.

DeterminingThree-Point Moves
Thus you have learned that in compiling a three-point chart from the
moves already recorded on your one-point chart. we plot on the three-
point chartonlyrallies or declines which are of three or more full points in
extent. In order to determine which are the moves to use. we consider the
last recorded figure as zero. and count one, two, three. If the move car-
ries to the third square or further. we record it. If it is less than three full
figures away from the previous point recorded. it is ignored. Notice, also.
a move which carries beyond the previous recorded point in the same
direction iscarried forward when a further move of one pointor more past
the previous high or low price is registered on the one-point chart.

The principle involved is as follows:

Record all moves of three or more points in extent. Disregard reac-
tions or reversals of less than three points. Continue the previous
recorded direction by one-point plottings as soon as the price ex-
ceeds the previous low or high.

Three-point charts. in addition to their function of general condensation.

form the basis for analysis of the more volatile. highly speculative. medi-
um and high priced issues. and for the broader swings of the market.
Three-point charts also showthe worthwhile intermediate trend swings,
because they eliminate all minor technical corrections.

76
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Use of Five-Point Charts

Five-point charts are used to indicate broad zones of accumulation and
distribution in the main trend when plotting the market indices. and are
used as basic condensation charts for the morevolatile issues which move
10. 20. or 30 points in a single speculative cycle. Five-point charts con-
dense the time factor and show long-term accumulation and distribution.
and are invaluable guides to the Capital Movement Trends.

Turn. now. to Figure 14. five-point chart of "XVZ." Notice. here. that we
plot from the one-point data onlythose moves which are of 5 or more
points extent. A stock must rally or decline to the fifth from the last re-
corded square before our five-point chart records a reversal. Neverthe-

FIGURE 14 XVZ Five-Point Chart

0

5 "
5 "5
x~
~x

0
XX
x~

X
XYZ ~
xx
xx
~ FIVE POINT
2 5
....
....
5

kll
Xlt
0
k
Ilk
)IX
II
I 5

5
-

0 0

Compare this five-poInt chart of XYZ with your one-poInt chart Flgure 12 on page72 and note
how thIs method provided a hIghly eft1c1ent condensation of the time factor. We plot from
the one-point data only those moves whIch are of 5 or more poInts extent.

77
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

less, a continuation of the move in the already plotted direction is record-

ed by one-point additions until a full five-point reversal occurs. In making
five-point charts, we determine whether or not the move is plotted by
starting to count zero at the last recorded square, then if the move is to
or beyond the fifth square. it is plotted.

Compare your five-point chart of XYZ Figure 14 (see page 77) with your
one-point chart Figure 12 (see page 72) and note how this Method pro-
vided a highly efficient condensation of the time factor.

78
 VIII

Analyzing Technical Position

fter you have gained a comprehensive understanding of the Method

A and the technic of making the charts, the next step is to study the
formations as they develop, and then to classify and analyze them.
It is important to know whether a stock is under accumulation in a strong
technical position, under distribution in a weaktechnical position, or mere-
ly in an indeterminate neutral position.

The Price Path Characteristics

In studying the movements of stocks, it is well to have in mind the old
saying, "Stocks mustfluctuate." Price paths on your one-point charts will
develop patterns that reflect the peculiar characteristics of each stock. You
will begin to observe that a given advance in a certain issue is usually fol-
lowed by a definite type of technical correction. You will be amazed to
observe the harmonious rhythm with which certain types of issues
advance or decline. and which generally repeat themselves in the price
progression path. While some stocks move harmoniously, other issues are
very erratic with sharp advances followed by equally short declines. and
thus complete their technical correction.

Patterns of the Leaders Duplicated in the Secondary Issues

You will note. again and again. that the key issue in any group develops its
characteristic pattern, which is usually duplicated by the secondary issues

79
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

in the same group. A catapult developing in the leader of the group one
day will more than likely be followed by a similar formation in the sec-
ondary issues soon thereafter. Study carefully the number of points
advance and the correction area which follows. Learn whether the correc-
tion area is a reaction of 50 or more percent of the advance or a conges-
tion area in which the stock fluctuates back and forth while it is consoli-
dating the move. The first correction which is greater in proportion to the
last advance than the previous corrections which occurred during the
advance is the first sign of distribution. Watch carefully for the first more
than normal reaction.

Solid Formations Give Confidence

During an advance, we prefer to see fairly solid congestion areas after
each mark-up. This indicates each stage of the advance to be well consol-
idated before the next up move develops. When the progression of the
move proceeds with only normal and minor technical reactions, it is an
indication that the technical condition of the stock continues strong. If the
formations are irregular and confusing, with no uniformityof pattern, we
suggest caution. It is an indication of conflict and uncertainty. Such for-
mations, during a major advance, give rise to hollowspaces similar to air
chambers beneath the congestion points. These occur as the technical cor-
rections overextend themselves and create intervening blank spaces in the
form of arched ellipses, semi-circles or irregular hollow patterns. Such
formations are usually advance warnings of stubborn resistance to the
advance and indicate supply meeting demand at the higher levels, with a
strong possibility of a change of trend forthcoming. This indication devel-
oping on the three-point chart is particularly indicative of the imminence
of a reversal in trend.

Watch for Changes in Activity

You will observe from your charts that stocks fluctuate narrowly during
periods of major accumulation. Soon thereafter, activity, sharp advances
and equally sharp technical declines follow. This is usually a sign of the
beginning of an extended move. Watch carefully for it. When a stock

80
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

alters its most recent fluctuating habits. it is wise to be on the alert, for
it is a sign of either accumulation or distribution.

Strong and Weak Technical Position

The technical position of a stock or the market, as represented by an
index, is strong when demand exceeds supply. This condition develops
after a period of accumulation which has followed a major decline. A
strong technical condition also exists after a mark-up followed by a con-
gestion area which develops to be consolidation.

When stock is purchased and taken out of the floating supply, technical
condition is very strong. As a stock develops a strong technical position,
the one-point charts should show an extended line of work in the con-
gestion area, either with a well-formed, fairly solid, flat base, or a series
of bases like a descending stairway, the bottom base containing the great-
est number of squares along the support line. This type of base occurs
very often. An exceedingly strong base develops after a sharp decline
when each successive rally and decline builds up a triangle with its vertex
to the right. When this formation develops to be accumulation, an ex-
tremely strong technical position exists.

Weak Technical Position

A weak technical position develops after a series of extended advances
which are uncorrected by congestion areas of consolidation. As the move
progresses, the advances are not as Vigorous as the early ones, and soon
the ascending move begins to give way to a series of confused and halt-
ing patterns created by the churning motion near the top, which you will
recognize as distribution. This formation occurs when supply begins to
overcome demand.

At this point, it is important to check against your three-point charts in

order to observe the consolidated moves and to judge whether or not a
real ceiling, which is apt to precede a drastic reversal, has been formed.
Should this formation near the top of an extended move begin to devel-
op reactions which leave air pockets, arched ellipses and other hollow

81
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

areas beneath the congestion zone. it is an ominous sign and time to close
out the position or to protect it by close stops.

Gauging the Length and Culmination of the Moves

For the more advanced students and technicians. the Point and Figure
Method affords a purely mechanical means of judging the length and cul-
mination of future moves. This system. although not absolutely accurate.
is extremely helpful injudging the proper moment to close out a position.
It is truly mechanical and involves littlejudgment to make it operative.

The Count
This system. an individual characteristic of the Point and Figure Method.
is popularly known as "the count" to students and technicians. Because of
the fact that it is somewhat involved and requires a lengthy explanation
with multitudinous concrete examples and considerable study before it
can be understood, it is omittedfrom this volume and will befound in the
more advanced work entitled The Advanced Theory and Practice of the
Point and Figure Method. by the same authors.

Coordinating Your Studies

We have stated that it is vitally important to record the action of the mar-
ket by plotting the important and popular indices. as well as the half-
hourly. half-point movements of the popular Dow Jones Industrial Index.
The conclusions which you will make resulting from the study of the
charts of these indices should be used to influence the opinion arrived at
from the study of individual issues. It is well to remember that you buy
and sell individual stocks; therefore. it is most importantfor you to make
your commitments based upon your analysis of the individual issues. sub-
stantiating yourjudgmentthrough the influences of the averages. Always
remember that we buyand sell stocks and not indexnumbers.

You have now completed a full and detailed course on the elementary
principles upon which the Pointand Figure Method is based. In orderthat

82
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

you may get a clearer understanding of how to apply your knowledge of

the Method, we will proceed to take you through a complete intermedi-
ate trend cycle move of several issues as illustrated in Chapters IX and X.
In Chapter XI you will learn how to plot and analyze the half-point. half-
hourly running index lines of the Dow Jones Industrial Averages. In
Chapter XI!, by aid of the Point and Figure Method five-point chart on
which are plotted the moves of the New York Times index, we will show
you how a knowledge and application of this Method would have avoided
drastic losses which many suffered in 1929. when the last bear market
had its inception. Lastly, we will take you through the campaign of Atlas
Tack. illustrating to you the application of the knowledge you have
acquired, and showing how such knowledge and application would have
permitted you to buy and sell with the insiders and share in the sensa-
tional moves which were completed by the insiders in that campaign.

83
 IX

Anticipating the Action

of U.S. Steel
Examine chartFigure 15 (see page 87). which shows the one-point moves
of U.s. Steel during the primary trend cycle of 1933.

The Full Ideal Fulcrum

Figure 15. shows all one-point moves in U.S. Steel from the first day of
January 1933. up to near the close of the month of June of the same year.
Charts like this are compiled from the Full Figure Daily Data supplied by
the publishers or from the one-point moves which you may obtain from
actual tape action. In the previous chapters we have shown the correct pro-
cedure for the plotting of one-point moves. Examine this chartFigure 15.
Notice the congestion area between the column marked "A" and the one
marked "8." You will recognize this to bean ideal full fulcrum. which meets
almost exactly the requirements as laid down in the definition for this type
of formation. The first column indicates an up move starting with the first
day in January. after which the action proceeds with its backing and filling
until the low point was reached. and which was established before the
fourth of March. when President Roosevelt was inaugurated. The rally to
full figure 33. was created after the bank holiday. when the marketopened
up sharply and exceptional strength developed. The subsequent correction
which carried down to full figure 27. was completed later in March. In
April the stock began to develop new strength and a sharp up trend was
recorded with ascending bottoms.

85
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Catapult Position

Notice that the pattern from the beginning of the year until the column
marked "B" indicated the required down trend, the first rally followed by
a technical correction which holds above the previous base level and then
a succeeding rally which develops a catapult point, both of which are
indicative of a trend reversal. Note in column "C" the full figure 34, indi-
cated with an arrow. This isthe mostimportantof all signals given by the
Point and Figure Method. It is a full true catapult point. Observe that ten
points quickprofit develops after a position is established at this point. An
order placed to "Buy U.S. Steel on stop at 34," would show ten points
quick profit without registering even a small paper loss.

The Semi-Catapult Position

The congestion area which begins to register in the column "0" and car-
ries forward to the column "E" is a temporary halting of the up trend. It
is the type of congestion area which develops a semi-catapult point. In col-
umn "E" full figure 45, develops to be the semi-catapult point and sub-
stantial profits accrue to this position without subsequently showing any
loss to a position thus established. While the move from 45, was not as
spectacular as the one from 34, nevertheless, it developed more than 18
points profit before the end of the move was completed.

Consolidating the Gains

Note the one-point decline and subsequent rally plotted in column "G."
Here is indicated a temporary supply of stock at the 49 level, which is
blocking further advance. The stock reacts from 49, to 47, rallies again
to 49, and then reacts to 46, in column "H." Column "I" shows good buy-
ing around the 46 level because the second decline fails to go lower and
creates a double bottom at 46. Thereafter, the stock develops strength,
and in column "J," a new semi-catapult develops. A reaction follows, in
column "K." In column "L," it goes through to new high ground forming
a new semi-catapult at 51. A small reaction then follows and in column
"M" a newsemi-catapult develops at 52. Nowyouwill begin to notice that
in the upper 50 zone the stock is meeting definite resistance. The moves

86
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 1S U.S. Steel One-Point Chart (1of 2)

. '. ~ -H

u. S. STEEL • -t

ONE POINT CHART

JANUARY ISM JANUARY 1934
PRIMARY TREND

z
o
I-
a
cr
cr
8
)0-
cr
g

5
§
(f)

This chart shows the one-point moves of U.S.Steel during the primary trend cycle of 1933.
Note In column "C" the full figure 34. Indicated with an arrow. This Is a full true catapult
point. the most Important of all signals given by the Point and Figure Method. Also notice
the arrows pointing to the semi-catapult positions at full figure 45. 59, and 61. In column
"U" we see another two arrows pointing to a ceiling or fulcum In reverse and a reverse cata-
pult position at point 63. The reverse fulcum Indicates the end of a move.

are not nearly as sharp as they were previous to this point. and the
progress. though it goes somewhat higher to approximately 65 or 66. is
made with greateffort and with many rallies and declines. New semi-cat-
apults are developed in column "N" at 55. and in column "0" at 57. when
a rally to 58 meets strong resistance and develops a double top. after
which the first extensive reaction is witnessed which carries the stock in
column "P" back down to the 51 level.

The Final Mark Up

Here a sharp recovery takes place which is plotted in column "Q." Such a
sharp recovery from a low of 51. indicates technical strength. The reac-

87
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

tion from 58. down to 56. is another bullish implication because it is a

normal correction. Then the stock rallies back to 58 making a quadruple
top at this point. The subsequent decline to 54. where another double
bottom is established. is bullish because it holds substantially above the
previously recorded low point at 51. New semi-catapults develop at 59.
and at 61.

The End of the Move - A Reverse Fulcrum

Figure 16. shows the continuation of the move of U.S. Steel which was
carried forward from the point left off in Figure 15 on the previous page.
Notice the congestion area which builds up around 65. and note further

FIGURE 16 U.S. Steel One-Point Chart (2 of 2)

U.S. STEEL
ONE POINT CHART
JANUARY 1933 - JANUARY 193 4

y.

This chart shows the continuation of the move of U.S. Steel which was carried forward from
the point left off In Figure 15 on the previous page. In column "w· at 56. a reverse seml-
catapult position develops. and the profits of a down move quickly accrue. The extended
congestion area plotted between the columns "W" and "z" Is an Indication of a close bal-
ancing of the forces of supply and demand.

88
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

that for the first time we have a quintuple top and a failure to carry
through the resistance level at 66 and 67. The actual top of this move is
plotted and indicated by the arrow at 67. Here is the end of the primary
bull trend of U.S. Steel in 1933.

The Short Positions

From this point forward. the secondary correction commences. and we
see between columns 'T;" and "V." the congestion area known as a ceiling
or fulcrum in reverse with its top point plotted in column "U" and the
reverse catapult position at 63. indicated by an arrow. in column "U" (see
Figure 15 on page 87) In column "w" at 56. a reverse semi-catapult posi-
tion develops, and the profits of a down move quickly accrue. Examine.
now. the extended congestion area plotted between the columns "w" and
"Z." Here you see an indication of a close balancing of the forces of sup-
ply and demand. In column "V:' the failure of the rally to carry further is
an indication of developing weakness. Notice the down trend which devel-
ops soon thereafter (see Figure 16 on page 88).

Geometrical Charts
In order that you may have an understanding of the application of the
one-point geometrical chart. we have plotted a part of the one-point
moves of U.S. Steel by geometrical technic. This is illustrated in Figure 17
(see page 90). Examine it carefUlly and compare it with the one-point
chart and with vertical line bar charts of the same move. This will give you
a clear illustration of the advantage to be gained from the application of
the Pointand Figure Method to stock price movements.

The Trend Outline Charts

In Figure 18 (see page 90). we show the plotting of a trend outline chart
of the three-point moves of U.S. Steel. These charts. while not necessary
in a technical analysis. are sometimes very helpful to students who will
take the time to draw them.

89
FIGURE 17 U.s. Steel One-Point Geometric Chart

U.S. STEEL
ONE POINT GEOMETRIC CHART
JANUARY AUGUST 1933

This chart shows the one-point moves of U.S. Steel Figure 15 plotted by geometric technic.

FIGURE 18 U.s. Steel Three-Point Trend Outline Chart

U.S. STEEL
THREE POINT TREND OUTLINE CHART
.....NUARY l~ JANUARY 1934

This chart shows a trend outline of the three-point moves of U.S. Steel from Figure 19.
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Three-Point Figure Charts

Figure 19, is a three-point condensation chart compiled from the one-
pointdata of Figures 15 and 16, and shows the moves of U.S. Steel from
the beginning of the year 1933, up to the end of September of the same
year. Notice how the catapults and the semi-catapults develop on the
three-point chart and how they confirm the conclusions arrived at
through the study of your one-point charts. One should always compile a
three-point chartfor every one-point chartthat he keeps. One- and three-
pointcharts are vital and essential to a proper application of the principles
of this Method.

FIGURE 19 U.S. Steel Three-Point Chart

u. S. STEEL
THREE POINT CHART
JANUARY 1933 JANUARY 1934

This Is a three-point condensation chart compIled from the one-point data of FIgures 1S and
16 on pages 87 and 88. It shows the moves of U.S. Steel from the beginning of the year
1933, up to the end of September of the same year. Notice how the catapults and the seml-
catapults develop on the three-point chart and how they confirm the conclusions arrived at
through the study of your one-point charts.

91
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Five-Point Charts

In Figure 20. we show the five-point moves of U.S. Steel. The five-point
data is obtained from the one-point charts Figures 15. and 16. Five-point
charts are very helpful and showthe broader zones of accumulation and
distribution. They should always be compiled to show the moves of the
main indexes and the volatile issues.

Summary
When you attempt to establish a long position near the base of a fulcrum.
your stop mustbe placed very close. Your position established at the cata-
pult point must allow for a 50 percent correction of the lastadvance. The

FIGURE 20 U.S. Steel Five-Point Chart

u. S. STEEL
FIVE POINT CHART
JANUARY 1933 JAMJARY 1934

The five-point data Is obtained from the one-point charts F1gures15 and 16 on pages 87 and
88. F1ve-polntcharts are very helpful and show the broader zones of accumulation and dis-
tribution.

92
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

same is true for the semi-catapult points. Note that the further the move
has extended itselffrom the full fulcrum base. the more dangerous it is to
establish a long position. After an extended advance. you run the risk of a
more than normal technical correction touching off your stop. Be patient.
Before you establish your position wait for the terminations of secondary
corrections in a bull market. Analyze your formations carefully; then pro-
ceed with confidence as the full fulcrums and catapults develop.

93
 x
Analyzing a Campaign in
Western Union
ne of the mostwidely known multi-millionaire stockmarket oper-

O ators. who lived and prospered at the turn of the lastcentury. used
to counsel his friends to buy Western Union Common whenever it
was available around $50 a share. Western Union Common has a $100
parvalue and formerly paid an $8 annual dividend. It was considered one
of the prime blue chips. In the 1929 bull market. Western Union sold
above $270 per share. In 1932. at the bear market low. its price regis-
tered $12.375. Hundreds of thousands of shares were turned over at
price levels far below $50. which was the level at which the older gener-
ation of authorities counseled their friends to buy. It sold at one-quarter
that price at the bear market low.

Selecting the Fast Moving Issues

In 1933. a remarkable campaign developed in this issue. It began around
the end of February, or the beginning of March as shown on the chart,
Figure 21 (see page 96). The stockwas available between $18 and $20
a share for many days during February, March and April. In a very few
weeks it advanced sharply and in a spectacular manner from the level of
18. to more than $75 per share. Here you have a move with a possibili-
ty of more than 300 percent profit. since $1800 invested in 100 shares
of this stock would have grown to $7500 in a short time. Notwith-
standing such a tremendous profit percentage. there was nothing about

95
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

the move which was not clearly indicated on the charts. You too could
have had your share of those profits which were made by many who
understood the technical condition of this issue. Your one- and three-point
charts indicated the move weeks in advance.

The Full Fulcrum Base

Figure 21. is a one-point chart of Western Union. Observe that the down
move was arrested near the end of February and the beginning of March
and how a congestion area base with a flat bottom was built up between
full figure 18 and 20. Note the sharp rally in the middle of the fulcrum
when the stockadvanced to 27, in one sharp. rapid upsurge from the low
of 18. Here was a sign of technical strength. a 50 percent advance in the

FIGURE Z1 Western Union One-Point Chart (1 of Z)

WESTERN UNION
ONE POINT CHART

A one-point chart of Western Union from January - July 1933. The arrows Indicate buying
levels at point 27. the first full fulcrum position. and at semi-catapults points 30. 39. 40.
44.47.53. and 62. The stock has advanced from 18 to 64 without a worthwhile technical
set-back. The beginning of a correction Is Indicated by the reverse fulcrum In column "H"
followed by a reverse semi-catapult at full figure 54 In column "J,"

96
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

price of that stock within one day's market action. Surely no one could
have failed to recognize such a definite signal. Its confirmation was had
after the correction which held firmly in a double bottom formation
established at 18, near the end of March and the beginning of April. Here
a newbase builds up at a somewhat higher level and the formation begins
to meet the requirements of the ideal full fulcrum. In column "A," when
the stock has advanced to 26, this fulcrum is completed. The arrow in the
next adjoining right-hand column pointing at full figure 27 shows the first
full catapult position.

The Catapult
Take particular notice of the firm and definite up trend which the issue
establishes as it advances from 20, up through the catapult point and
establishes another semi-catapult position at 30. This sharp up trend and
its angle of inclination is a confirmation of the strength indicated in mid-
March and connotes sharp continuation of the uptrend soon to come. The
advance begins to develop in column "S" from the semi-catapult point at
30. The stock soon rallies sharply to 38.

The Semi-Catapults
A new semi-catapult position is developed at full figure 39, in column "C."
Then follows a minor technical correction and a rally which establishes a
newsemi-catapult position at full figure 40, shown at the arrow point in
column "D." The congestion area terminating with column "0," shows an
excellent solid consolidation of the advance with the stock reestablishing
a strong technical position and indicating a further sharp up move soon to
follow. The rallies and declines between column "0" and column "E" cre-
ate further consolidation, establish additional strength, and create a new
semi-catapult at 44, shown in column "E." Another semi-catapult is
shown in column "F," and still another in column "G." Notice how sharply
the stock now advances. An additional semi-catapult position is shown at
62 in column "H." Here one must be on guard. The stock has advanced
from 18 to 64, shown on Chart Figure 21. without a worthwhile techni-
cal setback. Proceed, now, to Chart Figure 22 (see page 98). Observe that
the correction sets in.

97
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 22 Western Union One-Point Chart (2 of 2)

WESTERN UNION
ONE POINT CHART
~- JUlJ' 1933

o
s
Continuation of one-point chart of Western Union from Janual}' - July 1933. Notice that the
correction sets In. The development of the Ideal full fulcrum In column "L" is a sign of devel-
oping strength. and an Indication of the termination of an Intermediate swing. From the
base at 49 to SO the stock has again had a 25-polnt advancewhen It establishes a semi-cat-
apult position at 74. In column "5." Note that the congestion area to the right of column
"5" Is a sign of developing weakness and you should be on guard.

The Short Positions

A reverse fulcrum develops with a short position catapult indication at 58.
This is indicated with an arrow in column "I." A reverse semi-catapult
develops at 54, indicated in column "J." After the down move in column
"K," notice the congestion area that builds up between the columns "K"
and "L." This is an ideal full fulcrum. always a sign of developing strength,
and an indication of the termination of an intermediate swing. It isalways
a signal to go long of the stock at the nextcatapult point. A catapult devel-
ops at full figure 53, indicated in column "M." Profits soon accrue as the
stock rallies to 57 and a fraction. Some little resistance is met at that
point, and the stock makes a double top at 57. after which it sells down

98
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

to 53. In the zones between columns "M" and "N," one would bejustified
in being somewhat hesitant and in doubtaboutthe technical position. The
formation is a neutral one until a double bottom is established at 52. The
decline which establishes the first 52, creates a newlow after the 53. pre-
viously recorded and isto beconsidered a cautionary sign. However. when
the stock rallies in column "N" and creates a new semi-catapult at 58. we
have an indication of new strength developing. Notice the semi-catapult
which is built up between column "N" and column "0," with its miniature
full fulcrum at the bottom. Again an excellent semi-catapult position is
builtupat full figure 59. indicated with the arrow in column "0." The stock
continues its advance. but meets with some difficulty, however. between
zones the of 60 and 63. When it establishes a new low at 59. indicated
in column "P," we mustbe on guard.

Any position now established must be stopped close beneath the low
made on the move which was recorded at full figure 64. The zone from
column "0," to column "Q." is a congestion area, of the type which some-
times develops to bethe culmination of the move. Be on guard, however.
when the stock develops a new semi-catapult at 64, in column "Q." It is a
sign of strength. Congestion zone between "Q," and "R," is a consolida-
tion of the gain. and a newsemi-catapult position is established in column
"R" at the 68 point.

From the base at 49 to 50 the stock has again had a 25-point advance
when it establishes asemi-catapult position at 74. in column "5." The con-
gestion area to the right of column "5" is a sign of developing weakness.
Be on guard and ready to take your profits on further strength or when
subsequent weakness reaches your stop order which should be advanced
beneath the market as the move progresses upward.

Summary
We are sure. that from a study of the one-point moves in Western Union
you would have been able to detect and take advantage of an exception-
al campaign without the aid of tips. rumors or boardroom gossip.
Examine your three-point condensation chart Figure 23 (see page 100).
Notice how readily these two types of charts are used in conjunction with

99
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 23 Western Union Three-Point Chart

WESTERN UNION
THREE POINT CHART

Three-point chart of Western Union from January - July 1933. Compare this chart to the
one-point charts of Western Union on pages 96 and 98. Notice the Indicated buying levels
on your one-point charts as they develop confirmations (shown by the arrows In columns
"A: "B," and "COO) on the above three-point chart.

each other. See the indicated buying levels on your one-point charts as
they develop confirmations on your three-point charts. We show them
with arrows in columns "A," "B," and "C," in Figure 23. Compare them
with Figures 21 (see page 96) and 22 (see page 98). From these charts
you will learn that it is not necessary for you to listen to tips or rumors
which circulate about the boardrooms and are printed in many of your
daily financial publications.

Study well and master the principles of this time-tried Method and you will
always be able to anticipate stock price movements weeks before the tips
and rumors filter their way into the boardrooms and financial columns.

100
 XI

Judging the Minor Swings

lsewhere in the book. we have promised to give you the details and

E explain the methods used in compiling a running action index

line. which is considered a vital aid by most experienced market
technicians.

The Half-Hourly Index of the Dow Jones Industrials

For the purpose of judging the day-to-day minor swings of the market.
there is no technical aid as helpful as a one-half point figure chart of the
half-hourly position of the Dow Jones Industrial Index.

Forthe purpose of facilitating the plottingof the action of this running line
we have especially designed a one-half point chart sheet known as
#5001.5. Students of the Method will find this sheet ideal for the purpose.

Messrs. Dow Jones and Company have recently inaugurated the policy of
publishing the hourly position of their Dow Jones Industrial Index. Since
the fall of 1931. your authors have privately compiled this important
index at each half-hour interval during every trading day. These compu-
tations form the basis for this exceedingly helpful half-point half-hourly
index. The data for carrying this chart forward is supplied in the Full
Figure Daily Data Service available from the publishers. This most indis-
pensable index represents the fluctuations of the market as it actually
moves from point to point during the day. Notice that the maximum high

101
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

established in the newspapers and the maximum low are disregarded

when we use a running action index line. We are concerned onlywith the
fluctuations of the index as it moves in a continuous line throughout the
day, and from day to day. The total of the maximum highs of the stocks
which comprise the index highs, or the maximum lows which comprise
the index lows, does not interest us.

We are concerned only with the relative strength or weakness of the ral-
lies and declines as they develop and with the resultant congestion areas
built up as the index line fluctuates during each marketsession. Of course,
knowledge of the maximum high. the maximum low, and the close of each
day is helpful in judging the technical position of the market; but more
important for the technician is the information which is to be had from
startingand maintaining this importanthalf-point half-hourly running line
index of the Dow Jones Industrial averages.

The Half-Point Half-Hourly Log

Turn now to Figure 24 (see page 103). The half-point figure chart plot-
ted here for you represents the technical action of the market, and, as
continued on Figure 25 (See page 104), shows the action from the begin-
ning of the year 1933, to beyond the top established in July. The chart
terminates with the action indicated about the middle of August at the
right-hand edge of Figure 25.

Half-Point Technic
Observe, here, that half-point technic is exactly like your one-point tech-
nic, the only difference being that the crossing of the halfway zone and
the full-figure zone calls for a new symbol. Thus, a move from 101 to
102.56 would require "x's" in the lower half of the 101 square, in the
upper half of the 101 square, in the lower half of the 102 square, and in
the upper half of the 102 square, showing that the move had reached the
halfway point, or beyond. Should the move carryto 102.99, no additional
symbol would be needed, but the moment it registers 103, we would be
required to put a symbol in the lower half square of the 103 level show-

102
FIGURE 24 Dow Jones Industrial Average - January - July 1933
Half-Hourly Half-Point Chart (1 of 2)

...
•<
~. .... ..
.
.~
,.
- ,. .-
. -}
-;. ~- ~ -: .~ .. ~

~ ...
.'. t
_r t ...
.~ t .; ..
"r
.. :- ...
(

~
-r

-t
.. .

"T -
t ~
......
of.-
l- I -/'
... --
i-
.. ;
-~
~
;
-~
~.-
-. .:-
~ II)
... .
f . ..
+- ...
oJ.
1 "-
.r
+
....... ...
t
_.
~
.'.

;. ~- ...
~ ~- " ;-:-T-"' ~ ~
... ". , ~ .- I ., _r ~ _r t - :. ~ .• ! ~ ~- . ~. I
~ ".- , ; ... . ~,. - ' -r -. ~ ..- .; ... 7'; .: ," ~ . ~ ",-.. ..- . ...\ -r ~ .•

.. ", ~ - ~ ', ... : -... ~

... ~ .. 'r : , ;. ... ~ •
~. .
...
.,' ' ' ; ;

." ~ -r -.- :--; . . ; ~ ... " t l' J. .:

T : .... ! ... _. ~ _r v- i .l .
-} ~.

. . ... ...
.
-r ~~. ~ _,"
...- ;. ... : ~
\ .J.

... .. ...... -.;. .. . . ~

; .- -. ;. .. -:. ~

.J.
...
_ ~
,- -,
.;_ ~.
~

t 'r ~- ~ _ .. - } ... . ;_ 4_ ....

.' 1 ; 1- ..; ;. i·. i l' ,- ';' .J. ~.o I T ~ ~ ~ t

" -. ~ _. ;. _•. -.- ~.o- ;' {-... .' ,- ~ I
. . _ .J.: _.... : .. .r ... ! J. _•
..
•- !- --1 ......

; ~. ; ,
..... r ~ 0' .. •... 1 ; ~., : I.. -I t " .,- ;- , - ,- ... ~

•. ~! -. -r r -, •. •. ~ " ·t T r T "r "r

+ ... ~ -. ~- .•
; ....- -r' -, ... ; " "-
,. . . ,- . + -," : ,'.- -, ..-
.
- ~
..;. ... t -:.
-,.:....
! 4.. .
-,' ~ -1 J.
"
~. t
~

.• ; ( .... ~ _ : ..L I .• .~ .... . ~

~ 1·... {~ .l. t + ~
-: .,... .. ._ _ . •• ~ .... ,. ~. ~. 4 . , . 4, . :

•• , ,10 .•. ~ ., t- _ oJ. >-

• . T' 4. - '.

:- '. : ... . .
~ ~
w .;
~ : .,
t
-

i
' .. -

..
l'
"-', : "
• . ~. ,- ,
~
-~
'r

~. .. '.
a:: 'r .'. o' ,. ~ ..... , ~ _~

w oJ. -:: •• o~
.'. -, -;- . -

~
u,
....J
<t
:I: :- .- _.-
4. t· . .'. r "'
. ... .;! .• t
W J, _ . o ... ! •. ,_ J I 7
Z T' ""

:
o ~

·r .. ·
; ...

;
"0

t I
.~ 1
4"
;.
', '

. :'
~. """-

... ..;.

.~ .. . ~ .; _ ....
I oj': " ; " . ', •. ~ J... ~

l- ~ -:.. .. .. -:.. r',', -,-

ffl
z
, I oJ .,. ~
r -;- ,. ,..
~' -~
~ _. .• •- ! .-
t ; : t ... - ... ... ~
_ •. -
..... v- ' r -r

; : rt .,. l 1 ~ ••
~
_I ' ,.
I ~ ... ..
.:. ' r~ '

,
...
J. j . :- ' .- -r... · r · '

.. : ':lL - .. " , ~
.,. '.
·f
-~ " ' .'. ~. ~ o' or ., . j- ~, •. , . J ~- i
~, : ~ .....
+ ~+ ~'_
, • •, ... T -, i- .' ~. - '.. ' r

- ..
':•.; ,. " ,;. -r I
~_ I.;. ·r ...· ·• " !- 'r
.... I ·.. '," - .., ~ .
- 4 _ ;

~ .. . .'. ~- ;. ~... .... ~

... ~. .~.j. .'. 1" 4. 'I'~ 4. 7' oJ. ..

.' -+ -i· I ";' I'" .•• .• -r -.. . .~ .• " 'f " ' r '"

....
'r • ; .... ...
.• •j .• ,. .-
'~ i
..
~ . • . , 'r
'l'" .•.
" -t-- .... ·f ....... .. ...- ! -. .. ~

~ -. . ., ,. _' -• . , 'i _I. • • - - -. -'

103
FIGURE 25 Dow Jones Indusbial Average-January - July 1933
Half-Hourly Half-Point Chart (Z of Z)
I , ,<
.- 1 - ·
, ..-r- , .:- .,. .,, .:. -, - •
, ., f , " ., -., ., , .' , , , -c- .. - .." , • t , <"
l-~ .~ f - .,
. .-

-- -+.. ., .,;. ,.- .,, ,. , -,1.' . ., . .- .. .'- , .. · .. ,

·m' ·
. I
" . 'f .. 1 "

1
I "

"

, + . .." i· -, -i- ., , - , ,. -, .,-.,• ,

; '- I 0 ' I I I 0 ' ,f t
1 0 0' .1 I " I " I 0 ' ' ; I

" +., <, -t- l ' .... , .f , , , -. ,, ,- -, , -;:' , -.. , I ,- .. -;." " , · .,1 ,
. :Il ·
; t,
r ~ f I ~ I,

,
'

.
~.

, , : .,. , . ,• .- , , ,.< -,:. ., , " i , · , , ;

I
1
,
' "

,
.
tI <- I .- ~ .
.. .- - ,, ,- ;· ..
"

, .,..' . .. ., ,
-,- ~
• -r I t ~
-e-
-t-
, <. < ,1 , , ,. .. , .. , -, .' . ; ;. ; ;

·
f ' ,' 0 '

.' r ;. <, : , -t- ,, .. .. ,-- .,.- .,- , 1 ,-." ,- 1 ,< - " ..- .'- ..,, -, .., ,, .., ,.;, ., .t-,- , -. .' _.,.,. , .,-, , ..-I .,. ..1, ,. ..., "
" "

·
1 ; ;, .~ I
-t
; ;

·
I.
-t- I'
; ~

, , + 1- ,. ,·
1

• , - <
- ;-
.. f

·
I ;.

,, · -' , ,- , _. -; .... - .-- .,. ~, .-i -, ·.. ., .. .-..,. -, -, .,. .- , .' f -, .,, ., . -' ., ! • +., .,
I ,0

; .,
"
_. 1 0'

;.
0 -0 ·f I
.,.
, I I ;
o' 0 I.

.
, ,f ., , t· , , ,, 1 -, , ; ;
-, ,
.,
, , ., -, .- "
· , -, , .... < -, _. -,, .,, <, . .. ..- ,- ., ,, -r ·, , • ,
, I ;- I - 0 -' I ; ;

.
-, ; ; ; ;

.' · ~
0 0'

, , · .; .,.,. ., ,
i ; 0 1+~' ,~ -,' ;-

, , .,- ., · , .. , -. , .,. . , - , ,
·
;.
.. .. , ..
;. ;

, .,
I

I
1 '

.. 1 · -. , .. · --, ., ,-
; " I
0-

.. · -t , <-, , · - , , .. -. .. - , .... -, . .,. .-

.- ; t_ -0

. ., , .- :
t- ,. ;
0 - t- -t; I -t- I.
1 I- I

· .,; , -. <- - • ·.-, ..

; -r-
I
., W
0-

t ; -r- t- .- - 0 .. . ',
-r
.. -,
- 0

., t - -, ,-
.. ,
~
t 0- 1 I-
..
It,
, < .. ..1 .'.;.. .. .,;. .. -r, .... ,. I -, .-, , I
.-,. r -1- ., r -, .,
; , ,- ;
I
, , .. , ..
, -
-. - , , ., • . ; .; .~ .. , -'-.. -,, - .. .. " -l- -, - ~-
, , .. .'
.. ,- ; , .. , 0:: ~
~

,
t
.. ·
, , 4
-
. , • -
.. , , .-
"
,- , , W z
"j.
.' ; "
,I o'

;
., ,- " , -,- <-, .. -,
-,

.,. f -<. _,. -, . -, .. .. f

I
1 -- .
, -

.- ',. .. i · -, _... , , , _.
<- .. -'- ; '... .. ; 0-
I ; <,
..
,, -
· .' · E(
~
'

0
,. , ., ; ... . ,
" -. .,
- "
; 0 -0 0 '

a.
0 -
f
,. .. ,
-- ":- ,;
;
.,, .;... .,-, .. 1 1 ; ,- .- .. 0 l' 0-

... ... , ;I , ..f , , , .. , .. .-, .., ,- . .. , , -.; ...:- ..-- .- .- . 1 . .'

1 1 ,- i· - 0 .- 0-
_f 0 -

u.. ;
.. ., 0- ~

... , .,. .. .. -,, ; ; , i ; f .-, t ,. , , ,·

~

--.. , .. ....J
I ,

.. -J , 0 .; _ _

.. , , • . , + I -, , , • -,, ,,- .., ... -

,- .
.-
~ .. . ~
,-
.. -, .- . --
I, , I '-
<t
:I:
1 -

..
.. -
, -,- ; ;
,-
0 -

, •, "
« I -

lE
0 -

., ;
.-
, . ..
-. < '.
, ; ,t .-.;. ,... -,f '...- .- 1 -..,. 0 ' =!
~ , ..
"

; , :
I , -:. ,• ;
;
' ,- .. ,- t
-;

~
.- 1LI
' 0

, -, .. < -. .. , .. -. ~~
.. I 0-

.. .. .. ..
, .,. I _. · ., .'• .. ..-. .. ;..- ..• -- .... .-.. .- , .. Z .,
, ., ,- , -
-, -
-. .-
0 -

... .;. 0- ~ t - ;
~ , -,.. ..< ; ~,; ~u

-. II .,. .-t " .-f I .,. ., -- ---, ; -I

~ 0 -

0
;- ..
N
~
~

··
0-

:::>
0 - 0-

-.
-.
-... 0., ..: -,..- ., .. ~ S~ -,

· I, .- .. ; .. ..
' ,' I -

-.
O' 0-

0 I
, !2"-
,,::, .- ~al

.. 0-

,- ~
, .. .. ..
. .. >- 0 ; ;
, ...
,
· , , -;- , , .- , I ,
.. .. -. ..
I
., -f ,'. ! -:.
.. .. < .. ; -,' " : : .. ..
, , - .. .. ,
! -
Z III
~ ·
' 0 .;.
-, .. ,
i- ;
~~
0"
.., -., -; ... " -,- .. ,
~ , U"
.. -,
;- t , ..
-0 0-
I

- ~ I ,
-, , ~ -
, : , ,
·
~.

, ;
0- "
"
:- ; , -- .
! , ,
-, :
.' a::: I' I

,I < - .. · -,· -:-: , .., <, , .. ; ~

'0 "

-, -, t -, i- t ..
~ I
, , .- · .. <- T

..
t -'-
,
1 -:-
.. ::;) _. .,. ..·
-0

. .- -:. .. - - · ..
,- .
,
--
~
,-
~ 0'

.. .- ; .,.
. -, ;
.. ,
-..
, 0
.' • ..
i
_. -.
.. t . t .. .. ,,.. -, ,- ,
',- 0 -
-:-
~ t
Z
I-
0
:I:
<, -0 .
-, .. , - -
0 I <-
-0

., ; , · , ; .. --
.;. ; ,-
.,. i ', -

0 -
0- 0 -

.. , .,. , .. .. , ., ;-
., ,
. J
~
..
, -;- ,
;,
"
.,
t
.
.,. 1.. f I , , -. , . , . - ; .. I -. ., t -- .
; 1 f
~ " 0- -,
.;. ~ .. ; .-
-, -, .
i·
.. .. .. .."
.;. .. , -,
, ; - .. , , <t
• -, -,- - i
,

· .. ,-.' .. -, .. -. ; .. -,
I ,

-
0-

..I
.- ; .." .. .. .-., i , _. ..
o'

·
~

_.
o'
.. ; ., , -
.. .. ','
,-
, , .. .. .. ,
;
0 ,
:I:
-0 ..• '.
-' .. ~ ·
.. .... -, -,.-;- ; •; ' ,,- , .,., -'. -- -. , .. ...., -, .. , .., .; ;, .." 0
o'

.;. ., ; 0

, -,
I •

.- .. .., ,- .. ..
_,"

.. ,
.. -. .. .. .
.. -, .. - .. , ..
l ; .. ,
0 -

.. ..
..-,'
, - -!
,-
,- ..
" .. I -,
0-

" ;
-, .. .. ..
- 0

.. " 0
..
, .. ,-
.- !
.
-- ..
..,- .., , 0
; 0
~
.-

"

, .- .f _. " . , -; .,.. . .. ;
.. .. .. , --
.. .,. -.
-0
I -,
;-
-;
"
, -
-, .., - .- -. .- .. ..; .- ..·f- •,
-0 ; ..
.. .. .. .- .. ..
.. ..- ..
-, "
. ;
+
. < -, :
, . -, ..
.. ,' - 0-

..
0'
0
' . -0

, .-
'

.. .,. ,-.:. ',- .-, , -,-, ..f ,, .., ! -', _. .. .. . .. , ; . " .., , .. .-f ,- ,.. .--- .., ..--- ..-'-.. ..,. ...,; " ,
...
.
_

., -, -,' , -, ' 1 .. "

0 -
<
.. , • ...
-0-

"
o'

; "
I
,
-0
" -,

... _.., -, _<. -, -, ,- ..

1- _f _
''-
_
-0

.. I .- , ; - .. ; , . , • -,,. -, .. -; , -
~:- -,

-. -. ,- " .. . . ,
·
'
.:. , ,- ..,. .. . ., ,;
' 0 "

.. .. .. ; ,- -- ,- ,- , ..
~ , -
.. ,-; , " ' ' ,'
; , .. , ..
,- .. -, .. .. .. , ; -, .. ,. , ... t
i ., L i- .- -- i < ..
.. , .- 1 " ..- -,f "
I " '0

..
0' ,.
.. .- - .,
.,.
-- "i.--,-;- ; -, .. -,. -, ,-, ,-, ,- , ..,- .- • , .. --
-0

" -f
-0

.. : · .. .'
.,
·
. , - _. .,- -, ., .';. -+. .. .... .. ;
;
I,

·
.. .. ,
_

-, .. 1, -._. .- • " , ..
, .. , - , _. ; .. · . ! _. ---
,- " , , .. , _. ,
-0

,
-, .., ..
.. ., ..
-. .. .. ..
,- I ;.

·
0 ~

< ,; ,
! "

, .'- r
.- ..- I ; ,
· , I

- ., .. -, -, .. ,
'0 0- -0
' 0

-. .- ..
,-
;
".. ., ...!
; .. -,
., { .-
..
- ,' !
_.
,' - J_
~

, .- " , ,- ..I .. ,, ..-,- " . .._".- , ..... .... -,--; .. .; '. .... "
-,

.. _.,- .- ',- ..-,' : .-

.. .. -, ....
-, .. .. .,
L
0 -

.. _

., ,. ,- , , _.- ,- _.- -. ..-, ;

;
-, .. . ,
' 0

-, ..,; ..
0 -
_

"-
_., , ..'

..
.,• 0

.. -. -- ·
, .. " ,
- 0
I
..
.. .... .. .... · .. "-, " , , - .' .." -. , -,,- -,..-t. , .. -f, - .. : ...- ..-. .,.. .... .. .., - -.. .. .. .... ... .., , -,-, -, -,...- ,
l
.. , - ..
-0-
..
·
-1 ---
.. ; ;

'.-
,- i ..

-.- ..-
.,-
~

0 -.
-0
.0

-,
.. -0
-r ~
' 0

. '0
"
- 0

104
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

ingthat 103 flat had been reached. We feel confident that you will under-
stand the technic of developing these half-pointcharts, especially so if you
are sure of your one-point technic.

Scientific Tape Reading

These valuable charts are very helpful to the boardroom trader and oth-
ers who attempt to catch the shorter swings. They are far more reliable
than an attempt at tape reading. This half-hourly running line index plot-
ted by half points is actually a picturization of the tape itself. It is depend-
able and helpful. It is far more reliable than trusting to memory or haz-
arding a guess. We urge upon every one of our readers to establish and
maintain this half-hourly log in half-pointform. It is a formidable tool and
invaluable as an aid in recognizing the day-to-day trend of the market. As
you proceed to study half-pointtechnic and its application to the running
action line. you will begin to realize that the vital mechanical principles
forming the basis of the Point and Figure Method, namely, the fulcrum,
the catapult and the semi-catapult are clearly recognizable in your half-
point half-hourly market log chart. Compile and maintain this chart.
Watch the trend lines on it as they develop. Notice the congestion areas
at the terminations of the swings as the market moves up or down the
trend channel.

Analyzing the Half-Point Chart

Be on guard after a sharp upsurge when resistance to the advance is clear-
lymdicated. Be ready to buystocks after an extended decline when a con-
gestion area builds up a fulcrum and a catapult develops. Consider the
broader trend channels on this index to showyou the trend of the mar-
ket. The closer trend lines in the congestion areas will showyou the dan-
ger zones after an upsurge, and the point at which to liquidate your long
position. The important buying levels indicated on this chart are in the
bases formed after a down move when a full fulcrum or a catapult devel-
ops. Watch closely congested zones. Also. be on the alert to take advan-
tage of the semi-catapult position which may develop in the price pro-
gression path of this important technical aid.

105
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Ignore Rumors and Gossip

If you maintain and study this chartyou will soon be able to disregard the
advice of your customers man or the boardroom habitues and the gossip
in which they indulge. If. in the face of bad news and pessimism, this
important half-hourly index builds up a congestion area of accumulation,
disregard the bad news, ignore the rumors, establish your long position
and have patience. Likewise. when all is enthusiasm and stock price
advances get on to the front pages of our newspapers. your half-point
chart will either be showing a clear and already effected advance or the
building up of a congestion zone. Congestion zones give implications re-
quiring caution. Be ready to liquidate quickly at first signs of a ceiling devel-
oping even though the news and all about you are rampantly optimistic.

Summary
It is well to remind you, at this time. that you cannot trade in index num-
bers. The half-point half-hourly running action index log is but a repre-
sentation of the market. You must trade in stocks. When your index line
is bullish, select the mostbullish formations in individual stocks and place
your position in those stocks. Use this valuable Half-Hourly Log as an aid
to reinforce yourjudgment. From it, analyze daily. the technical position
of the market.

106
 XII

Half-Point Technic
in Atlas Tack
n order that you may have an illustration of how the half-point. Point

I and Figure technic is applied to an individual issue, we shall take you

through the recent campaign in Atlas Tack. The sensational advance of
this low-priced stock which advanced within a few weeks from $1.50 per
share to $34.75. attracted the attention of the Stock Exchange authori-
ties and the Attorneys-General of several states.

Historical Background
The Atlas Tack Corporation was first listed on the New York Stock
Exchange at the beginning of the last bull market during 1920 or 1921.
There are issued and outstanding 98.000 shares of common stock of no
par value. The bull market high of 1929 was 17 7/s. The low of that year
was 5. In the period of 1930 and 1931, the high was 8Vz, and the low
1Vz. The bear market low in 1932 was 1, and the high of that year 3 7/s.
In 1933, the low was 1V2, the high 343,14. In the month of December
1933. the high was 343,14, and low 10.

Here was an issue which presented an ideal opportunity for unscrupulous

marketoperators to take advantage of the public. The small outstanding
capital stock, with most of the stock closely held, and an extremely small
floating supply, permitted of easy manipulation.

107
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

Analyzing the Campaign in Atlas Tack

Turn, now. to the chart Figure 26 (see page 109). This is a one-half point
chart showing all the one-half point changes in Atlas Tack from the high
of the year 1930 to the low of the bear marketand up to the high estab-
lished on a recent date in 1933. Observe the zone between columns A,
and O. Here you will see the type of fulcrum which will always develop in
low-priced stocks when you apply half-point technic to their fluctuations.
Give particular attention to that formation. Notice the difference between
it and the one-point fulcrums.

The sell off in column A. from the high of 8Yz, was quite sharp, consid-
ering the price level. At 1Yz. some resistance to the decline was metas the
stock was picked up by the insiders. In the zone A, to B. the stock was
several years under accumulation with very few transactions being regis-
tered on the tape. Little was heard or seen of Atlas Tack during 1932. In
the lastquarter of the year. during the months of October. November and
December. the stock sold down from 3Yz to the actual low of 13,4. regis-
tered near column B. A few transactions were effected in the month of
February, 1933, around the price of 11/z. Later. a few thousand shares
changed hands at 13,4. to 2. and in the month of April. we find a few
shares changing hands during the first week of that month at $3 per
share. During the month of May. the price of the stock advanced from 3
to 3Yz. Thus, you see. between the months of October 1932 and the end
of April 1933, Atlas Tack had a verythin market while it was being accu-
mulated by the insiders. when 7.500 shares comprised the total transac-
tions. At 4. shown in column B. the stock was on the catapult. This was
the first important buying signal.

Things began to happen during the lastweekof May 1933. It was at this
stage. in the zone marked Cto 02, that the manipulators begin to take a
real interest in the issue. The advance from the bear market low to 10Yz.
the top of the rally in column 02. is to be considered a normal one for a
low-priced stockof a company with fairly good prospects of future earn-
ings. The zone from column B. to column C, represents the final stage of
accumulation, C. being the June shake-out of the 1933, bull marketrun-
up. In column 01. we find the first semi-catapult occurring at 8Yz in this
issue. Another developed at 9. in column 02. These two semi-catapults
were buying points.

108
FIGURE Z6 Atlas Tack Corp. Half-Point Chart
March 1930 - January 1934
- t ~ "," .. •• ; 1
.. .. ~ ..... ~ .. 4 .. .:- .... t- . .. · ~ 4 ·; +. r·) • .;..·.. · ~ T- • , ... t - ',' , - •
• ~ ~ ~. . 4 .. .~ .. t .;. ... , .Lt ..... ·.. ~· t J... +· )·,.1 ;- ~ ~ t - ...· • • '
+ : .,;. -- ~ ..... {. .. .. " t -j- ". ~ -t -r ... ~ . . . . .. v t ~ .. -. . ~ .. t .. ~ ..... ~ ",' r - • .: •
... • ~ . • .• {. r ; -~ .. 4 .... 1 .. • !O t ~ ... ~ .~ ... ~ -:- +- ~ ~ ." , ~ . • "I' • .. . ..... " .
, ... +"": • .. i ~_ . .. ... ... .... L ~ ., ... t .~ -, ; .~ . .. t - ";'" • .. -:. :. ~ .. . ~ .. .. I , , -, .... t .. . 4 ... ~

.. • • ..l. '.- ~ j. ". ~ ~" • _ ~ ... . :- ..;., .. -ol- • ~ .: • ., . \ ; • .;.. • .. _I .. , ~

• 'r ~. ~ ; • ~ .. ... • :. ~ ~ .. i -r .. .... . ; . ..
-. ... t ; .. . ~ -." ~ .• -,- ~ -r- ;. , :- ~ ..- ~ .. .. I .. .. .J J

a..: o r • ~ • .. ~..:- : • ..;. -- -;- ... ... ...... - t -l-r • -:,. , + ~- .. -t _ l ~ .... :. ; ';' .. ,

a::: Z
~

.. '
• ~

-' ,
, '0

.. • ~ • " .~
. ...
-i- •
~ .'.
~:
~ -j- ..,- .-
t ·
..
-: :- •
:- ~ .. .....
_l. ~
t- ; . " . ...
... t .. ;. ..1_ •
~
~ .'_
~.
~
f 1" ~
.1
.
., •

.. , o
:I: .... : 'r "; ' ~ } . .- ... , ~ ~ ;. .... 4 . - ~ , ~ ~ i- ~ -:- • yo ... -e .. , r ~
t ~. ~ - ... ; • -~ ..., -! -, .. ~- • ~'r t · _, .. . .: ••.• ~ + .. .
..
.; ~
o @ .l- ~ ~- .. .;- ~ ;.. -
j. : - .

..;. .... ~- ~- ~ .• -:- ~

•
0( •• , - } •• ••
.J

.:.... - ~
__ •

~ ~ .. ; _..

. . . ,- .
..
• .} ~ • .. ~ ., r ~ -;. ~ : ! • ~ i -;.. i • .;. ~ : :- ., , -~ ;. ~ ·r . .. _ '• •• • •. -: • ~
t- '0' + 0 : . :- - t .:. , -~ .: ~ ~ t ... ·... ·t ... .... ~ o ·t .. .. .. .;- • ~
:- .. :. 4 _, ;..: ~ ~.. ':" -:- ..:- ~ -: - . ..,- I • • "!. ~. ;.. ,- • -t ~ i -r ... . ~ • t
- -t- ~ -~ .-: , ~ • .~ .: - ~ _. • ~ - :- 1- ~ • .. -~ ;. I t - ; 7 - 0 _. , - , t.. . -t I
t -.- ~ • -; - ..... -.-' -:. ..... ~ ~ ~ ':" .... .,. t ... .. ' - ~ ., -. ..
.... . ; •
· ~ .;-
~ .... '+ t -. . .
-t .

~
• .... .;...

~
~.

-I- .;
~
0

t
t ~ - : ... ~ .: • . : - :- .... ... . .. , - ... . .. -. ,. t -i .;- , ~ . .. ·t- ' • ~ .. -:. •.•
..... .. - ! . ~ j. { . ~ . ... -t- ..;. ~ - ,. -.- -; t ~ ..;. .. -~ , I ...· • - I oj • j- r t- r .... ~
.... .:- : -. ..... . -,.... ,
•_ • • ~ .. .; t - 0(. t o - .. 0(_ • -~ ,. , .. • •
..... . { .. ..... I- ~- ; -r ~. • r·t .. ~ -: • ., . , ,. .. .. • ; .. ~ ..... ; . . .
i -:- • . t t .. ..; ! -l-
.~
:- ~- ~ .:- ~ - , ... - -r .... .. ., . ;
' 1 •• •;. ... , .1- -~ ~ ~ . !- ; . ~
-. -:- ., -:. .. • .:- • • ~ -~ v
• -t .;. !- t
• - . "!- t ,
;. •
:- • --
...
t
.;- - :- .~ + • • -:. , .• -t- .• _
,- .... -:-- • ~ .:- , .. :
. ". , t ., '

- ... 1
.. .;.

.. . -
~

t
+
:>t
::rr:.
· t -~ • 7" •
•
.~ ~-
-~
" .!
; - ~ , _. . .;- {- ~ !
. - .. , -,- .:- + -'. •.~ . .;. .:-
-r ~. ~- ~ I · ': -
: j '; .1. J_
.. .
~
~

'
-, .; ...
-t- • -
~
t -:.
-t .- -;. :
~
~.
; .:. •
"

-~
. · r ...... ••
t· , -:. ',-
-r ... + ~
-.. I- ;
-r .;. o' ..
~ -.- 'i -} , - ..
t .•
r -!
_L 1
~
. .-
.
~
..
t ~ .• r e-
-
r ',' ... .. -:
..
... -~ -;

.. . .
to ;••
:
;- . -o -f -r-r :
:- .- - ~
l

0-
•

•
.; . . . - .,; . ~

• •• t ~
-r ... .;.
.. . :
+ .1- ••. ~ _:_ •
:- .......
·0 ~.,

" r ;
-'-
to;

):-: : ~ .;. . !
-~ -
• ;. .;- _~. ~ ~ 0 . ;_ ! _..

:I± ~: ~. ;

-.... ! ~ . ... ". -:- ......

~. ~
.
- 0" • - .;.

~ .:.
>

-.;.- -• -'- .• -e-.

.- 1 ':--'
. . -\. ~- ·1- ,
-. .
• - 0- ..

~ } .~ .; -t- + •. , ~ ~ ~• •
~ ! ,- -,. -~ .;. i ; ~

.. ..
I·;
.... ... -} ,
~ \ .
-' • • f T ~ + ~- • t • ~ .: . ~ -~. t ~. ~ ~ .1- ~ - ; .:. '1' ~ ... t •
• 0 ~ • •. ~ - . ~ ........ .,;. ~ -. ~ -r ~. f .~ .:. t .; ~ • ~ --:- - • ~ .;. ... - . ...
o. - ~ :- ~ 4 ,;. : _• .:. ~! .~;. '7 .- , •. , . ... , ... ... .. ~ .I 'r j_ -:- _ ...

•.• -t '!"" • • ~. • ... . .. - .:' ~ ' ;' - . .. . 0 ~. ... -I. ~. - ~ • •:• • 1" ... ~. ~ i l ·t .... 1
• •_; 0 .~ ; ~ -: ~ . ~ .~ _r ';' ~ • •_ ~ ~ 0 ; 7 '~ • r -;. .. ~ _~ . ... 0

_. ~ • . - ~ . . . .'. . ... .;. • ~ . • .'- • "r I. . _ 0 .:. ~ • •; _ . .... ~ .;.. 0 .. t .,. : ~ ~ 0 -~ .. ;. , .. . . -t _~ •

~ -. .:. • -r ..:. • -:. .: · · r ..• • -:. •. ! 1- ..' t· , - 'T - . -;• • ~ .. . I
. ; :- ...... ;. I '. i ~ -; ~ ~ ... ~ • + '0 or ... _ ' . ~ .;. , ~• • _} ~ ~
-• • -.-. .:.: -:- t :- .:. . ' ~. - • T .,.. -;. ]. ..;•

., •

; . • -:- ..... ~ ;
• :- • • 0

~ ~
~ .~
~
~ -~
:"" .
~
~
-~ ... l
-t .. .; . • • •
. :-

~
I-
... -'
~ ~ .. ! -;
• I . .. t ... :

- ~ . ! r • -~ .:. ,. ... i -'. t .• ..-

... ., .~
T --:--
-:-
~
;. ~
• -!- t ,_
. -~ ...
~.
-~
•
~
~ -~ .•'•• _
-, .. _!
., ... .
J
~
~ ..
~ ..
~

.. .. " ~ .'. .:.

_.. t ~- '- .; -~ : .,;... r' -;. • ~. •
1- . J." '. , -;. •
.-
.... . ... r 1 ., .

-~ ; ~ -~ ~ - I '. - . .,' ,- I ; - -
: ..
; ~- ,- •• ';"- f
• .• .'. ' · ' · · 1-·
.~

~
-:.

,
~

;
I

- ".
r
•
, .. ., . • .. 0
_••• 0 . ;. . .. . ~.
0 .... ~_

.~
....

._ ,. ~
_ •

. :.
••

....,

.~ - i- '.
_. ~ - 0 .~ ... , . ; .:_
.~ ~ ;. ~ .~ "'l' .... I . .. , r"
; ;., .~ .~ , ;,,,. .. ,,, .:. _~ ~_ J_ J ... ~ , ... .~ .:. •• •..• t ,_ J _ _ . _ ... _. !
, ~ ~• •~ • • . ~... J •• • t '. ,. ~ -~ t -. ~. + .; ~ . ! .- -. -~ .: • •:• • ~ .:. ' 0

, •~ _. J. 'r , -~ -. .: -I. ~- ... ; ~ . .. ; .~ 1 • 'I' . ". 0 . :- , .~ ;" • •, ;. 'r , · r ... -r ' 0

.... ~ .• ' ,' ,. ~ ... . -~ '...... ~. : " ~- .'- t ~ .~ • ;. -'. • --;- ; - f-'~ .- ~. • •:-
.~ -I' ~. , .~ _0 ~ .,. -:-- ' :. . - ~., 4 ~ _j. ,~ .. J ~ _,. _ j. _l _'. ~ .; > -~. -;. .; :. .:: - • .: :~ ~ ~~ .; ~~ ~
• ... • '.' • -:. ',' , • • .• ... ~ . '. -r .;. • .~ .. ~. : .;. • .~ -r -:. • • ., ' r ,;. ";' .- , . j .~ ~• •. I -.
~. , . • - ~ , ~ -: . - 7 .~ ; , ~ -~ ~ .; - . ~ -~ ' r ... -I- • • , .'. -; I '~ -)- .~ .~ " . • •~ ~y , l"~ i '-'·'· '~''''r
.' 0 _ ~- -. ~_.~ ~ -; ~ - ., - 0- t -:. ~ ... ;. ~ .;. .. .. ; ~ ... ~. 'r , 1- . ,.. ' • • . • • r" -~; . ~ •
•_ ~_ • -0' • r _L. , ... . - -. " • -. ~ .. -r ~ .! ~. + .~ • ',- -'- .! .;- , ... t i ·~ .... . . ~- • ; •
, ' f .; -( , • -~ - ~ -, ~. , - .,.. ~ . ... ~ .. ... ., • • ~ t .~ .:. f -:- 7" • • ~ •• • • 0 4 - J. + ... ' f -. • • 1
~ • - :- ' - ;• • -~ 1" ~ .;. . t "'- .. , -:- 0 .~ ;- ~ . .. . - .. ... ~•• ' r -:- , ~ '., ~;. • I ... ~. ~ ~ -.
~
"
•-
~

~
...... - .... ,
• + ., • . -. . .•
~ _. .;.. .. _
'
~ •• "'.
1
.:-
t .:_ •
~

J_
f .. ~ ~
~ ,~~, , ·.
• .~
L. ~ ..

- Jo .; .....
~.
· ,. .
~

-'.
l
.
i
~ . ~ -.-~
•
~

_, ...
~ "! . :.

•
_.:.~
~....
~ .i- -:- • -
~ ·:·
.. •
r 4
';.
• ••
~
J
~
••
-}
" ••

~
-~
.; ... to .;
. ..
'f
f ,
~ •
~ .~ .'. •
.~

~.
t
0

~. • t ·,. ; -f 'r- .:. ~. ~ t· , • -l- -0 ..;. • 0 ~ .. .' •• •••• ~ J . _J. •.

.. . ~ ~ .-1 ' i- I ~ t .... • .: ~. -0 t •. _~ ~ -t- ......
-.- 0 'r- ' ;

. ...... ~ -j.
• l ' t· .~ ...l. -r .... ::: I -t
: i
-! +H'
- .; ......

·f.
_l

, -t
i -0 '

! .• . ..,

109
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The action of Atlas Tack from the zone A to E represents a normal bull
market action of a low-priced issue. Low-priced issues always have best
percentage advances from a bear market low point.s Accumulation was
effected in the zones A, to B, during the run-up in column B, and from B
to 01. At the point marked E, we consider that the manipulators had
completed their line and the stock formed a new semi-catapult at 11,
which was another important buying signal. This took place during the
month of August while the rest of the market was recovering from the
drastic effects of the July break.

Important Signal During July Break

In the July break, while the rest of the market lost twenty-five percent of
the average price, namely from 110.00 in the Oow Jones Industrial Index
to 85.00, a net change of approximately 25 points, Atlas Tack had but a
slight sell-off from 10Vz to 9Vz, which constituted the technical reaction
betweens columns 02, and E. That was an important and significant sig-
nal to the effectthat big things were about to happen in Atlas Tack.

The negligible drop in the price of Atlas Tack during the July break was
much less than normally would beexpected and showed extremely strong
sponsorship. To those who observed its action by half-point technic of the
Point and Figure Method. the next semi-catapult point would have sug-
gested an immediate purchase. Certainly, the fourth buying place, the
semi-catapult at 11, would have been the best point at which to go long
of this issue. The mark up in the zone column E, to F, was what might be
termed "strong arm work." While the averages werestill below their July
tops, Atlas Tack was in this mark up phase. The ability of this issue to con-
tinue its advance and to hold its reactions at less than normal correction
levels was indicative of a continuing strong sponsorship, especially when
one considers the fact that the price continued to advance persistently
during reactionary periods of the market.

6 See Low Priced Stocks, When and How to Buy Them by Owen Taylor

110
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The First Caution Signal

The first cautionary signal came at the zone G. There, when the stock
reacted from 28V2 down to 25V2, we had the first sign of a change in the
technical structure. However, sponsorship was still apparent in the zone
F, to G, and. in fact. it continued until around the columns J and K. Some
distribution was going on in the zone G to K. Note. however. that the
sponsors were buying the stock on minor reactions and distributing it at
the upper levels, they were buying and selling on balance. meanwhile
reducing the size of their long position established in the zone A. to 02.
A new semi-catapult developed at 29, in column H. After the reaction at
G, all stops should have been advanced to a point close below the low
established on that sell-off. Subsequent to the semi-catapult at 29, one
should have been on guard. Stops should have been advanced close
beneath the market. Surely one should not have allowed such an issue to
come back more than 2V2 to 3 points from its last high. Positions estab-
lished at 4. at 8V2, at 9, at 11, at 18V2, and at 20V2, all would now have
shown substantial profits and should have been closely guarded by stops.
Notice, here, that the main trend line "LT," intercepted the work area in
column I, when the stock backed and filled in the 30 level. That was the
final warning. Stops should have been advanced tojust below the price of
30, and, on subsequent strength. moved up close beneath the market.
Compare the mark up trend pitch with the pitch of its predecessors. The
final mark up trend line, "FM:' clearly showed that the insiders had dis-
tributed a greatpart of their stock to the public and were standing aside.
The public then held the bulk of the floating supply.

Boardroom Observations
The mark up in column F, when the stock advanced from 18 to 26.
occurred on increased volume, and it was there that many boardroom
habitues, customers men, and others were attracted to the performance
of Atlas Tack. The churning in the zone between F, and H, represented dis-
tribution on balance by the insiders and some short selling on the part of
the more experienced boardroom traders. The mark up in column I.
occurred on terrific volume. There was another sign for boardroom
traders. Great turnoverin the number of shares of this stock. many trans-

111
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

actions in this issue which had theretofore been extremely scarce, and
rarely printed on the ticker tape as it unrolled from day to day, were indi-
cations to the more informed tape readers and boardroom observers that
the end was close at hand in Atlas Tack. Many began to sell the stock short
from column H to column J. This condition is always apparent on Point
and Figure charts when many half-point changes are recorded.

The Shorts Began to Cover

In the zone K to L, some boardroom traders who shorted this issue began
to take in their short lines, and the sell off in the stock met temporary
support due to short covering. However, the less cautious ones stayed
short, for they knewthat even at $15 per share the common stock of the
Atlas Tack Corporation was still high in price. After the temporary de-
mand on the part of shorts who were covering around 15, was met, fur-
ther supply carried the stock down to 10, and, in the zone L to M, this
issue found a normal level consistent with its actual value and reasonable
prospects.

Point and Figure Analysis

Notice that the zone H, to K, represented a large number of figure
changes while little progress was made in the advance of Atlas Tack. This
occurred during a period when the balance of the markethad shown con-
siderable strength. The opposite technical action occurred during the July
break. That was the final signal for students of the Point and Figure
Method to close out their positions. Increased volume with lessened
progress, and sluggishness in the advance, were all definite signs that the
sponsors had unloaded their stockon the uninformed public. It was time
to get out of the issue, and, as a matter of fact, to look for the first
opportunity where the price broke a previous support level at an inverse
catapult or semi-catapult and there go short of this issue. The sell off in
Atlas Tack from the actual high of 34% to gyz, was indeed dramatic. On
Saturday, December 16, Atlas Tack opened at 33Yz, and soon sold down
to 32 1A, Trading in the issue was temporarily halted. The next sale
recorded was 4800 shares at 25. That day, the stock closed at 21 5/ 8, and

112
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

a few days later declined to the low of 10. Thus, you see that no matter
where your stopwould have been in Atlas Tack, the positions established
at the catapult point or at any of the semi-catapult points before the
advance would have netted you $25 per share, a handsome margin of
profit from the first position established at 4, the second at 8 V2. the third
at 9% or the fourth at 11. Of course, there is a big difference between
$34 per share near the high and $25 per share, the point at which the
first block was sold after trading stopped. It is an indication of the dan-
gerinvolved using stop orders in a thin marketstock. Nevertheless, it per-
mitted the taking of mightyfine profits for those who took advantage of
the signals as they were clearly developed by Point and Figure technic.

113
114
 XIII

The Main Trend and Major

Cycle Culminations

n order to illustrate how the Point and Figure Method will aid you to

I judge the capital movement trend and the major cycle crucial turning
points. we have added Figures 27 (see page 118). and 28 (see page
119), one-point charts of the New York TImes Average from June 1929,
to the now historical break which occurred in October of that year. Figure
29 (see page 121), is a three-point condensation chart of the same move
and Figure 30 (see page 123), isa five-point condensation chart. The data
used to prepare the three- and five-point charts was taken from the one-
point moves as plotted on Figures 27 and 28.

Critical Culmination Points Easily Detected

The four illustrations. charts Figures 27. 28, 29. and 30, represent the
top zone of the biggest bull market ever witnessed in the entire history
of finance. Thattop represents an important and critical zone in which an
ideal test of this Method may be demonstrated. We have stated that the
Point and Figure Method provides the means for judgingthe majoras well
as minor culminations of price movement trends. We add to this state-
ment that this is the only Method which will always aid you to recognize
the turn of the major cycle when the market changes from bull trend to
bear trend.

115
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The One-Point Chart- The Basis for Analysis

Figures 27 and 28 (see pages 118 and 119). depict all of the one-point
moves of the NewYork Times Index during the critical period from June
1929. to the break in October of that year. In those few weeks some of
the issues on the big board fluctuated over a range of hundreds of points.
The market from June. to September. offered exceptional opportunities
for profit on the long side and the breaks of September and October
duplicated those opportunities on the short side. Not alone did this
Method clearly show the top and the reversal from bull to bear trend at
that time. but it will continue to do so again and again as the price path
leaves its tracings for posterity.

Interpreting an Intricate Major Culmination

The fifty stocks which comprise the index compiled by the New York
Times. and which we use for the purpose of illustrating the reversal of the
technical action in 1929. were a fair cross section of the market. when it
was fluctuating around the higher zones during the period under consid-
eration. Any of the popular averages could have been used for the same
purpose. - either the Dow Jones Industrial group. the New York Herald
Tribune or the Standard Statistics group of ninety stocks. Pointand Figure
Method technic may be applied to the movements of any market compos-
ite index. For bestresults. we suggest that you be sure the index you use
is a true representation. a reasonable cross section of the market. that it is
fairly accurate and compiled by a responsible organization.

The First Temporary Top

In the spring and early summer of 1929. several widely known organiza-
tions began suggesting the liquidation of long positions and the establish-
ment of short positions in anticipation of a majortrend reversal. The ver-
tical chartformations of the action of some stocks during that time began
to appear as though the end was near to hand. You will see from the fol-
lowing discussion that the Pointand Figure Method would have prevented
such conclusions on the part of those who understood its technic.

116
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

We ask you now to turn to charts Figure 27 (see page 118) and 28 (see
page 119). In Figure 27, the zone A. to B. represents a trading area in
the month of June which misled many vertical line technicians. We are
sure that you will recognize it as a Point and Figure pattern with a bull-
ish implication. The run up from column A. to the high at 248. in the mid-
dle of the zone was a sharp one, and a reasonable reaction should have
been expected to correct so sharp an up move. Therefore. the declines
which terminated at 242. are to be considered normal in view of the
nature of the previous run up. It is true that the small air pocket which
occurred beneath the work area around the figure 245. might have been
considered a minor bearish implication. but only so if the reaction would
have carried substantially lower. canceling more than 50 percent of the
previous rally. In the area above column B. however. you will notice a few
rallies and declines which began to show important bullish signals.

The bottom at 242, was tested. and the decline stopped at 243.
Thereafter, the succeeding decline stopped at 244. and the future rally
created a catapult at 247. and a majortrend semi-catapult at 249. Nostu-
dent of the Point and Figure Method would have failed to recognize the
bullish implications of market action at that time. No one would have sold
out long positions or established short ones. The technical action was
decidedly bullish and. in addition. the theory of "the count" applied to the
congestion area between A. and B. implied substantially higher prices?

Semi-Catapult Point - Unusually Bullish Pattern

The congestion area A. to B. with its semi-catapult point at 249. was an
unusually bullish pattern. It implied substantially higher prices. and the
run up B. to C. followed. This mark up B. to C. was a spectacular run-in
of the shorts who had established their positions during the spring and
early summer prior to the zone marked B. Those sharp advances are typ-
ical of major operations and in this case they proved to be the means of

7 The countmethod is more fully described in Advanced Theory andPrsctice of the

PointandFigure Method. (Note from the publisher: This book is out of print.)

117
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE Z7 New York TImes Average One-Point Chart (1 of Z)

N. Y. TIMES AVERAGE
FIFTY STOCKS

ONE POINT CHART

This chart and Figure 28 on the next page depict all of the one-point moves of the NewYork
TImes Index during the critical period from June 1929. to the break In October of that year.
In those few weeks some of the Issues on the big board fluctuated over a range of hundreds
of points.

obtaining front-page publicity for the marketand an invitation which car-

ried many of the public at large. head overheels into the biggest bull mar-
ket ever witnessed.

Strength Carries Through Objective Level

The implications of the congestion area A. to B. suggested that the rally
would run to at least 266. or higher. and it is at that zone that you would
have had reason to begin to look for a possible top of the bull market.

In the zone 265. to 270. however. the market continued exceedingly

strong and no danger sign occurred until the price area 275. to 280.
began to develop. From the last starting point, 242. at B. to the tempo-

118
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 28 New York TImes Average One-Point Chart (2 of 2)

TRUE INVERTED
CATAPULT

N. Y. TIMES AVERAGE
FIFTY STOCKS

ONE POINT CHART

.. ..y - OCTOBER 1929

Notice the triangles between zones G and I and H and I. the Inverted fulcrum at G. the false
inverted catapult at full figure 296. and the inverted catapult point at 292 between columns
I and J. These were all vital and important signals that clearly indicate the top of the bull
market and its impending reversal.

rary top. 280. at C. we have had no correction of consequence. Examine

the three- and five-point charts. Figures 29. and 30. and notice the sharp
trend of the rally B. to C. Active short swing traders. basing their judg-
ment on the one-point moves. would have liquidated positions around the
275 zone. sidestepping the marketuntil either a correction was witnessed
or until the semi-catapult point at 281 was registered. The rally A. to C.
required either a congestion area of re-consolidation. or a reaction suffi-
cient to correct so sharp an upswing. The reaction which came was of
minor consequence. however. as is shown between columns C. and D. It
was clearly indicated at this point from the bullish pattern and the solid
formations which were witnessed between C. and D. that a further
advance in prices was in prospect.

119
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The Change Over of Technical Action

Observe carefully the zones between D, and E, between E, and F, the final
mark up F, to G, the minor correction G, to H, and the false rally H, to I,
with its inverted recoil fulcrum. Note the signs of distribution subsequent
to the zone marked D. Observe that the highest squares between the
work areas are massed solid with the oft repeating sharp declines fol-
lowed by sharp rallies. These are always signs of the beginning of distri-
bution and the weakening of the technical structure of the market. Stocks
in this zone began to come out of the strong boxes. to pass from the
hands of the insiders and long-term holders into the floating supply and
to the inexperienced public who buy at the top of rallies and sell on the
declines. Notice that the zone from D. to I, repeats again and again the
elongated hollow areas beneath the work zones as the price path pattern
progressed slightly higher and moved across our chart. Notice the absence
of solid zones of consolidation. Observe that the move was struggling and
meeting additional resistance as it worked higher.

Note carefully that patterns which have the form of the character "M,"
with the congestion work areas at the tops of the "M" loops, when
repeated many times in rapid succession, are always to be considered of
bearish implication. On the other hand. patterns which have the form of
the character "W," with the congestion works areas at the bottoms of the
"W" loops, when repeated many times in rapid succession, carry buJlish
implications.

The one-point moves as depicted on charts. Figures 27 and 28 (see pages

118 and 119), show many repetitions of the "M," pattern in the zone D,
to I. This in accordance with the theorem setforth above, implies a weak-
ening technical condition and constitutes an important cautionary signal.

On the three-point chart, Figure 29 (see page 121), the dips columns E.
and F, indicate the beginning of a weakened technical position of the mar-
ket, but the unusually sharp recoveries implythat the main top and rever-
sal isto come from higher levels. In column I, you will note the reverse of
these dips when the list rallied to 311, and quickly backed away. The
action that quickly followed confirmed the last inverted catapult which
had developed at 296.

120
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 29 New York TImes Average Three-Point Chart

N. Y. TIMES AVERAGE
,.IFTY STOCKS

THREE POINT CHART

MAY - OCTOBER I9U

The dips columns E and F. Indicate the beginning of a weakened technical position of the
market. but the unusually sharp recoveries Imply that the main top and reversal Is to come
from higher levels. In column I. notice the reverse of these dips when the list rallied to 311.
and quickly backed away. The action that quickly followed confirmed the last Inverted cat-
apult which had developed at 296. The failure of the rally J. to K. to penetrate the main
trend was final and definite confirmation that the bull market was finished and the bear
trend started. Compare this chart to the one-point charts on pages 118 and 119.

Compare the one-, three-. and five-point charts at this point. Notice. on
the five-point chart. Figure 30 (see page 123). that the final mark up
trend line "FM," is soon intercepted by the price patternjust above the
300 mark.

The Top of the Move Clearly Indicated

The intersection of the price path pattern, by the final mark up trend line
"FM," on the five-point chartwas the all important danger signal. the final
caution. That signal was confirmed by the nature of the patterns on the

121
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

one-point chart, from zone D. to zone G. This. together with the failure
of a mass zone of consolidation to develop between G. and I. were all to
be considered as warnings of the impending reversal. The patterns
recorded from column D. to I. constituted a change in the type of techni-
cal action and were caution signals for students of this Method to liqui-
date all long positions and stand aside until the previous rally. A. to H. was
fully corrected. The correction could have been effected by either a con-
gestion zone of consolidation or a reaction.

Indications of a Major Culmination

Notice carefully the peculiar and extremely nervous state of the market as
was indicated on the one-point chart between zones G. and I. Observe the
triangles on the one-point chart between zones G. and I. Observe the tri-
angles at H. and I. Consider the fact that no consolidation of the final mark
up appeared. Consider the inverted fulcrum at G. and the false inverted
catapult at 296. Notice that the last push through at I. was accomplished
without the previous formation of a firm solid base at 300. Also. consider
the inverted catapult point at 292. between column I, and J. These were
all vital and important signals for students of this Method; they clearly indi-
cated the top of the bull market and its impending reversal.

Bear Trend Technical Action

Having reached the conclusions outlined in the foregoing paragraphs that

the zones D. to I. represented a change in technical action, no student of
this Method could have failed to recognize in the sell off from I. to J, and
the rally J. to K, definite signs of an impending bear market and bear
trend technical action. The top at I. is a typical inverted recoil fulcrum
which you will recall always implies swift action. On the way down in the
decline. full figure 303. represents the inverse catapult point. An addi-
tional inverse catapult is developed at 298. Certainly the failure of the
decline to hold 299. and consolidate above that zone is an exceptional
example of the imminence of a big break and an additional confirmation
that buying power had been exhausted.

122
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

FIGURE 29 New York TImes Average Five-Point Chart

N. Y. TIMES AVERAGE
FIFTY STOCKS

FIVE POINT CHART

MAY- OCTOBER 1929

. .
§
. l

This chart clearly Illustrates the turn of the mlijor cyclewhen the market changed from bull
trend to bear trend. Compare this five-point chart with the one- and three-point charts on
pages 118. 119. and 121 and notice the warnings signals at key points on the charts.

You will remember. that a recoil fulcrum. whether upright or reverse.

always connotes a sharp move impending. Therefore. either at 303. or at
298. youwould have established short positions. especially so, if you were
trading for the shorter swings based on conclusions and analysis of the
one-point inoves as depicted in Figures 27 and 28 (see pages 118 and
119).

The Investor or Long-Term Trader

The longer term trader. although he would have been out of the market.
might have waited for further confirmation or an opportunity to analyze
subsequent technical action before establishing his short position.

123
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

The decline I, to J. which started in September. and terminated tem-

porarily in the beginning of October. was typical bear trend action. The
recovery J, to K, was final and definite confirmation that the bull market
was finished and the bear trend started. The congestion area which built
up after the rally in column J. in the zone around 295 to 300, above the
symbol "K" showed definite resistance and plentiful supply of stock for all
buyers who wished to take it. The failure of the rally J. to K. to penetrate
the main trend was a final confirmation of the bear trend even for the
more cautious long-term traders who would have been out of the market
during the decline I, to J. After the rally J, to K, with its inverse catapult
at 289, inverse semi-catapults at 286, and 272, none could have doubt-
ed that the bear market was under way.

124
 XIV

Technical Indications at a
Turning Point
y observing the number of full-point or half-point changes record-

B ed daily. either by individual issues or by a market index. and by

studying the technical action throughout the day's trading and its
relationship to immediately preceding market action. we are able to judge
minor swing turning points.

The Change to an Up Trend

After a period of decline in a bull market, a turning point from down
trend to up trend usually develops in the following manner:
1. The number of full-figure changes dries up (lessens) on the declines.
2. The number of full-figure changes increases on the rallies.
3. A test of the last established low point follows. which test must hold
at a level above the last low or at the same point as the last low. The
latter technical action is known as a double bottom, the former as a
higher bottom.
4. After the test establishing a higher bottom or a double bottom, the
succeeding rally develops sufficient strength to penetrate the preced-
ing rally top.
(Students will note that the foregoing type of technical action exactly
meets the requirements of the Point and Figure fulcrum formation.)

125
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

After a period of decline. it is customary. during periods of accumulation.

for marketactivity to subside to such a degree that often many days may
pass in succession wherein only 20 or 25 issues of the 100 mostactively
traded will show but one full-figure change daily. Students must remem-
ber that a limited number of full-figure changes after a decline is an indi-
cation of an impending turning point. In such a period. one should not feel
that the marketis inactive. or to use the colloquial expression. "doing noth-
ing." It is at such times that importantaccumulation is being completed.

Changes in trend occur when the half-point half-hourly index hovers

around a given level and builds up a congestion area from the few half-
point changes which register each day. This is especially indicative of a
changeover of trend when it occurs at or near one of the trend lines.

The Change to a Down Trend

After a period of advance in a bull market, a turning point from up trend
to down trend usually develops in the following way:
1. The number of full-figure changes increases within a congestion area
whilethe rest of the list rallies - buying power istemporarily exhaust-
ed as stocks pass into the hands of weak holders.
2. The number of full-figure changes increases on the successive declines.
3. A test of the lastestablished high point follows. which test mustfail at
or lower than the lasthigh point. The former technical action is known
as a double top. the latter as a lower top.
4. After the test. the succeeding decline gathers momentum as it goes
down and breaks the support point of the last previous decline
(Students will recognize this to bethe typeof technical action which meets
the requirements of an inverted fulcrum.)

After an advance. it is customary. during periods of distribution. for activ-

ity to increase. In such periods. stocks fluctuate with increased numbers
of full-figure changes but make little further progress or the rate of
progress is greatly reduced as the number of fluctuations increase.

126
 Conclusion
uccess in every field of endeavor is but the resultof assiduous effort

S towards a definite objective. In order to attain success, we must

apply the principles which have aided others. In applying these prin-
ciples to our own problems, we are, in effect, making the experiences of
others our own.

Ofttimes the progress is slow and discouraging moments arise. When

such obstacles do occur, the mettle of the individual is put to test. If he
permits discouragements to impede his progress and concludes that he is
incapable of accomplishment. he drops by the wayside and is overtaken
and passed by those whose tenacity of purpose and determination to suc-
ceed is uninfluenced by temporary discouragement. To the successful
these obstacles are merely additional incentives.

In the preceding chapters, we have endeavored to teach and to illustrate

the basic principles of the Point and Figure Method of anticipating stock
price movements. This Method has run the test of time and has not been
found wanting.

Since a proper assimilation of the principles of this Method and their cor-
rect application to market action are the keystones to the mastery and
acquisition of a knowledge of a stock markettechnic which cannot but pay
handsome dividends, we urge you to keep the following guides before you
at all times:
1. Apply yourself to aserious study of this Method. Ground yourselfthor-
oughly in all of its principles and their application as setforth and illus-
trated in the text.
2. Apply the acquired knowledge to past as well as present marketaction.
Test and retest your reasoning and conclusions. Money need not be

127
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

involved at first. Theoretical trades will be found interesting and

instructive. They will give you the required familiarity with the proper
application of the principles. and thus you will beinstilled with that con-
fidence so essential to success.
3. Having acquired a mastery of the principles of this Method. and a
knowledge of their correct application. be sure to follow their implica-
tions. Have the courage of your convictions. and do not permit your-
self to be influenced by outside opinions. rumors. or gossip.

The success achieved and the profits derived from your stock market
transactions will be in proportion to:
• the enthusiasm with which you study the principles of this Method and
their application.
• your understanding of the technical action of the stock market,
• the intelligent application of these principles to your own marketoper-
ations.

Do not hesitate to consult the authors should you encounter difficulty.

128
Compendium
of Charts

FIGURES 1 through 30
 NO. SOO l
ONEPOlf'lT ONE POINT CHARTS
I I I I T I ! I I 1 1 I I I I I I I I
I I I I I I I I I I I I I
- I-
FIGURE - j TREND OUTLINE -l
- tt GEOMETRIC ::t:
rrJ
55 1111 IA -a
114 II~ 114 II II o
Z
113113 113113 113 1\ ~ 1 I -l
112111 III III 111111 N \J 1 LJ >
Z
III III III III \I 1 C
50 110110 I
" I I ~
o
t c
::a
rrJ
s:m
-l
to ::t:
o o
c
I
-l
::t:
rrJ
o
1 r ::a
5~ 1111 llll llll 116 II' 1\ 1 -<
j I
I" \ >
114 114114114 114 114114 \I L z
113 113 113 III IV V 1 C
III III L -a
::a
III >
n
50 110 ::!
n
T rrJ

FIGURE
 NO. !l4J0 1
ONEPOINT

0 I I

XYZ -I
:c
[I]
5 ONE POINT CHART ~
o
Z
-I
>
Z
C
0 ~
Cl
c:
::c
[I]
I FIGURE I FIGURE
WITH TREND OUTL INE SUPERIMPOSED 3:
[I]
-I
w
...... 45 :c
X o
c
xx x I
-I
xx \X :c
[I]
xx ~ o
40 o0 0 It ::c
-<
xx xx X ~ x~ >
XX XXX xl< z
e
xx xx iXX ~

XX XX ::c
~x >
35 55 5 n
r :::!
t X n
[I]

30

FIGURE 2
 NOSOOI NO. SOCII
ONEPO,NT ONE POINT

0 0

-,j
:J:
[I]
5 5 "tl
o
Z
-,j

XYZ XYZ >

z
c
o ONE PI)I! 11 H ( UTI I~ I~ 0 at JE paiN" -GI ::OMt TRII ~
Cl
c:
::a
[I]

:s:
[I]
-,j
W 45 4 5 :J:
N o
c
I
-,j
1\ :J:
[I]
1\ o
40 I 40 1r ::a
-e
N1 LJ 1 >
II L I z
" C
"tl
::a
1\ I >
V I n
35 35 :j
n
[I]

30 30

FIGURE 3A FIGURE 38
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

oX XX X&O XX XX
Xo
Xo
~ XX 0 XX
:::> XX
0:: XX
~ XX X
:::> XX
LL XX
XX
--l XX
<t oX XX X
W XX oX
0
- XX X
XX
W X&O xx X
I
~ x&O
xx xx &0
ox
..-

0 III 0 III a III a

<0 &0 &0 'V 'V

133
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

xx XX IClX
IClX XX
XX X
Xx oX X X
X XX
~ XX
~ XX XICl
a::: XX
~ XX
XX X
~
u, XX X
XX
0 Xx
g XX XX
XICl
a::: XICl
CO XX
XX
W XX ICl
I xx
r- xo x x xx
Xo
xx
xx IClX xx xo
xx 1__

a II) a II) a II) a

In ...,. ...,. If) If)

134
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

~
::>
0:: Xo XX XX
g XX lllX
lllX XX
::>
u, XX X
XX XX
-I XX ox
0 OX X
o XX X
W xX oX X
0:: XX Xo Xx XX
XO XX XX lllX XX XO XX XX III
W -+
I
~

a 10 a 10 a 10 a
co ..... ..... eo eo

135
 NO. 5001 - ONEPOINT STOCK MARKET PUBLICATI OI" . [ W YO IIK CIYY

IDEAL
CHARTING
SHEET
5

-I
, I ::J:
~o
~ [I]

"'~<,;~"''', "'ll
THE IDEAL FULCRUM v+~4 , . , . ' 715 1
i III I1I 1 0
x Z
X )( -I
)('x x X
:I>-
Z
7 10 17 101
~ C

,.~ DEMAND ::2

~~xI~ C'l
x HAS c:
0 15 OVERCOME e J51 ::D
[I]
CATAPULT AT 64 *E SUPPLY
XIx
~Xlx'
x
I 3:
[I]
-I
0 101
w
(J)
IIIi
oro XIWI~!XI~l xtXtx
XI><I><IXlx l L
XTXITxlX
CATAPULT AT 58
~
x
'--.lOl.J
~X i X
)(
::J:
0
x XI DEMAND c
SUPPLY ~ xx BIB: OVERCOMING I
~ !» 5> S 5 SUPPLY . ,51
EXCEEDS • ~
,x -I
XX ::J:
DEMAND X X [I]
X' 0
EQUILIBRIUM REGAINED j I J.tal ::D
. 10 ~ISI~IX •a -<
:I>-
Z
FULCRUM c
415 POINT rm "'ll
::D
:l>-
n
~Cj
'~~!rER cF~~~~~c~O -I
~~ 4T01 n
9F SUPp(:r AND DE"'''' [I]

e COPYRIGHTED -1933
STOCK MKT. PUB. N. Y. CITY
FIGURE 7
 ,.... .001 STOCIC MARKET PUBLICATIONS NEW YOIM CI'
ONEPOINT ml~

-I
:I:
['Il
."
o
Z
-I
>
Z
e
::!!
THE TRUE CATAPULT C'l
c:
::JJ
['Il

s:
['Il
W -I
-....J :I:
o
o
I
-I
:I:
['Il
o
::JJ
-<
>
Z
TRUE CATAPULT o
."
::JJ
JCr TJC >
: J. lx brlx
n
-I
TRUE CATAPULT n
['Il

e COPYRIGHTED· 1933
K MKT. PUB.- N.Y.CITY
FI GUR E 8
 * ,0. 5001 Id?J~L I S10CIl IWllln rueucAnONS _ YOllJI ~
.. ~E POINT SH'~El

·,1
· 1 _

:c
"'"
til
"U
o
Z
"'"
:I>
z
THE FALSE CATAPULT ~ ~
Cl
c
::a
til
3:
til
W :c
"'"
00 g
FALSE CATAPULT I

1 · - - TRUE CIlTAPULT ~
~
-<
:I>
FALSE CATAPULTS • • ~

; If ""D
• ::a
• - - TRUE CATAPULT ~
; ~
~. .:.x~ ••• x:: x:- ~

Cl COPVRIGHTED· 1933
MKT. PUB.- N.Y.
FIGURE 9
 STOCK . . . .rr PU8LlCAnON S om YO•• C~
"..~:r -H

~
:z:
rrJ
"ll
o
Z
~
:I>
Z
C
THE TRUE SEMI- CATAPULT ~
o
c::
::D
rrJ
s:rrJ
~
W :z:
to o
c
I
~
:z:
rrJ
o
~ T RUE SEMI- CATAPULT ::D
-<
:I>
Z
C
. 1'~ TRUE SEMI - CAllIPULT
"ll
::D
:I>
n
~
n
rrJ

e COPr RIGHTED·19 33
K "KT. puB . - N.V.CITY
FIGURE 10
 \~rri' STOCKMARKn ""aUCATIONS MEW YORK C"
1i(~ ~~T
1.1 , n -I .•4
HI=;:

h '-i+!+!+- -I
X
[Il
11 11 "'tl
o
Z
-I
>
Z
THE FALSE SEMI- CATAPULT C
...
C'l
c:
::a
[Il

s:
[Il
-I
~ X
o FALSE SEMI c.uAPULTS FALSE SEMI-CATAPULT
o
c
I
-I
! X
[Il
" ;t;
"'~"~ ..
~1x,ll.
I r!' o
f. Xl( lC.llft. ;JC
' , ::a
. Xx )1, ;1(1
' ~ -<
_.)1, -. . . I.~~, >
lilii t;c z
C
"'tl
::a
>
n
rt-t t - ::!
n
[Il

IT5

IST-&:~'l.7r;1~E.ON ~g6h
FIGURE II
 THE POINT AND FIGURE METHOD -THEORY AND PRACTICE

5...
!
!a

i
I" to
i
~
l:l5
!:>
s~
.... .,
a1<
~~
0'"
u
G

I ti
:>

S
c:: ti
i :>

~ '" ~
<I)
. (\J
...x.x.
Z u

N 0
a.
r W
X I.LJ ~
0:
Z
0 ...~ 0:::
..J :::::>
,
..J
...:>
~~ ~
<.9
gw '"
9
1..L

141
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

I-
Z
N oa...
>- w W
X >
u, 0::
=>
C)
LL
liCK.«
• • ••
• •
.lC xx..
• • X IlI
.~
X • • _

t()

I-
Z
0
W
N a... 0::
>-w
w =>
X a:: C)
·~ f
r:~
::L
l- -
LL

142
 NO. s00 1 STOCK MARKET PUBLICATIONS NEW YORK err
ONEPOINT ~

-I
:x:
[11
u. S. STEEL ."
o
Z
ONE POINT CHART -I
JANUARY 1933 JANUARY 19 3 4 >
Z
PRIMARY TREND C
TO ~
Cl
. . c:
• • s ::a
X JOt J( II( [11

~= l 3:
[11
><'.
-I
.l::>. :>' :x:
IX X'X
W s te e • s
o
c
......" " .. ~ z I
o -I
SEMI- CATAPULT
i= :x:
, [11
&3 o
0::: ::a
0::: -<
II )(~ )(
JC,
~· liCK o >
• • l Z
.... o
• •
m C
"
."
>- ::a
0::: >
o
• •••• _CATAPULT C3
)C')C )C
.. . Z
:!
o
[11
)C
)C~ )C~ X K_ o
1lI ,11 ~ )(
: X )( 1IC C- &3
a s en
• •
ISTM~~I~~E_ON~9&t
FIGURE 15
 NU. ~ l NEW Y,''1K 1;IV
STOCKMARICH P"UBLICATIONS
ONEPOINT
I~.I
i-

;g.
-I
u. S. STEEL :I:
[11

."
ONE POINT CHART o
Z
JANUARY 19 3 3 - JANUARY 1934 -I

P<" • >
Z
o
""Cl
c:
::a
[11

s:
[11
-I
" x :I:
t ~¥ e
" " o
o
xx x x x x . jX
)C )( XJ(x" xx x: x
)( xx xx x x X" )( 'Ii",ex J(X I
x x xx • • x -I
-fxF. 4- -++ ,0 .0 xx . J( :I:
x X [11
xx X -I le X 1C1Il
" o
X )C X) " X X ::a
s
X -<
" )eX" XJC W
X x x >
x Z
o o
xx
X X x,x
x x ."
x "
::a
>
n
:::!
n
[11

y
e COPYRIGHTEO ·1933
IsrocxMKT. PUB. - N.Y.CITY

FIGURE 16
 THE POINT AND FIGURE METHOD -THEORY AND PRACTICE

~
!
ez

'"
E
f
t;
I-
•.."
" a:::
<t
"" :c
~ U
Q
,.,
-Ia::: ,.,
W I- ... 0>

W W u>

~
~ ::>
0
W
C)
.
co
::>

en >-

I
0:
I-"::>
::> 0z ~
a..
w
z
0
I'-

W
~
:::>
(!)
~~
C
-u,

145
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

~
a::
«
::I:
0
IJJ
Z

II ...J
W
w
..J
~
::::>
0
...
r!!
~
~ Cl ~
CJ) zIJJ I
CJ) a:: :l
~ 2! CO
!i:
::> ~
Z
.
1<
:::>

~ ~ W
~ 0
~
j!:
a.. et:
IJJ ::::)
IJJ
a:: C)
::I:
~
LL

146
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

I
s
i
i

IJ ~
.... ......
...J
a::
« ..
~ ."JlLX

W :::I:
0 ...
!!!

0:
W il
~ ~
z~ en
(f)

(f)
0
a..
I
:l
...
!!!
~ W
0
z
::::j IJJ
IJJ
a::
:::I:
~
~ ..
.....
a:::
~
~
:::::>
C)
LL

147
 NO. 5005 STOCIlIlAR.n IlIJButATIlJNS NEW rOR"C.lY
FIVEPOINT l~l~

u. S. STEEL -I
:c
t'Il
"'ll
FIVE POINT CHART o
Z
JANUARY .933 JANUARY 1934 -I
:I>
Z
C
~
1:1
c:
::c
~ t'Il
&
~ 3::
t'Il
-I
.J::>,. :c
CO o
c
I
-I
:c
t'Il
o
::c
-<
:I>
Z
C
"'ll
::c
:I>
n
:j
n
t'Il

C> COPVRIGHTEO ·1933

K MKT. PUB.· N.V.em

FIGURE 20
 THE POINT AND FIGURE METHOD -THEORY AND PRACTICE

5
•
!
I

l
I:
•
i
xx

z
! 0 .....
a::
Z « :I:
::l
:::> 0 !!!
0
..... ~
~ - 0
Z z
0:: 0 I
W a.. ..'"
>-
::J

I]
QJZi InW W
z
0
~
III
~

(\J

W
~
:J
C.9
~i
~
-1.L
.

149
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

. ~

.!
~
..
E

l:!
'0
1=

i
t;

I
I

CJ)

IJ
~
z
0 .....
a::
Z <t
::::> ~ ~ (\J
0
a (\J
..... ~
~
~
Z Z
w

c::: 0
a..
I i
w
W
tilw I.LI
Z
I 0:::
:J
-'i: 0 C)
~2
i~
1
~ -u,

150
 THE POINT AND FIGURE METHOD-THEORY AND PRACTICE

6
I
;

II
I

ro
(\J

i0 W
"L
0::
0
:::)
C)
LL

151
 ~. ~ . , -; .•• ,- t ", ' ~. -, I.' , ' • l ~ " "' , ·1 5 ' • . -~ . ~ . .. • • : I ' I ! " -: - :. t "0 -;. ~ "0 - ... ~ • " . - . -•

. :,. -• • -I •. • • I • t ..· ~ " r • ~ ~ •• -, I , • •, t ~ " ,-.~: . 1 ' , : ~ : ;. ~ :-j:"~ • • • • • , .j . .~ ~. ••" -, ~ • -;. • "• • +
· : . ~ 't l '... + I. ' . ~ .. . - . . " ,. . . .: . ," ,.~ ;. ~ ~ : ; •• t, " I" I: i : , I " • : , , ~ ••• ~ .'. - , ~ • ~ • • :... •• .,-j
•• : .: ~" l " 0 ", - , " ... . " ~ 'i " :" " i ": : ~ ~ ~ ';'~": " " ~:' l+ ~ ' : ' t ' ·, 1t~)1 ~· ·J·~.> -:'~~'~ ~' +' ''' f
'ft~ ~ . .:.•.•• ~. ~ : .: • . : ~;. :.:.\ . ;. '. , .: ·t·; · ~. I ; -1 ·· • ., ... ·~ . I . ·: . ~·:J· r ~· : ~ • ., -: -: . ~ . ~~-~ 1. . z
~ -l .~ ~ •. ~ • .. ;. t , <;• • , .. ~.. .,. ~- ~ "" r • • ~. ~ - , i .~ . ?
-, j -. • • •; . . . t .;. ; ~ ~ • .; i .' -; t ~ ~ . .~ " ~ ", -~ -:- : :-- , .! T CO
I\\IERI\GE ,. •
o
-f j •• • • J . ...L .
_ ~ . + ... ; ~
:: :.:.,. :.: DOW JONES INDUSTRIAL HV H ,..'. :. :..
_... . .., '.. ~ '.. , t , ~ .., ~ ~
'~., - t·;
~.
., ~• .. ; . -+I ..: .,~
. ...... ... .J ,~'·· .i~ .1 1 • .• • .! ~. ~. ~ ' ~ , .~ .. ~ • .:.
~
CO
' :- .... ~ . ~ r . ~•. -l : . • , ~ , l : . ~-- ;. ; ~-:· ··: -: ·: · · · -:· . I
_~_ ~. i- ~ •. ~ .• _. . ~ . •.'- ' r ;. .~ -, 4 ';' , • i '- -:- t ~ ..
~ : • . ~ ~ .~ • , • '._ ; .-. ~ • ; • , :_ • •' : • , ~ L ~ -} ; ·i ~. ~ t.J· ... . ..
o
" : .. . , .. HALF HOURLY BY ONE HALF POINTS : ' : : : ' : .. ' i : ". " . ; : : : : ;- • • • ' '- Fl ':' I
...z
X

.~ ~ . : : ; ; ; ,: JANUARY JULY 1933 :: ~ <.: ~ :::::: :~ ;... :~ . ':';':'. ~ , :t ...~

~ ..:. ~ . .. ~ .~ • ~ • : ,. • • ~ • • ~ • , • • _i' ~ -; . . . L • ~ . ~
•. ~ ~ . ~ + •• ~ .... I .' ~ • ~ ... ' ;'- • • -: - • . ~ •. • •• • 1 ~ .; . . . . . ~
,:,"J : :' ~ 1-' ~ ., ~ .: . •••.. • • ~ • . .:. .• • :. ~ :Ci -~ ~ . ; - :• .;. Z
+ ..• . • ~ ~ t ~ • •;- ~ -'- : - j. f · ;.· · ~ : • • .: ~ .~ • • .~ j ~ ~ ; ' . . , .,. " I , .. ... _. • • .o. : " •...• • ~ • • ~ ••. : I ~ . .. .. + •.;. • .; , • -... ...
• .~ ~ ; .~ 1 r, t .: .• .'. I ' r . • -. - . • ~. • . ~ -j •• :. ; -. . . l j ~ ; ~ •• •.• : • • ' , .: ' ..: •• • •• ~.• • : ., .; . . .. .. -: •• • : .; •• I . .. ; .• ~ ~. ! .. ~ : 't ••• t ,J •• -+. - ..
~.:.~·.·: · , ·· · . .. · f l· l ~ - - :· · · - ..·_;. • .J·;-:·~~l '.' l l l l · · ·: · ~ ·~· · '~'; " "f ' '; '' ' ' j ' ; ;:' . It';, ; . · ·· ~.:.· ···;· ,· ; ·.;·· .- .. · ~ f - ;. · · ..·
• _~ ' '.' • ~_ • . • _~ " _. ~ . ~ : • _;_ I ~ , .; • .• .J_ . , -:. ,.~ •• " • _. " .'. ' j_ ; • • ~ ~. : .:_ : ,. : ~ f~· · .:. • ' ,' , - :- ~. i ' .I. ~ ' " - .. ';' •

J_ ~ '_ ~ ~ -r • ~. ~ ~ .... _j • • • , : _~ 'I .; .~ .~ ~;- -,' • , • I; .". , • . ; '.k •• : .; . : • • !. , ; • • .I•• ~ ! .' , . . . • .: ,--r -' ~ -" t -. ~ '. ~• • -• ..; . . . . . . .

~ r : .:• • -.. -:. ~ . • -. ! .: . . .. -:-.; , . ~ . .;. • . f , ••.• •••• • , • • ••• ~ ;. 0 t ' • " 1" ~ . ,. - : ' .... , . , •..• ~.•• -,. . ..- ~ •. : .• -• . ~
• .~ i ... J_ .; . • .o. t -l : .;- -:-1- ' ~. 0 .; f ~.:- .;. -;- : ~ ' • ~ ~.. . .:- .o; ~. ". ~ - - , • ~ • " ~,~. • I • ~ • •.• ~ -. ~ . • . ~ -~ -t- I - ~ ·r J _ -:- .- , . .....
•. I- ~ .~ ~ . .;. • -r ~ ' . -. ' ~ . , .. ; .; - • • . • ~. ~ . ••• ~ . ; -_ ~ I ~ . • l' • J.. • ~ ... , • .; , .:- ~ " • •... ! . ... ; .. ~ . , ... ~ j .• 4 ., .,. ;.. • •: • • . ; •• ~. ~ •.••~ .. ... ~ 'r
(Jl ~ .: ~ ~ .... ~ :. • ~ .. . . . .:. ; .;. .:. 1 ~ ~- '. .; ...;. ; .' .~ • '- 1 I .;. • • ' ; ~ • • -~ i .~ • .: ~ • ' " ~ : ~ ••.; .- ~ . ' ; ' . - .; .; ~ • :.
.. 1 ! • • ; ~ I _. 4 t·:- -;. ~ ;_ .: -:- ... ; .;. "" ~ ••
[I
.. ... ~ : f,;" ~ .~ .' .-.' ; • . • • . , ... ~ .;. • .; • • •.• . .• ' .' • ~ .: ~ • ; ~ ~ . .• ~ ;. ; • ,. I ; ~ ... ~ .• • i ' p • • ; ' j. r .' ! .. • , . , ..... ( '. ~ . ~. ~. . ~ ; .~ • ; -:- I I - .0- ~
N ,. , _. -: _ • • • •L • :_ • ~ t_ -:. • _ • • . j- .. _ .'. , ~. , •• , , ..:. .; ..... ~ .!- ., • ..:. ! i" •.• ~ 1 ; . ;. • ..• . ! -. : • . '- ~ . ~ ~ . ... . ! .• .;. _;. ! .:. ~- • • • .J. . ;. ~ .. . .. 4 f ~

; ~ ;...:. .. , .• . ~+ ~ . - ~ ! .• ~ .... : .:-.; •• -. ,; -I • • .'. '. ~ .: : -:•. 0.- -! •. ~ .;. • ;.., i r- I • i -:.' ~ - " . .• -- ~ ; ., .. :. • ·t· .' . • • t- -'. 'I i- !- : • -.. ~ -: " ;' ; 4. t or- t"
~

l ~: ,. .. <;?,' ':'~ ,. -;', ~.;:; ~: :.~ :. ~ :. :::-::::::: ~ ~ . ,:::;;::::,~ .; :: : ~. . r · '.~; .~ : -~ ~< :; ::: : .~ : ; :~ .~ ~. : ::.:~ : ]~ : ~...~ ··
- + . , ;. • .r ~, .'!. a .. .. . _ .; . • • •. ~ " . - •• - ~.;. t -~.;. . , . . ' ·1 · " -, ! • , • .• , . • " '• • - . ; .• ~ .:. . • • . • • .~ .; ~. . • ~ _ . jo ~. • . . ~ •• .;. .
: .~ ~ . -: -.- .... i .. ~ .. . .•. : .. - • . ,. I ' . _. . , ~ .; r" r';' -l'"' .. . ; . .•~ ~ : ... ! , ... • •. , 'r • •'- t ~• • -! •• " .. .. t • t . . ... ~ •. •.; .;. •. • ~.o r ·~ ••. t· • •

1 .:. : ~' :- • . t ' • • ' •. ~; : J. ;. ~' ,,- , - I; ' I .. ' • ~ ;- f ~ .• • • • .• .. • I" • • f ;. !, •. •. -i. ~ : l - .· · · · j ·· -t .• t- -;- 4_ • •• • :--~ • ' ..

• • ~ - • ," r'- ..... . + .. A ., . • , . I ' •• ~ .• - : t i- • ;. . .. ,. • .• •. ; .. . . ~ .; ... ~ .... f .. i t -~ I . •.•. , - ! 4· ~ ~ -r -:. •,. ~ -' ,
~
I, : .... ~ .. .;_ • .••• ~ ... ~. .. _. - ._ • •. .• ~ ~ ~ .. .; .:- ~ -: ~ • -r- • . ~ _L i '. ~ ; .• -i . • . -• • .; -p .'- •• -; • • • •; . . ' • • • ;. •• ~ . . . . ~ .~ ... 1 ' ;' .:- +- • -! -~ ~ ~- I -;. ;.
~• .;. . ' _. _ ;. ~ • • 0- • _;. t t-r • ; : , : _ - : -r ; ~ • _:_ • • ~_~ • .; I .; - ' " 4 .: _ . ; • • _ ~ • ~ ~ ~ '. t ~ .~ • ~ : 4 ..
: ~ ~ .• :. ' r'~" !'" .~ ;." ~ " • - ..:. '. ;.;- ~ ·1 ~ • .} ;• • , , .:. , ...~ i .•. ~ .. , • ~- 4' ~ I ... . . .;. .:. 1 ~ • ' r • " ~ ~ , ••. ! -( ' < ••••• ., ! . ~.
,. ·t t -: . • 4 ... ~ ........ . -: .;. t -:. ; .. ;. ~ • .;. -! .j.. • \ • • '. . ~ r ~ ~ -. . .... .~ ~ -: ~ ... .;- ... .; -~ ; .•. ; .;.;. : - :- ~ ... ~ .: . . .. . . + .~ ~ .... .;. , ~ .•~ .: ;. ;- r 4 -: ... - :- ~ " . 4 1 • .;-

.~ J ~- j.. • • .; - .. ~ -; : - . :- ,. -;_.p i • ~ ~ -;"r .•. • • J. ~- ~ ~,,:.,If , -;•.• , .; .:. t .;- f· : • ; ; I ~. , • .; . : •. t ; -;. •. -:- .'• •• , 'r 4· I .• •. ' . ~. t- ~ ~- ~ ~ ~ . • -. ' ;. ;. 4 • l' ~
• J _:.. : r ~ .... } ..- • -1- t . ;. _. ;. ~ .;.. , .~ .: - , . j •• • ,~ ~ - i .;- . - I .• , • ~. '. ~ ,'. : .. • ~ ~ , "t-... -;~ . ~ j , ... . ... ~ · r· ~ ..: .~ l'- • •,. 'i -'- r ... t :- i -
.• -. ~ : ~ I. _ ;_ p .;... !- "~. r • -J ' <• •• • ~ ~. ~ ,,- ~ -~ ~- -:. 0 , ~ •. , ;- .- ~ ~ . ., .~ ~. -.. L ~ ~. ~ • t .; .:,.. ~ l '- ~ -, oj ..
t • t ~. ~ ... •.. ;..~ .. . :- 1- • I -- • ~ • i ~ ; .~ 4 t- ~ r ....... 'r .• -t ~ -1- i -t-r-t t e ~ • • ~ .; ~ , .• • • ; t . .. .• ~ .. ~ ... • . ~ .: ·r ~ ~ • • .;. , .; - ~ .,. •: 4 .:- I -.
~ • .,_.: . ·r ;. .- ~ - ~ .;- ~-: .:- I- • . •' :. ~ ';. : ;• • _ • 4 •• • • ' I : • ~ • f .; 1- ; ~ ~ ;~ .; . • -:. -+.. • I . ,. ;. '• • :. ~ : p ~ ~ I -:
-! .~ ~ .. ' -! - .. .; ~ •• ~ :- r : ... ~ -: ~ •. ~ J ~ ... ~ .... ~ .. ,;. ;. .... .. ~ -• .:.. ••• J -t- .... ' • i , : ' I •• • _. ·r ... .. -j. • • 4 . - ~ ~ .~ .. - ~ ;.
1 4 'p _.:. '-:. r ~ • -:. ';' • ~
·
.:. •.. - .. . . .:;. t ~ ;. .. • ~ L • •: .:• •, -: - .. 4;4 ~ 1 ..- r .; -: ;. •• ~ .••. • ~ ; ; to ·, ~ -: .; .. ~ j.. p • t • ~ .. ..:. • • ;. ... t ~ -' - . .. - : ... .. :•
.. ;.. .. ~ •• j.. I. .. -: ;.. : ;. .. "'" . ~ ~ -. ' . . .. . .. .'" ~ ....... ;. " • ~ ,J ~ . ~ .;. t -·; •• • .. ... _: . .~ :- ~ . r .. -;. 4 ..: + r ~ 'I· ~ -: ..
: " 'r ~ ' ''- ', ~ .. .:- -;. 1 • •~- 1 .. • .;. I .... ..: _••-. I -:- ~ ~ -:-... . .. ~ •. I .. ..- • r •. ~ ; • -:. ~ .. t .!-........" -: -. -: ~ ..... , . - :- -. ~ ~ !-.- • ~ .. ~ -. ~
• ..:. L • •:_ • • . . J- I - !- ~ .; .:- • ~ . j. - . -; . . . . r • -r • • .o '1 .~ ..... ~ -: ~ ~ -~ 4 r1 .. ; -;• •;• • ~. - • .; -: -~ ;. 1- ~ ~ . !"" • • -:••' .~ • , ;.. • " • -' • • - . + ~ I
.• • ·· r • -. ; l .;_ I .. _;.. ~ . • • -I. ••• ~ ~ { , .; ~ l + -: ~ • -~ -:- •• " -- ';. . 1 • ! ~ J :• • 4 :. t + ;. ~, f ; -l .. . : ~
~ ~ . .. i. 't" • ~ ~.;' .. -; I ·.. I . '. ~ .; - •. ~ ~- -i- ~. ~ .. ~ _• • -r· • ;_ .. : ~ ~- • .• ,. !- .~ ' .. _r • ~. I ~ ~ •• ; . !- , j I ~ ~. . ~ . • .:- ~
: 1. '_ ; 4_.. ,. .: ~ . : p'.. I ~ _.. .p " .._• • p ... .. ~ •. . '" L ; . --: • ~ .; -4 ... • _. ;. ~ ¥ • _ ...:_ ;. _ ~ ••

Ii:) COPYRIGHTED -1933

STOCK "KY. PUB.-N. Y.CITY

FIGURE 24
 "iTiTtTTI' ., ., ,. • t ,. • , .•• ,. , . ' , .. 5 ,~ , ., , i ., . 'r ' . ;:. L ; , < -t- t ... 1 .1 ....
·H..tH ·~H·H· I ·....·
~ 1 ~ ·t H-· t I : 1- ~- t t ..·~ · ~ .~ <0 ~ - ;. ~ - ~ •• ~ • • ;. ~ . .. ... ... . ; • • • 'r . - ~ -, ·t -. i . ... -. I l'" ~ -t -: .. _ I J "; ·I- " I · · ~ ; t ·d":+t ~ ~ h -' ·. ... 1+
~ H - ; ~ ·· ~ · t :' l- ~ ~ j-l- .. , ~ + , ~ . ~ ~- . -:' H l ~ ~ ~ "" f -.. -• • -. ~ 'j " ~ .~ l . "r '1 - t -:. -: •• ., .. .. ,- ;. .. '" +- "I ~ ....
j • • -: .. : .. . .. i -.
., :i..t ~ ~ .~ :- •~ of .~ ~ .. .:. t ~ ~~ ~ ~- + ... ". - ~ - ~- i : . .:- .. - t , . - . . . .. - ~
....
TlTI't'H'll£ ... : ~ .
_... ~ ~ .
.' I·' f n'h l'·i<I; _: 1~ ~ ... ;. ~ . I " '!.::I:::i±I:i±, ~ ~ ~, .: ;> , . + , .; . . .• +" +.,., ~
..;.,j.t· l- ·, ~ •. ~~ . • I .:. ~ H ·~ ~· ... L t .+ oj. .. ~ ~ .. . 1 • ' ~" . ... _ .. • .,. t- J + .--. .... .. ... -, . 1. i -~ -:t
~·HHH' ·; Cll
.i. L ~ ~ ~ . .. -j- ... ~ -: •• .,. , .~ ..; ·t t -} • •:- r ~ -. - } -:- ~ -:- .. - t- • • ~.
!H I: cH o
.~ .~ ~: ~ ~ .~ .; ~ I " .... :.-! t· l ';' ~ - t t -r .:- I •• ~ , • • -f "
" "i,l[::l;t!l:r:t: , 'lTI'tTlt. . .:. '·f;j;t i.:t:l:.t ., :ttt:
.f ~ ., ~. : , ., ..l -:- - ;- • " -' . - • • -~. .;.. ~ T 1 .;. ~. ~ ... ... ~ ~ 7·~·'" ~ -I"";'

~ .~
" 'IL'tj 'r 1'1'1 l l'jTH' ... ... "7 -r ~- ~ - ~" ' ~ .~ ~ -i- ~ ~. . • ·1 of - ~.~ '- HRi:.~ . · ; t- j .;.. _ •• •~ + ..l .. + , • • .' - -:.. , -t- .. ~ • ..:-
...2
I

.j
5H cH-'·HH f Hi F c' f ' H H ;

~ ~; .~ p+
.. -.. j'_..~ ·LI .;·l n-'-l
1+1'1" "+t-tT -: .:,. '
... - . ... ;. . .
...
~ I ':'h

-~ ~~ .~
.. ... . ~ ~- ~

H-:.h. l :l:-
~ ;+~

~ t ~ i ..-,-:
~

:-1't l ' ~ .. . ,-.

t + · t~

.~ ...
I ·:·t •.,.•
';' 1.. 4 ~ -1 · ~ H
-~.H
,t_ "
~-1 ~I- ~ I ·~+ - -I ~ . ~" .H- I-
~ -....
,- - -t
~{_ I · ;'l _ .~ ...
.:
~.
~

~
~

I· ~
...
H-H-I~ ' "
-l
...
..
. .;. -
l~"~
:. -t ...
·;'T~
~...
- { . :. .. . . . ~_ .-.
.~ ... i _L .. - . . . .' ~.. ~ o
z
:z:
'"
.•t'" ~ .; ~ ..... ~.
" ::1::i+:,~ ; ;;::.,: ;. ~~' : ; .~.~ : .~ ~. ~
'''H IH '+H "H H~ I ;l ' I ·· 1 H ' ~< " ' I" "
· ~ I . "- ~ I~· ~ ~ 4- 1 j ~.~ ; ~ ~. i ~ - ~ ~~ ~ +~· " . + ~ ~ ·· h - .. ~ ;. ~ I i ... +<0i -;-t; ·, ...1-0 ...~ l ' .;. ~ ..,;.-t-:-...;.~ ......!- ~ .:. ~ .. . .. .. •• I_ :'~ ; I ~ . ~ ~
::i :.;,; .:: ~: .~ : ~ ~: ;:. i ;
~~ .1. . ~ . ~ ~ ~ ~. h. '~ I ......
" .I";'~ '
.I+I "; "HI~H
h ~ .1.,,;-
~ • ~ 1 ~ .~ ~ ,~+~Ht -:+~t~--I~~ ·;.l ..
't " '1 " 'i ·'j +f 'I '+"::I;Lt;U~IH;j :t.:j~' · ....1- ~t 7 _ I ~ .; -t' ;. A , ~ + ~ ~+ ..~~ ."l··H-t-; · :·H- I ';'j ' ~~~ ·I .. ~
;g
~ ~
", f:H H1o+H'+1/,1-,11/H;!·;·F·Hm.·, ~ t ~ + ;' il ~ - -r-t-: -I'- . •'" " + t. I- !'~~i·;.~~i~t-:-~ ..... i!
.."'~ " , f'/ ·' H1' I H H~+j --4
mf' t I ~
" . ,- " , · · t< ~ · "· '· I ' + ~ I ' · f' + ' f H+f' j
II H ·I ·HH ·: · ~~+;'H+-H·~ I - .
' ,.• ,. l<. I t -:-H- t ; ..l-· ·, H+ ' j ;·Hh l'· f + , I+I;·j'+, !+ F I ' +' <··
511<·; I ' . ~ ~ I' ~~ +~ 1-:-1 ~ +../ ~+ ··l_ ..·q H -:. -'- .
'·,,'·'·," - .,.
I ·~ "~..l _"
**
H ·· j· · I.;· 1 ; ~ · . l · . ~ "; -I-. ' : i • ; I -~ ~ ! ·d· ~ · i 1"· I';' t · d · +; + . I-;~· · j · · ,.. ,- , . ,
, ~ ~ f .
~-t- ~ ·f 1H ~ ~ ~-I- ; ·I ' ·· ~ ~ · I- ;' .;. ~I .. "'+-1<" ~ -1·~ · I ~ HH .. ~ ~ I ,· ~ ; t · d i -l-" ·. H ~" ;' ~ ··~ ·"
.} .;..~. ~ -; ·~tt.:t~ t ~ ~ .' t -t- ~ ..·...~ ~ ~· ~H· ... ~ + H ' I ·L H· "
.~ -: .*>w: .~ .• " · r t1ll ';"· ~ . ~ ~ -;.J ... ~ .. t 1
."I-~ I~ '''-1 t.~ I '; ~~I ~·~: ,j::l;I:.r u :'· H · "H~ -f·:+ ~t7
C8 • i· ; ' . f i ;·i-· ~ t ·; + ~· ~ ;·I· ~ ; t · ~ I.;- ~ ~ rO I i-t -,· -H ; ~ ':' I ';· t ":- ~ d-:-l .; ~ "; ·I · hi ;·h j ..;........ - I-+~'+'" ... I- ~~ 1 -1- ~ ~ ·"+~ " f

U1 :-1-' ~ . .
; ~~ ~.; + !
~ 1-:
I .. •
:. ~ ~ l .1 ~· I " + ~ f ~ .... .
...r.; I '. , •. • ~ ~ '; ..I . •
~ ~ · :' I: ~ · ·1·.. t ..H - -I·,..
<1"·h f "· ,j ' VH
.,. J .~ ..
"H++ Hht Ittn;Hl:
; ~· ~ I ~ ~· ... · ;. ~ ·
!
II ~
it ; I ·~ 1 ~ 1_; _jl;' ~ d~ i·d -:1-i·H IJ
" '1',+:1" :-H ·,1' · "; ~ " "" - ', i·; H H
W ~h ' ;. I ... ~ · +ft ·. -t ·, I " H · · I · ;. I -· " H · :-- I-~ I .. ' '' l '; .• '; ..~! -4• • ; -I+~- :" ij " 'H ~ I, t 1.
'! '~ ~' j.!~'f~_;j·~;tlj+flj
. :: ~ :~. i. '+~ I ";'' n<fH
~ ~ ~ "-H'!'; l'~t + H-
ml·Lf 'l ' ·F ·I·' .·· I· . t~ I -~ · t · t ~ I ·· h ~ ~I ";' j . ; :· ' · · I-d · ~ <" " j' j .;.; ;H : f :·t ; m : 1. ! ,J , I , '·· ·~H-! · ,j'h· f·+"'~ '+ · f ~ ;. .. ~ ~ H
:-1 ';+ ;' ~. ;' ~ ": .• ~ --I
.. ~ ! • •j • • ~ , .
1+' H ·'hj·' . I·!<·" · H H .j+l t-i H ·:+ ij t ' ~ .' --I-: + ; ~- :- . H~ +t l+ 'T o
, r~ . ~ .. o
'- ~ ' - ~ ·~""Ji -H + f H ·, r:r l ; I· ;- I H - :- k ~ ; I-· I -· ~ . I· ..
·H- ' f ; ~ . ;'I _ J .I ; J _.l ~ . I-! ~
'"
4-;' j .• I"· 1.:. j. ~ . f ~ ··I-~ i ··- I~f; t·; .f-~~ ";-I- ~
·· H :i HmTiT' ·:· I H : 1-~ I ~ I -H ~ ~·: ~·~ I 'P -
.. -t ; - I- .~ -l -. ·r t -;- ~ ~ ·t ... tot ·,'.."1·;HFh-fH1-!'I,
·
_,. io l . ... J : .P.!:Ai a ~ ~ ···I·~ I +- '-I- ~ ~ ~ I · ~· ~ H - H ,,! .j · ~ I ; · . f- ; ~· f i,· t·'· h + ' H ~ ~ . ;+, + ~ H-I-ai-l-:~--l - H· · ~·: "' ·H;· ~-
" " ; I ·! ·;·!'i·H·' !·'·H P t·;+ ,
~ ~ ~ ~- . ,',t 'l+" <1' ·I :·f : j {FI·'li-fL·I·H·;!'},.
···
5
DOW JONES INDUSTRIAL AVERAGE
l i tt ;·t q ·;-t " 1.. · t 1 1 ~

~ 1 ·:' 1 i I ~ h 1-;-1..• --Ii HALF HOURLY BY ONE HALF POINTS

~+~i~ I·: 1 ~ ' '' ;ld+: -I ~~ ~ ~ l~ ~ - ·-. l b
-:+ ~ H t . + :+;·1 ;~ ..- ·, ' H , h l ' H
'I , -.. HH I ·· ·~~t' 1-; H · ~+~ ~ j-
JANUARY - JULY 1933 .,. r " , ·1-· ~ ~ ~ ~ H+ ' + ~+ :- f~
IT!
PAGt: • t 1-
~ ~ "7 ~ ~ ~ . ..l -.. -~ ~:.
_" , . " !. ; :. ' LL': ' ;r --:; ; ...." H ~
·:
->'.' . ' f H·;·I' ' ~ ; " 4" +-" f H ..·I·,·, ' t - t .. f! 14h ";1-' - , ., ... , . ''' 5 J1~ <+>1' ; t ':' I" " h j. H " ' ~'-f ' H ' H:++ HH + c· ~ ; ; ~; : ,~ : ;. : ,~. ; ; ;~:; , 1.
... ..,.• 'H+" "'f ' h+ ' I, Vf , ~, I ; !·,HEI·;+; 1' 1+'''" -:- t.... t ~ i .~-t i't •. ~ i I .;. t ~ . •. • : ~ -:. t -: . :- ; ... ..; : ~ ~ ~ -..:- ... { ;.;. ,;.,,;. }- -t ..; + -. . . . :. .; -. - ~ ~ ~

""'Ii j ~+;+ d ,fil'1-<-1 ;iii," ,"1" ,j.,.j.;+: " .,

·i-P· t-~ I · i+ . l· ;~ ~ ~ '; + l- I I , I · H ; 1';·1. + ·IH ~ · I ·' H h -l-> .,
H -:·H ~ -4 . ~ J. ,-1 •• IT; ~ - ; -.- . . ;. .. ~- .: .. _. : · ~ ~ ~ - H ~. j. ~~.~ ·!+~ I ). I .'l "' -j "-f .• , ., !- ~ . _l-q_~ ~ ';' L: LJ..... -'- '" ~ t ';- 1-01.•
. , t>H ' +,
-i + ~ ~ ~ .: ~-i+ ~ I'; ~; ..... 1 t ;'1; j · ' - H ~ · ; I..;. H ..;-I. ~ I-;. j. ; --1 -~ I ·;' l ;-1 .~I- ;. ~ ';-1 .. ~ ,;. t..· j. ';'~ ": . ~-j. ~ ~ .-,
Iii) eOPYRlGHTEO-1933
STOCK IIKT. PUB.-N. Y. em

FIGURE 25
 tt±B j...I.~~ ~I ' ~ ': ;. • .".. -• • +
oh l ·· l, -,+ l l ,J . • .. . • .., • • ~ ~ .:

- H ~ f H , 1i I' H ;l... j l ; i -I :. .. . 1." .:. " .~ ~ 1- ~ t t

~ .• r .: l ~ · ~ ; 1·;.1.0 ·1-:- 1. .. .. -:. ~ ., ' f ~ .!" ~ + .. . ...
,. ~ .. . ~ ~ ..;~ • .l. " ' !-I . .I. L '''H I ~ ''''.
~
" ~ 7 H '"
' ·' I' H I'HH-H-.
~- .;' ~ ~ + ; .J. ; ~ ~ ~. ' L.:
'.1:::.!i-
:TITI , t,-t H·t+......
.
o
.~ I .u.::: i ~ ~- I + f ~ i,. ATLAS TACK CORE> ... ~ ; ~ .:- " !'t
.. ...2
- ~ I ~ J ~.I J,. I·:- I·~- ~ ~ + ~h l I ~ ~ ~ ~ ·H tl · .J i ~ -:. L
..
:-- ,. .... -:- I
-;f H-'-H+' f ' I, H- + lc- .+r.-KSl:t lt
_ ;.. ~ ~ I '; · .~ l .~ I ~ : ' ~I + } I ....I ." , 4....1-"-1 ..
....-::L LJ+ . H H · ~ - l ' .f<
~
' 1' -i : I :- ONE HALF POINT TECHNIC -- ... .
Hf -: H H "+ H·; I... I- ~. • L ':-lJ %
'"
4 . , d ~ '. L ;..~ . ,. •. 1.; .1. ; L I. ~ -: •
MARCH i930 JANUARY 1954
.~ ~ ;. ~ . ·1· '. , ~ : I or · ~ 1·1"I · ;' t ; "h - ~
m ~L
'J .:.
~ I ·~ I ~ .J ~. ~ ; -~ ~ ·nl ~ n ·l·;-FI";+. i- ~ ~.
.- ... ,.,
",,,'-1< ~ ·I '; ~ · ~ ~~ l i."l · ' 1 -,-
:rrmr.:r-~; ; ,- , -I , , -' I' ' 1;:r;T: I I~ I· ... ' i· ~ ~ · :' ~ ~ · ~' '+ ~ · r -: :." i. '; ..,.H
• -~
,
ITo. ... -:- , - ..
, -.. ~
~.
-~
- ~ t ". ~ I
"1 -: ... .'
.-t-. · j - ' P · i ';
,. ,.;.- ~ . -t - ' ~ - ;.. ~ .

' ~ ~ H H· ;" I "

;_;,f.!

l ~" I
• hH ..;.

· ,~ :.of t l~ t ·-1' i ·' t !

H ';·HH..~ .
+ . -1 ' • •
'1;1'l:rf'jTVI'''' H-~ ~- ~

. : ~,
_r .. .
•~
•
~ J l ..
.. . ~ ~ ,.
~
~
w. ~=~~ ~- ::: ~~- :. -;. H -:' -.-:T. : ::::;- ; ~ ~: ;:-~ : ;:;-
.... .. ~ . :. : -:- : -~ ~ -. ~ ~+ :. - a ~ i~ H i-H" H·t ~- I ·~ t-:- -t- ·~·t ; ; ~ .'. f· -c' ;' ~ ~ •• • ~ J •• • •:. . . .~ ; ... .: .. . ~ ~ .j. , . 4
+++,H I-:-" -
+ "1" ~ ~ • ~ . ' " • -}o. -;- ,~ + ~ •.,1- :-1- • t ~ . -. ..;.j . :. j ; J.' .• I , I ..·+- . 4-:" ~· I·'-I· :-I· ; H-: ·t~i · :""· .:- .. ; ~ ~~ t .. -;- .. .,... et-: ~. t '" ~ ~ .. .;. . -," ... ~. ... .... ~ .;. ;
-FF'~ { -, . , -. -. ':' H H ·;.H "· .:-1... H-: l -: ,IP H -~ t -;. . ,.~ .~ ,', -l- -;. , - 'r ~ .. -. -:. • •

, h HI-'-H --14 H Hi t:ttt!·· ··H -! ~ 1~+;" -: .. ;. ~ ~ .~ J ~ I ~ . • -:-- ~. , .,; "'!' I- ' ··t'd· ~1· ~ t-~
;'I · .~ I...~ .~- ~ n; 1 ~·l t1 +~~ l -:-I-:·I . .!+ ~ . • 1"" ~ - l-~ ~ • ...1••• ,. H' ·f: 11j -:+:V I·· f ' ·- · ". 1 ~ ~ .; . ~ ; i 1' ~; iH i 1 ·:'I·:'I ~i · ~H ·HI ~~ t 1 "';' ~ ; i · ;" I .-l ';· ~ "
· ·· 'f lJ ·'I<fi-H -IH - ·!-:f :f> I 't 'I 'T'-FF1 <-!,-J,'Hr Pi -: ·f : H 'f , I A' : f tl ' kH q 'f ' l ~j - ,I :+ , H -tl-t-i d '1- , LfH ·;1-, ' , I; H+:-H f , F HFl CIl I; 1-:1 <I ' F I- ;1-;F F J-:F-f' H l-'f" -' I' l·:" " II
I nTlTr.nTn'-I:::> 'l i-l -' I; >" -:- I ,J-:- I -' li+ ' l i ·I- :- K ~i ll ' 1' ["l' TiT--
>rtr:+ ;-r::r.T 'F F -l-'I i '·:-f, f : j->
~ · ,,-I-Hmnt->FFl ij ' I-'-1' -J-!! iFFI+ j - ~ F ~:- ~'! : -f ; j :F+ >r--1+ 1,t ·..,I , p:p , ' +H-:I 'I-' H d '~ '; ~ - ~ .~< ;'H
-ll ll H-1·jl ~-l-.~l -:. tTlt
: ~. ;'n'j'jH
;1 -:- . H' _:.0
TH'n:-
\ ~ .! :" ~ ITlt .• +·tTI
1 : ~ · J · ·i·~ I '~ ->IT+
" : "·H
.:, ~ ~ · · l- H· ~ . · H- I. :'. ';"H · . f ·HH·.. • ~ ~· I+ I ·~ H ~ ·:.j."1 ~_ . ;l' ;.IJ ·: t · H· H .. ~ I- · ~ "' ~· ., ~ · ~ H+ :
... .Tt'~ ...~". F H ·:-H4 · ... . j ~+"- ;·l ~ r ·k ~~ ~

; t ·. J .; . ~ ~ 4 - ~ ~ I ~ .: . ~ ; ~ .i. t ~ 11+ ~ ~ . -I-;"' I- : ~ " H ·H . ·'+ -h ·H ~ ~ ; + -:-I ~ ' · . f';' l ·:· ~ • '·"1-1+ .1 .+, j, t: h l<1-:+:F li I' -HI-'
.. " nl '-l-H ll i-f' l i++i!-'l+ H-'-· ". '. .~ ... ). f "" . . ;. ; ~ .w ; . ; '1 ' ;- ~ + - .- t- • . ~ ~, ; .,.. ~ ~ -;. + . ;:~ ;; i ;. j ~
.,:-. ~ .; .; i - .~ .. ..
eU1+fl,flfH :!-·j,-H ·t!--f;H ·+ + H '-" ·- . • .;.•. ; . ~ .. .,. -:. i' ~ • . ;. ~. .. ." • f ·H·" - - . -~ '-" r' " I ... .,. • .;. j. ~ •• "': .:. ~ t ~ ..... "l - .; . ~ ... ~ -t- + ;-
·!
.~ ~ .. ~ .~. • • • ; , .'. ~ ·t ~ H-~ ... ~. • • " - '. • .). .'. t 0 ~. . • : 01 - ," • -r ·t ~ .. . +.-
H-fH-I H+H·/-.: I' l ,. "I ' F I, -id" ' -' --
~ I ' d ~ + ' l :-- H~ ~ ;' '""' " , ++ ;.;, ' ··H ·... ~ - '1 · ' H 1 -' H ·H H + + 1' H OI ' 1"> - . • _...~ .; - ~ .,... . · f ..· ~ .;. ~ . . -. ~ ... ~' ~ ~ ... .~ ... ... . ~ ... -( .
.\.q p p ·,F fI H -, H--- . ~ I.: + . I"',
• -f ' . , ,_ ;_ : , ·, I-.:_;};-H-:+·I!
, : " >I "'-f: "-- --
lfl -:- 1,f-il -:-H _ :-f-J-++-f'-H-I+3 -·-H r f • j ,j->Fj-'! 'FHif+-l- +j-·j-ij -a'i~ I ·+it' j-; !-;F" " '
".+ 11,; H+ ' .f " I...+, ~~. ,,". + ~ ·H' H+ . i -;'
...~~ .~ ; .~ • . } . ,.~ '. ~ ;. I l' . - . ';. ~+ t ~ · ~. I- ~ .. -~ -;- • -:. •. : t ..:-- ~. .. i . • -. . ~ . •.•. \ 4. :. ~ .( . :• • ,- • .J _~ ~ I

- I

H" ·'
..., .; . ~ ~ i · · I':+ ~
-t j';' j.. H~ ..
~
" -:-H" +, ++ + 'I >I+ : 0 ...10;i ·i.l·:+:'1-~ I ~ + ~H +: +I h+ ~I'i ~ ~ _..~.~ ~ f ~ ' ''''H-'
·
, H l ,i l1 - H t -;· ~ . I-~ I ~ ., .;.. ;: 1 ";' 1 ~ ;- .;' : ~ ..;. ~ ; .~ + i" ~ ' -:. ; -~ •. ; ; -.; ~ ; ~ i . ~ .
_:_
~Hc ._. _: . ' ii" <-t' ..• -'- ' " -,
I .;. : -;- ~ .~ .:. t -l' t .... -:. ~ 1 .;. • i- ~
-«+ '1-'"
:~~ ~ i;'- In}jnEttHnE ;1;:~ ~ _~;+' ,~.
t : 'f- ... + • ., I . .. . • l '
~ -ill !~ .'- .
. l- ~ .._LI-; ~ ::±: BJ ~-'- . -; -':1: . , -. -, { -, -- , ~ " -• • , " ,-. •• • • ' "ttili± 'H h- I~ ; ~ - '" I· .~ ~ .,. j .~ :- - -r . ; l' • 'I 10 ,.
H-... ~~";-i '; rt" t ·~ ; i .. .j .. . l ...I .... • 1..-. ...~ . t ..~ · ~I-H · ;.H ~ ~ I · ~f '; + · ..;. 1·... - 1-:- .:. ~ ~ t-· I ~ ".p ·H·;-t • . ; . . ; .... ~ . ... ... . ~ ~ ~ '" • i.. ~ ~ . r:-H i"
l ~ a ~ j. ; i iJ~Ht -tj ..· t ~ H +·'·r .- r-, r • i ~ • . ~ 1- '" i- • - 0 ~ .~ ! ;. I .; ./- -t ~- ~ -; .;. l' .;. . ' • ~ - ;. '~ '-; ~ ~ -- 1 ' ;' .. . .;. ; -( . .. ~ of .1 ... ~ .} i ..
'-I-H'H ,-hI3+- H. ,- ;- .. • ..... .. .. .;- -: - '- • • .. . • 1 .~ ~ t "" - ~ t - '- .. '. ... • .'. - . • ;. ~ .. .. :. ... .. t" -:
- -: .· i · t _r . .~ -:- ;-..;. - ";' ~ '- I ~'" -.. 1' . ' r"
·"-"·mrt"t +'tfm'i-;l
• - "1-,. ..~ I.'~ '....- ~+ , " +' h ;.~ ~ +::j . :. ~ .; ~' I ~ .. : -:••! l ' .. ' -: . :. 7 1 +-. -( . ;. ' "':.:- ~ r ~ T ;. ~ ... ~ + t ..... .. . ~ t ~ . .. ·r 1 .. :'
·:
. . ).~ ~ ;. ~T ;. ~ ;... ;. ... + 0 1 .. .,. _o. • .. ;... .' .; ~ .l __ • • '. ;. t ~ to · ;. t ~ ..;. ~ .... .: , t ... . ~ ' ;' "1 ..(' '; ~ I -( ~ ; -I .., .; .: -!- ~ ~ ~ , • -: ' 1 "' ·'
:' • .. - ~ ~ . ;- • • •~. I ~ • ·f "": . . . ';' ~ ... • .:. ~ 1 ... ~ . ... • ,I t t·:- ... ~ .. ~ .. J. t -~ .; " - 1 ~ ., '1 ' r .~ . . . .. 4· } i • 4 .. . ..

' .. I ~- t .: .:. ~ i 'r 1 - .; . ;... -. ;. 0 •• • ~ 1 . ... ~ ..: .; i } 1 · .~ --:. . ;. .. • ~ +.:- ~ ... . . ~ ~ • .~ • ~ -:. .' ... • .. ;.. • .:. ' oJ t .:. I
. j -!=-~:' ... 'r " l~'; · ~ " - :- . " , • • ",- '- " •.• .. . ~j .;l- ~i·i .. .. ~·~i ·: .f.l
'1"0. .. • T ; ... • ~• • ; ; .; -: • ., . ~ ~ I . '. ~- .. I i ·" ~ , ,;,, '" ~ • ~ 1 • :- • ! ... t •
.... : I .: .l.~ I ';'i; ~ ';.j... ;~: H + ;. I~ ·H+ ~ ': + ;' ~ .; 4 ";+ "H 1-:'1 ; { '~I1-i · ; J':'JH :'I ;' I ; J,.; ~ . :' I ... ~ ;-I-~ I '; · . .. . • t .. I ~ · l- . ........ 1';+ ' --l.;,• .;-1•• I- ~ ~~ to.;--14 4· ~~.. . . ~ _;. I _:. i ; ~ · ;' . ~ I '; ~ ";' ~ ~ . ... 1-. ~ .;.,..:... ~ ' '' j. . j. ~ '" ' -6- ...

Cl tOPrRtGHTEO-1933
STOC K "KT . PUB-- N. V_CITY

FIGURE 26
 NO: 5001 ............. I.,~....,

'HEPOINT --om
[Thill

N. Y. TIMES AVERAGE
FIFTY STOCKS -I
rn :t
rII
ONE POINT CHART ; I I II j I I I I I Ti l I II I !
.. ~
MAY - OCTOBER 1929 Z
xxx -I
:) " " , "
MXX X _'NC M >-
Z
XM.XX XXXX X x x. XI
lI[ )Cr. x xxxx·" x'" IIX X X c
~ ~ IIX ~ xxx • xx x x x x
o 0 ::!!
X _I M,Xi'" lI[ - - -
" xx o
H:x=;.xx, k s =~~ c:
m =
rII
"If If , " X
.
i"'
3:
rII
-I
Ul :t
Ul ~ o
eT5 c
I
-I
:t
rII
o
SEMI- CATAPULT x X"
" =
-<
xx " >-
CATAPULT Z
C

v VV , . V"
... . "'ll
" " =
>-
n
-I
;:;
rII

'"*j(to"-x'
.J X, c
~
i(,
.'
1,,~~'l.".rf.'~JE.ON~9~
FIGURE 27
 NO. 5001 IDEAL STOCK MARKET PUBLICATIC*S .~ Yb•• CI17
IlNE POINT ~Hfe1

INVERTED FULCRUM
e
r
~t~· -INVERTED RECOIL FULCRUM
~~ ...,)
~ srsr !I :c
it{ .1( ". ~ [11
"~ ~ ... -
.~ ~ ~ "'tI
o c o
Z
...,)
:I>
Z
C
TRUE INVERTED ~
CATAPULT
o
c
::a
[11

s::
[11
...,)
U1 :c
m o
c
N. Y. TIMES AVERAGE I
...,)
FIFT Y STOCKS :c
[11
o
::a
ONE POINT CHART -<
MAY - OCTOBER 1929 XI
~ :I>
Z
!!! C
"'tI
..., . 0
.. ::a
z
:I>
~
o
8 :!
o
[11
J'I+H""' I I I I I I I I I I 1( 111 !
G

e COPYRIGHTED· 1933
KMKT. PUB.-N.Y.cm

FIGURE 28
 NO. 5003 DEAL
.. STOCIl u m;,n P'U. unaa
THREEPOINT HU;T' ''~ ~t:
HEET N£W YO•• em
~
~ • .'lit....

'.~~l'

-I
:x:
1TI
1C:'Ir. ·i'" ":
:., _It "'C
o 0 o
TRUE INVERTED Q ': • Ell Z
CATAPULT •
-I
rt :J>
~;~~ _1_ Z
·~ T C
"t~
".;. ~
• . ~.4- ' ••1- C'l
• ~ x I( _'Ii c:
• r,
II ~ :xl
1TI
•
~ s:
1TI
-I
U1 :x:
-...J o
N. Y. TIMES AVERAGE c
I
FIFTY STOCKS -I
:x:
1TI
II o
:xl
THREE POINT CHART iz -<
MAY - OCTOBER 1929 :J>
Z
CI C
g: "'C
:xl
~ :J>
~ n
r .. 1 :::!
n
1TI
c
~

ISTM~?r.I~~E.ON.~9~TY
FIGURE 29
 NO. S005 $1llo.. lID PllIoLJCATIOIlI IIEW~C
n VEPOINT
I lt~1

N. Y. TIMES AVERAGE -I
0" FIFTY STOCKS :c
~1" !II
.t~1; AVE POINT CHART -a
o
IIAY - OCTOBER 1929 Z
-I
~
Z
c
INVERTED CATAPULT ::!!
Cl
...
M' c:
::J:l
.. !II
:s::
!II
-I
:c
~ o
c
I
-I
:c
liT
~ !II
o
~ ::J:l
-<
lor. ~
w·
r ~
o
Z
C
l -a
::J:l
~
n
-.Ylw :j
n
!II
c

FIGURE 30
Trading
Resource
Guide

TOOLS FOR SUCCESS

IN TRADING
 Trading Resource Guide
Point and Figure Charting: Essential Applications for
Forecasting and Tracking Market Prices
by Thomas J. Dorsey
Now. the first newwork on point and figure in thirty years. Today's lead-
ing expert shows how to use point and figure to chart price movements
on stocks. options. futures. and mutual funds. Also covers how to com-
bine point and figure with technical analysis for unbeatable success.
$65.00. Item #2365.

Charting Made Easy

by John J. Murphy
Renowned market technician John Murphy presents basic principles of
chart reading in easy-to-understand terms. In the book hecovers all types
of chart analysis. "need to know" concepts such as trendlines. moving
averages. reversal patterns, price gaps. price patterns and more. This
book will also teach you how to use the industry's top tools to obtain a
better understanding of what charts can do- and how they can help you
grab your portion of today's trading profits. $19.95. Item #11353.

The Encyclopedia of Chart Patterns

by Thomas N. Bulkowski
Brand new comprehensive guide covers chartformations. identifies chart
patterns. explains market behavior. and provides up-to-date performance
statistics on which patterns presage different market events. $79.95.
Item #10781.

High Probability Chart Reading with John Murphy (video)

by John J. Murphy
This brand-new 120-minute presentation by the mastermind of technical
analysis -John Murphy - brings together the mostimportantaspects of
technical analysis into one powerful tutorial. In this video he also explains
his pioneering work in the field of intermarketanalysis - and how it can
be used for explosive, reliable results in your own trading. $99.00. Item
#11351

Technical Analysis Simplified

by elif Droke
Here's a concise. easy-reading manual for learning and implementing this
invaluable investment tool. The author distills the mostessential elements
of technical analysis into a brief. easy-to-read volume. Droke's compact
guide is a greatstarting place - and the perfect complement to any tech-
nical analysis software program. $29.95. Item #1108Z

Trader's Guide to Technical Analysis

bye. Colburn Hardy
Achieving high-impact results can be made easier by implementing the
mosteffective technical analysis toolsthroughout your trading day. In this
easy-to-read classic. you will learn when to buy and sell stocks with the
help of technical analysis - written for the average investor.
You will also learn to recognize trends and pinpoint entry and exit points.
and how to improve trading results by combining technical and funda-
mental tools and techniques. $3Z50. Item #11563.

Technical Analysis of Stock Trends, 7th edition

by Edwards and Magee
A universally acclaimed classic, updated with the latest data in marketper-
formance and trends. on which the foundation of technical analysis is
built. Step-by-step coverage thoroughly explains and applies the current
data. Stochastics. trendlines. stops. reversals. support/resistance. and tac-
tical usage of each. $75.00. Item #2376.

..................
Many of these books along with hundreds of others are
available at a discount from Traders' Library.
To place an order, or find out more, visit us at
www.traderslibrary.com
or call us at 1-800-272-2855.
161
l! 14.95 U SA

The Point and Figure Method of

Anticipating Stock Price Movements
ccurately ant icipa ting stoc k prices an d defi ning precise entry and
A exit points is the drea m ofever y investor. Fo r decades. the Poisu and
F(l!"n' Mt'lh,Jd has been o ne of the most useful tec hni que s for successfully
forecasting market prices and de termining what action should be taken .
Victor de Villicrs pio neered thi s met hod in hi s groundbreaking book
17/f' {\lim & FiguR'M j,tJltld of A ntiripatillg SUlCk Pn'{t' MOI ~ ·"It·tl u . which
rem ains an acce pted classic toda y, T his cherished work . .. .
• Deta ils the construc tion of " P&F " charts
• Provides nu mero us pattern exam ples
• And offers suggestio ns on how to optimize th em
Other modern-day works- most notably Tom Do rsey's H,I;1Il & F(l!IIR'
C1l,utillg--pUI " P&F" in the context cf rcday's investment climate,
offering imp rovement s and applications to basic co ncepts. But. fin a true
und erstanding of thi s method and th e founda tions o n wh ich it is based.
de Villiers' landmark work sho uld he include d ill ew ry inve sto r's library.

"After reading this classic book and applying its tools and
lessons. you will never look at the stock market-o r trade in
it-the same way again. I urge all serious students of" P&F"
to usc this book as a prim er to bett er understand the
concepts presented in my boo k. Point & F(l!lIre Clla rti'~l!."
- Tc m D orsey, autho r, Point & F{~I/ rc Cllart;",\!

T RAO E R S ' LI B RARY

P.O . B o x 2 466
EL LI C OTT CITY M D 2 10 4 1
www .t ra de rslib ra ry.com