TIME TO HOLD AFTER BUYING OF SELLING

After you make a trade, if the stock closes showing you a loss the first day,
you are apt to be wrong and trading against the trend. If it closes against you the
third successive day, you are wrong nine times out of ten and should get out of
this trade immediately.
When you buy or sell and the trade immediately moves in your favor and closes
with a profit the first day, you are right and with the trend. At the end of three
days if it still shows you a profit, it is almost a sure sign that you are right
and with the main trend.
Therefore, get out at once when you see that you are wrong and hold when you
see that you are right.

BUYING OUTRIGHT FROM 1929 TO 1932

I have written in all of my former books that it never pays to buy stocks
outright because it does not help any if the trend happens to go against you. I
have stated that the only time it is safe to buy stocks outright is when they are
selling around $10 per share or lower. So many people get the mistaken idea that
because they have a stock paid for they cannot lose on it. That is just where they
are wrong. When you buy a stock outright, you do not worry because you think you
will not have a margin call, but you also fail to realize the fact that you can
lose all the money that you pay for the stock, because it ran go to nothing and he
assessed. Therefore, when you make a trade, the idea is to know what you are going
to do if it goes against you. You should protect it with a stop loss order and
limit your risk. Holding on and hoping never, helped anyone and never will. When
you are wrong, get out at the market and take a small loss, but when the market
moves in your favor, hold on for big profits. Don't think that because you are well
acquainted with a stock and because it had gone up for many bull campaigns in the
past, that it will go up in the future, because old leaders go and new ones come to
take their places. You must keep up to date in the market and buy and sell the new
leaders in order to make profits.

WATCH BOTTOM AND TOPS OF PREVIOUS CAMPAIGNS

When a stock breaks the bottom of the previous hear campaign by 3 points,
then you should watch for support around the bottom of the next former campaign.
For example:
When stocks started down in 1929, you should watch the bottoms of 1923-24,
the previous campaign. Then if those lows were broken, you should watch the bottoms
of the 1921 campaign, from which the great Bull Market started. It these bottoms
were broken by 3 points the next lows would be 1917, then 1914 and after that the
1907 panic lows, then 1903-04 and 1896 extreme lows.
You should look up each individual stock and see what years it made its
previous extreme lows. When you find that a stock has reached the extreme low of
its history and then hold for several weeks or several months and fails to break
the old bottom by 3 points, you judge that it is in a strong position and time to
buy with a stop loss order 3 points under the old low level.
Industrial Averages: In 1932, after the Averages broke the low of 85, which
was made in 1931, the next important bottom to watch was the low of 64 in 1921. The
Averages declined to 70 in 1932, and held for some time, but finally declined and
broke the low of 64. Then you would took for the next bottom and would find that in
1907 and 1914 these Averages made a low at 53. When they declined and broke 53 in
1932, the support lever of these two panicky declines, you would have to look for
the next bottom, which was 43 in 1903, from which a big bull campaign started. In
July 1932 the Dow-Jones Industrial Averages declined to 40 ½ failing to get 3
points under the 1903 low, a sign of support. The market became dull and narrow,
the volume of sales dropped to the lowest of any time since 1929, accumulation took
place and the trend turned up again from that point.
 In an extreme bear campaign, like 1929-32, when a stock declines back to the
old levels made 20 to 30 years before, then holds without breaking these previous
panic levels by 3 points, it indicates that it is receiving support and that it is
a buy with a stop loss order 3 points under the old low level.
U.S. Steel is an example. In June, 1932, it declined to 21 1/4, which was
only 5/8 points lower than the extreme low in the 1907 panic. It was a buy
protected with a stop loss order at 19. A rally followed that level, but U.S. Steel
did not have so big an advance from 1932 to 1935 as other stocks because it had
been split up and the amount of stock increased from 5 million shares to over 8
million shares.
It is just as important to watch old tops of previous campaigns. The further
back they are, the more important when they are crossed by 3 points. For example:
Westinghouse Electric made a low of 38 ½ in 1918 and a low of 40 ½ in 1919.
In 1921 the low was 38 7/8, selling around the same level for 3 years. This showed
strong support and indicated that the stock was being accumulated for much higher
prices. It continued to work higher and in 1925 crossed the 1915 high at 74 7/8 and
advanced to 84, which showed that it was going higher. The next top to watch was
the high of 116 ½ in 1902, the highest of its history up to that time. When it
crossed this level, it indicated much higher prices, and according to the rule you
would continue to pyramid all the way up. The stock sold at 292 5/8 in 1929.
Follow the trend of each individual stock in the same way and when it crosses
the top of a previous year or the tops of previous campaign by 3 points, it is an
indication that the stock is going higher.
In a bear campaign you should watch tops of former campaigns as well as
bottom of previous campaigns. In the bull market that culminated in November, 1916,
the Dow-Jones Industrial Averages reached a new high level of 110, then followed a
sharp decline. In 1919 these averages made another new high just under 120; then in
the panicky decline in 1921 reached 64. After the bull market culminated in 1929,
there was a sharp decline in October, 1931 and the averages broke 3 points under
120, the old 1919 top, which was an indicator of lower prices. Then we would watch
the next top of 110. When the averages broke 3 points under that top, they declined
to 85 in October, 1931. Then on November 9, 1931, rallied back to 119 or around the
old top at 120. When they failed to cross this old top, it was an indication that
stocks were still in a bear market and that prices were going lower.