Вы находитесь на странице: 1из 468
PRO )g asm in the stock market This Book is a MUST for all Serious Stock Investors and Traders Originally written in 1935, “PROFITS IN THE STOCK MARKET” had become a classic and a collector's item H.M. GARTLEY was a renowned market technician. In 1980, he posthumously received the MARKET TECHNICIANS ASSOCIATION ANNUAL AWARD for his contribution to technical analysis. In “PROFITS IN THE STOCK MARKET,” Gartley shares his knowledge of such topics as— Mayor, INTERMEDIATE, AND Minor TRENDS Teners or THE Dow Tukony TRIANGLES Movinc AVERAGES Gars Vouume or TRapine BREADTH-OF-THE-MARKET Ficure Cuarrs SeLEcTING THE RicHT Stocks PLUS — Garey cIvEs peraiLep INSTRUCTIONS ON TRADING WITH Pnuce Oscu.raTors Now for the first time, this valuable work is available in this hardbound edition complete with all of the original charts. LAMBERT-GANN PUBLISHING CO. Box 0 Pomeroy, Washington 99347 Other stock and commodity market books available from Lambert-Gann Publishing Company 45 Years in Wall Street W.D. Gann ‘Truth of the Stock Tape— W.D. Gann Hao M. Garey ng bn wl W.D. Gann Stock Market Course Harold M. Gartley, 1899-1972 W.D. Gann Commodity Course How to Make Profits in ‘Commodities W.D. Gann ‘The Tunnel Thru the Air— W.D. Gann ‘A Better Way to Make Money Burton Pugh aid done mor ‘Traders Instruction Book — volume than anyone ei Burton Pugh Born in 189, Garthey grew up Science and Secrets of Wheat ark, New Jersey, He attended th ‘Trading — Burton Pugh eratk ‘Teche! School and th New York where he rected Mastering Cotton —Burton Pugh Science and his Master's Degree Astro-Cycles and Speculative Thstecs Admintation, He b Markets—L.J. Jensen Wall Stet in 1912, Over the sem broker,» secrly analyst and by many ofthe prominent peop Wall St ember of the New Yor Socket of Security Analysts. He also founde the Wall ints Plus others! From Send for our FREE catalogue. Lambert-Gann Publishing Co. Box O Pomeroy, Washington 99347 PROFITS in the stock market by HM. GARTLEY DY Copyright 1935, 1963 by HM. Gartley Copyright 1981 by Billy Jones All Rights Reserved including that of translation into foreign languages PRINTED IN U.S.A. Published by Lambert-Gann Publishing Co. Bos 0, Pomeroy, Washington 99347 INTRODUCTION ofits in the Stock Market” by H.M. Gartley was originally published in 1035. At this time the book was contained in a three-ring binder. Less than 1000 copies were originally sold. I purchased the copyrights from Mrs. Gartley in 1979. After a long, tedious job reprinted, “Profits in the Stock Market” is finally complete in ‘accompanies the book. In order to retain authenticity, we have not redrawn any of the charts but have made reproductions from the originals. Tt may interest you to know that the Market Technicians Association, at its Florida meeting recently, gave its annual award to HM. Gartley for his contributions to the field of technical analysis, believe you will find this book was worth waiting for. Billy Jones, Publisher Lambert-Gann Publishing Co. Pomeroy, Washington, 1981 TABLE OF CONTENTS I The Technical Approach to the Problem of Stock Trading Il Charts—The Averages Il A Chart Portfolio IV_ The Long Term and Major Trends V_ The Intermediate Trend VI The Minor Trend VIL_ The Tenets of the Dow Theory VIII Tops and Bottoms, Supply and Demand Areas, Reversals IX Triangles X Trend Lines XI Moving Averages XII Gaps XIII Net Change Oscillators XIV Volume of Trading XV _Breadth-of-the-Market XVI Figure Charts XVII_ Comparative Group and Stock Studies (Selecting the Right Stocks) XVIII Profits in the Stock Market (Summary) Index 81 91 uw 155 173 237 251 281 291 319 327 389 425 CHAPTER I THE TECHNICAL APPROACH To THE ProBLEM oF STock TRADING REFERENCES “Business and Investment Forecasting” “Business of Trading in Stocks, The” “Business Cycles: The Problem and Its Setting” “Business Forecasting” ‘Business Statistics” “Economic Cycle, The” “Financial and Business Forecasting” “Forecasting Business Conditions” “Forecasting Stock Market Trends” “Interest Rates and Stock Speculation” “Investment For Appreciation” (1936) “Practical Application of Investment Management, The” “Practical Business Forecasting” Principles of Investment” “Scientific Approach to Investment Management, A’ “Security Analysis’ “Security Price Movements” “Statistical Methods” “Stock Market, The” Stock Market, The” Stock Market Profits” fock Market Tactics” “Stock Market Theory and Practice” “Tape Reading and Market Tactics “Truth of the Stock Tape, and the Wall Street Selector” This Course, concerning the technical approach to the business of trading in stocks, isnot to be considered as the philosophers’ stone of the stock market." It does not, by any means suggest a perfect solution to the problem of stock trading which will enable every reader to begin making handsome stock market profits 1s soon as he has read the last word. ‘The average reader should leave the stock market alone, or learn enough about its intricacies so that in- telligent action can be taken in trading stocks. Itis the purpose of this Course to provide a means of learning some of the important essentials in a study of the market The Primary Objective It is assumed that the reader takes up this work "Pmnvosoriuas’ stONE: AN IMAGINARY STONE, OR SOLID SUB. FASMUTING THE BAS = R, Vance J. Durand W.C. Mitchell L.H. Haney J-L. Snider FY. Presley W.F. Hickernell R.N. Owens & C.O. Hardy KS. Van Strum R.N. Owens & C.0. Hardy L.L-B. Angas D.C. Rose D-F, Jordan J.E. Kirschman D.C. Rose Graham & Dodd S.S. Huebner R.W. Schabacker L.L.B. Angas R.W. Schabacker HB. Neill W.D. Gann with one primary objective, namely fo make money by using intelligent understanding instead of ignorant gambling. The objective is easy to define. However, the procedure of accomplishing itis far from simple, in that it requires a detailed presentation of the factors which appear to make, as well as the manner in which, stock prices advance and decline. Gambling or Speculation ‘There are two channels of approach which may be taken in attempting to make stock market profits. We ‘may approach the problem as a gambling proposition, as unfortunately (for them) all too many persons at- tempt to do. Or we may approach the problem as a business proposition, involving greater than usual risk, but paying greater than usual profits to intelligent and patient participants In suggesting the second and more logical of these {ovo approaches, it might be wel to point out the dif- ference. In a gambling operation, the participant depends almost wholly upon chance (assuming that it is honestly run), as one of two or more unpredictable developments governs the determination of profits or losses. In many gambling operations, the risk is reduc ced to one of two chances, as both the maker and the acceptor of a given wager assume exactly the same risk. For the most part, intelligence is not the gov- cerning factor. Every time a roulette wheel turns, there is an equal chance that red or black will turn up. Quite different from gambling is speculation, wherein the participant depends (if he is to profit) upon a reasonably precise knowledge of the condi- tions which govern price trends. In speculation, the participant relies upon changes in the price level (stocks, commodities, services, et cetera), and not the ‘mere operations of chance. These changes have their root in some specific cause. Many such causes may be studied and understood, and thus reasonable judg- ment may be applied. Unfortunately for most dabblers in Wall Street, the gambling approach is most often used. The reason is simple, The average person is too often governed first by downright laziness, and secondly by the silly desire to gain something for nothing. The intelligent ap- proach, wherein stock trading is counted to be a business, requiring careful attention, robs the stock market of its romantic appeal to many people. It takes ‘most of the fun out of it, if it becomes a job requiring patience and application. How futile it isto enter the stock market without fully recognizing that profits can be only a matter of chance, unless the market is patiently and carefully studied. The market is a complicated mechanism. Although man-made, and thus logically subject to in- terpretation by other men, its complex workings re- quire a systematic study, if losses are to be prevented, and profits made. Haphazard or Systematic? ‘The difference between losses and profits frequent- ly hinges upon trading in a hit-or-miss fashion, or systematizing one's speculation by studying the prob- lem, estimating the risks, selecting what appears to be the mast profitable opportunities, and adhering toa pre-conceived policy The difference between the average investment counsellor and the average customers’ man in a broker's office, is the fact that the former conceives a plan of operation, based upon a systematic approach to all the various angles of the problem including the requirements of the customer, and consistently pursues this policy; while the latter vaguely attempts “to make money.” Our Purpose It is the purpose of this course to encourage the reader to study the market and train himself to arrive at his own decisions as to the probable future course of stock prices, by using certain systematic methods which have proved profitable to successful traders, Matter has been collected from many sources. The phenomena explained and illustrated represent many ‘years’ work on the part of many market students. They Should be the means of saving the reader many hours ‘of personal research. However, thumbing through the pages which follow will not make a successful trader of any reader. ‘To take some single idea which is presented, because it seems to have special appeal, and expect to make con- sistent profits by using it alone, is a dangerous pro- cedure. Throughout the chapters which follow, it will, be noted that there are constant warnings that the various technical phenomena suggested must be used, not singly, but as part of a program involving many different angles. Two Primary Problems Reduced to its final analysis, successful. stock trading boils down to the matter of answering two questions, namely: 1, WHEN to buy or sells and 2. WHAT to buy ot sell, At first thought, and to hear some of the hangers- ‘on in the brokerage offices tell the story, making ‘money in Wall Street is all very simple, if you know “when to get in and when to get out”, Although, as we shall learn, the solution to the “When” question is ex- tremely important, itis also a fact that a trader can be fairly right in judging the reversals in the trends of stock prices, and yet make only a fraction of the poten- tial profits available, because he is ignorant of systematic methods to assist him in the selection of the right stocks ‘The “When” question may be classified as a study of trends. Except for short periods of time, usually ranging for less than two weeks, stock prices have a habit of going somewhere, During the vast majority of the time, they are either advancing or declining. The successful trader must be conscious of a change in trend. Thus a continual knowledge of stock price trends is essential to the successful timing of com- mitments. ‘The “What” question, on the other hand, depends chiefly on observation of the specific characteristics of individual stock price movements, and may be classified as a study of comparisons. The solution of each of these two problems, which are about of equal importance, requires equal atten- tion. However, as the “What” to buy or sell problem usually covers a much broader scope, it requires a ‘seater amount of time, Usually, the “When” question, that is the timing of commitments, is studied by observing the trends in the market as a whole, or at least its major parts. The “What” question, which is the selection of stocks, is observed by studying small groups and individual issues. ‘Two Approaches It fs the custom of those interested in stock prices trends to approach the solutions of these two primary problems from two totally different angles, each of which may be logically subdivided into the same two categories, namely, “When” and “What”. These two approaches are: 1, The FUNDAMENTAL approach; and 2. The TECHNICAL approach. Fundamental Approach The fundamental approach, which will be re- viewed only briefly, because this course concerns the technical approach, may be classified in two general categories, namely: 1. The ECONOMIC; and 2. The STATISTICAL. The economic factors may be designated as those which deal with the “When” to buy oF sell question, while the statistical factors are those which concern the “What” to buy or sell question. The broad economic trends are studied to learn the causes, and anticipate the reversals instock price cycles, while the statistical factors are studied to determine the in- dustries and particular companies which appear more or less attractive at successive intervals. Economie Factors Stock prices are the means by which investors and traders appraise the effects of prosperity and depres- sion. During periods of prosperity, when the general level of trade and industry is high, the prices of shares rise to reflect that condition. Conversely in periods of depression, the price level of shares falls to reflect the converse condition. As the economic cycle goes, so oes the trend of stock prices, Primarily, the changes in the economic cycle are caused by the relation of supply and demand for goods and services. When these factors are more or less in balance, the state of trade and industry carries on at a level often vaguely termed normal. The factors which make up the economic picture are both foreign and domestic, and cover a wide range. ‘The average stock trader who has not had the special training of an economic background, is naturally great- ly handicapped in being able to reduce the effects of numerous enonomic changes to a practical working basis for trading stocks. The economic facts which ap- pear on the financial pages of the metropolitan newspapers are hardly sufficient for the purpose, because they are not sufficiently comprehensive or related according to their importance. In combing the field of information available, the author has found that the most complete presentation of organized economic facts, in convenient graphic form, appears in the publications of Economics Statistics, Inc.?_ Because this service appears to merit the attention of those stock traders who feel the need of concisely summarized, but comprehensive economic data, which have a bearing upon stock prices, the author presents, in Appendix I of this #70 Pie Srmezr, New Youx Cr, ter, a brief discussion of this service, which is believed to be worthy of the attention of the reader. Unless some such source of organized information is employed, the average stock market trader is probably better off to leave the economic side of the fundamen- tal approach out of his calculations except in a very general way. Statistical Factors ‘The investigation ot che conditions of particular in- dustries, and companies in such industries, is the method which the fundamental student employs in selecting the best mediums for investment or specula- tion, This study requires trained consideration, a multitude of facts concerning the management and ‘operation of many large and complex corporations. To reduce the information to a concrete basis, from which to make commitments, it is necessary that the financial history of the various corporations be studied. In addition, current changes must be constantly scrutinized, and recognized relations between gross and net earnings, profits and losses, assets and liabilities, as compared with stock price trends, must al bbe carefully considered. ‘A substantial part of this information can be conve- niently charted. When the average trader starts out to master this large volume of information, he soon finds that an intelligent study of itis beyond his ability, unless the pertinent information is very briefly summarized, and the refined figures are constantly available. ‘The outstanding service which presents the majori- ty ofthe statistical factors, customarily used in connec- tion with judging the advisability of buying or selling icular issues, is published by Investographs, Inc. lea of guiding the reader who is interested in thisbranch of the fundamental approach, a description of this service, with illustrative charts, appears as Ap- pendix Il of this Chapter. Fundamental Approach A Study of Causes The fundamental approach receives its name by vir- tue of the fact that it is a study of the economic and statistical factors, which are conceded to be the causes which influence the rise and fall of prices of shares. In- vestment trust managers and investment counsellors are constantly pointing out to their shareholders and clients that the only logical approach to the problem of successful investment is naturally the study of the causes which underlie the price changes of investment. In recent years, particularly since 1927, it has been found that time and again the fundamental approach has fallen short of expectations, apparently because of ‘what might be called "poor timing” of buying and sell- ing, Frequently it has been found that a particular stock or group of stocks, which from the fundamental facts appears to be relatively over-priced, continues to rise; 91 Gunns Serexr, Rocursren, New Yor. or conversely, a group or individual stock which seems to be substantially under-priced refuses to rise for a long period. Investigation of numerous. cases, wherein fun- damental causes which were known required @ con- siderable time to show before they appeared in a substantial change in the price of shares, has rather clearly indicated that, in addition to the fundamental factors, there are apparently indirect psychological fac- tors which develop in the marketplace, to delay the im- mediate effects of fundamental changes. Sometimes there is a lag, and at other times there is alead — that {s, on some occasions price trend of shares will con- tinue on when fundamental factors obviously show that a change has occurred, while at other times, the development and knowledge of fundamental changes appears to have no effect upon the price trend because such changes have already been registered. Examination of these variations shows that the “willingness” to buy or sell, on the part ofthe majority of persons interested in stock price trends, is not by any ‘means exactly timed to fundamental changes. In some cases, stock price trends will anticipate or discount a fundamental change. Thus, when the figures or facts of the fundamental picture indicate that » change has cceurred, the stock price trend has already discounted that change. In other cases, when a fundamental change has not been discounted, the price trend accelerates or reverses to take such changes into consideration. ‘As fundamental factors which affect stock prices have been more intensely studied by investment trust managers and investment counsellors during the past few years, many occasions have developed wherein, although Fundamental studies in the end prove to antic- {pate stock price changes correctly, many purchases and sales based upon fundamental studies have been early, ‘with the result thatthe most has not been made from the ‘opportunities which fundamental studies suggested. In an effort to meet this problem, increasingly seater attention has been given to the developments in the marketplace, on the theory that the supply of and demand for shares is @ factor which the fundamental student must take into consideration to improve the timing of buying and selling based upon the fundamental approach. The result has been that in the past few years, a study of stock price trends themselves hhas received greater attention. This branch of study has been termed the technical approach. ‘Technical Approach ‘Thus, technical studies are beginning to receive @ place in the consideration of outstanding organizations which make a business of studying investment securities, particularly in connection with stocks. BRIEFLY DEFINED, THE TECHNICAL APPROACH 18. A STUDY OF RECURRING PHENOMENA WHICH APPEAR IN THE RELATION OF THE SHARES TRADED ON THE Stock EXcHANGes. ESSENTIALLY, IT 15 A STUDY OF THE EFFECTS WHICH FUNDAMENTAL CHANGES CAUSE IN THE PRICE: “TRENDS OF SHARES. Just as the supply and demand factors in Industry, ‘Trade and Commodity prices are studied with the objec- tive of determining the probable future course of business activity and commodity prices, so the supply and demand for shares are studied with the objective of anticipating the price trends of stocks. Comparatively, because there are so many more stocks or individual units traded, the problem of study- ing supply and demand for shares is far more complex than the study of the supply and demand for agri- cultural or industrial commodities. As in the case of the fundamental approach, the technical approach is divided into two general cate- ‘gories, because the same two primary problems must be met namely; 1. When to buy or sell; and 2. What to buy or sell. ‘The “When” Question In the last analysis, the “ problem reduces itself to a matter of studying trends of stock prices. The successful stock trader ‘must be conscious of whether an up or a down trend is progress, in order that the majority of his operations are n line with the primary movement under way. Equally important is a consciousness of the development of reversals in trend. A study of price trends may be designated as the abstract side of the problem. Castomarily, technical students study stock price trends by means of observing comprehensive samples of the market, which are considered to reflect the main trends in progress. For this purpose “The Averages” are studied (see Chapter II). ‘The determination of the direction and reversals of trends, however, is only haf ofthe problem. Its specific side is also very essential. ‘The “What” Question Although the technical student can arrive at useful conclusions as to the trend by studying the averages, practical trading in the end requires the purchase and sale of specific shares. Thus, it becomes necessary to determine which particular issues are more or less attractive from time to time, in order to take the greatest advantage of the timing of buying and selling, which ‘may be suggested by a study of the “When” question, Essentially, the “What” question is a study of the relative supply of and demand for shares of specific companies. If the prices of all shares moved closely to- gether (percentagewise) in any advance or decline, there ‘would be little need for this department ofthe technical approach The wide variations in the fundamental factors which have a bearing on each individual corporation, naturally are the primary cause which requires constant. selection of issues, if the stock trader is to obtain the ‘greatest benefits from the risks he takes when he buys and sells shares, Fundamental and Technical Approaches Combined Although some writers concerning technical studies have chosen to take the attitude that the technical approach is more direct than the fun- damental approach, and thus for the average trader represents the Best means of making greater profits, the author chooses to take the stand that a neat combination of the fundamental and technical approaches forms not only the best plan of operation for the large investor, but is also the logical method for the trader of moderate means. Although it is true that a study of stock price trends includes a reflection of all the fundamental forces, and in addition, the psychological factors which, it has been argued, can substantially af- fect the correct timing of commitments, never- theless there seems to be no justification for assuming the attitude of an ostrich, and blindly disregarding entirely the study of causes in favor of a study of effects. Practically all of the outstanding technical students make a careful study, or at least are broadly conscious, of the fundamental situation. Take, for example, the typical statement which is noted below, from the writings of C.J. Collins, dated September 28, 1935. Collins is noted for the interpretation of stock price trends in terms of the well-known Dow Theory. ‘Among those posible near-term developments ‘which would encourage optimism as to the broader outlook for busines would be strength in railroad stocks, The rail lit has boen slugtsh since July 1639 because there has ‘been no material expansion in the demand for and the Drodction of hoary or durable goods When this Somand, 30 necesary to base or sustained revival inthis country, aserts isl hoavy p> ttn in carlondings will eventually fallow. Wall ahead ofthe heavier traf and larger rail eam. ings, however, would be a vigorous ise In prices tf vuload shares in andtpation of what i to tome, ‘The market, it-mist be remembered, lays loks ahead, Its beease ofthis relation: Ship between the ralls and the @urable goods Industri, and the market's habtt of discounting, that the ral average now takes on an added tguicenen ‘Technical Studies ‘The Direct Approach Pethaps the chief reason why the technical ap- proach has been so much more widely used in recent years is explained by the fact that the average trader finds it more direct. Without the necessity of a broad economic training, or the constant study ofthe fi cial position of numerous companies, the technical ap proach, with a few relatively simple studies, enables the average trader of moderate or small means to be conscious of the important changes in price trends, with only a fraction of the effort and knowledge necessary in the case of the fundamental approach, Naturally, the technical approach also appeals to many persons because the vast majority are inherently lazy. Its relative simplicity, however, is perhaps its greatest danger. When the average trader gets the idea that a few technical studies, casually observed, are all that he needs, he is usually well on the road to ruin, or at least his capital account is on its way to substantial depreciation. The trouble in most such cases is that the trader fails to realize soon enough that, although the technical approach is direct, and far more simple than the fundamental, nevertheless, it has its complica- tions, demands constant study, and the application of reasonable judgment. However, the technical approach is ideally suited for the trader of moderate means as the average man, engaged in other business, cannot hope to make a com: prehensive study of fundamentals on which to base the buying and selling of shares. Many persons who realize this, assume that the logical procedure, then, is not to do any of one’s own thinking, but instead to purchase one of the many in- vestment bulletins issued by various organizations which cater to the demand for skilled opinion. Although such bulletins, particularly those issued by the more reputable services, can be mighty helpful in bringing to the attention of the average person both the fundamental and technical factors which appear to be influencing stock price trends, such bulletins ‘often fall down because the subscriber is either unable to interpret them, or cannot fit the suggestions made therein into his own speculative problem, with any ‘consistent success. ‘Thus, technical studies unquestionably can be of great value in two ways: first, for that small group of persons who like to do their own thinking, and second- ly for the vast group of lazy individuals who choose to buy their judgment “ready-made”. The latter group can employ technical studies as a means of making advisory bulletins more practically useful to them. ‘An examination of methods employed by successful stock market traders, shows first that they are persons who do their own thinking, and secondly, that their success is not mere chance but instead is the result of arduous and careful study of market conditions. Itis a sad commentary upon human nature that so many in- dividuals go into the stock market with surplus funds which have required considerable effort to amass, and assume the risk of stock trading, which is far greater than that in ordinary business, with only a fraction of the knowledge which they would expect to employ on the business or profession in which they make their liv- ing. This is why stock trading, for most people, is gambling, rather than speculating. But to return to technical studies — let us proceed by looking into the materials used by the technical stu- dent. ‘The Elements of Technical Study The greater simplicity of technical, as compared with fundamental studies, is emphasized by the fact that the materials of technical study primarily are only three in number, as follows: 1, Price 2. Volume, and 3. Time ‘As in other economic relations, the interplay of supply and demand for shares creates the price level. A preponderance of demand forces prices upward, while preponderance of supply depresses them downward. The change in price levels is a more important factor than the levels themselves. Every change of price results from a meeting of current supply and demand, wherein a transaction consisting of a purchase and sale is consummated. The aggregation of such transactions represents the volume of trading, Such activity is the second factor used by the technical student. ‘Time or duration of price movements is the third, ‘and least important factor. Its value in technical analysis arises from the fact that a study of price trends cover a long period of time clearly indicates that ‘economic cycles, which are the foundation of stock price cycles, seem to recur within very general time limits. ‘Of the three primary factors, price is by far the one given most consideration, Gradually in recent years, the more profound technical students have been ex- mining the relation of price and volume, in the hope of finding some concrete laws which appear to govern price trends, Although this branch of investigation has yielded some useful results, itis far to say that it is still in the development stage, as is the whole art of technical studies. Nothing which has been presented thus far, appears to justify the conclusion that the study of duration has suggested reliable laws Sources of Information The information concerning these three primary elements of technical study naturally arises on the floor of the Stock Exchange, in the form of transac- tions which are consummated each moment and is almost instantly available to all interested persons at the same time. There is no lag (except when the ticker isa few minutes late) and there are no “insiders” able to have “advance information”. The usual sources of such data might be listed as: 1. The stock ticker tape, which announces each successive sale; 2. The official sheet, which lists the transactions that appear on the tape. This is published at the end of each day; 3. The newspaper tabulations which are sum- aries also taken from the stock ticker tape; and final- y 4. Special data services, which cull out the essential technical information, and arrange it in useful form. Graphic Presentation of the Facts ‘As a means of facilitating the mental effort necessary in studying the numerous data which the technical student employs, charts have been concei ‘ed. As conclusions concerning future price trends are so dependent upon the previous course of prices, the technical student, like the fundamental student except in a different way, finds it essential to have before him fan accurate, up-to-date, historical picture of the course of stock prices. As in any other human endeavor, pictures more strikingly emphasize cold tabulations of facts or figures. Thus, charts relieve the memory of arduous work, and leave the mind free to comtemplate the future. The mention of charts makes it necessary to distinguish between the familiarly known Wall Street character, called the “chartist” and the genuine technical student. Briefly, we may define the logically berated chartist as a person who tries to guess the future trend by insisting upon the fact that some cur- rent picture in the price trend resembles the past, and will consequently result in the development of a par- ticular and specific pattern which followed upon a previous oceasion. His approach is mechanical. To his, way of thinking, the market must conform to a preconceived imaginary pattern, which he arbitrarily, sets for it. ‘As yet, the “mechanical age” in the stock market hhas not arrived. Thus, we see many lamentable characters trudging from one broker's office to the next, with a few much besmudged charts under their ‘arms, suggesting to any listener they can find, just ex- actly what the market is about to do. When question- ed, they have many explanations as to why their previous judgments were in error. Always it was some unforeseen event which “changed the market” The enlightened technical student, on the other hand, attempts to use chart pictures which portray trends as instruments which show him either that « current trend is continuing, or that a reversal is developing. Unlike the chartist, who attempts to forecast the extent of a movement, and foretell the point of reversal, the technical student realizes that the sequences of events, which cause price changes, con- stantly vary. As these sequences result in trends of varying lengths and amplitude, the technieal student is always alert to the fact that it is only coincidence if one trend closely resembles a previous trend. The trained technical student operates on the premise that his charts are a means of knowing where the market is, as related to where it has been. On this foundation, he builds, by various processes of dedue- tion, a market opinion which he is ready to alter whenever, and just as soon as, the evidence of the cur- “Tie Most coMMIENSIVE OF THISE NOW BEING PUBLISHED 15 ‘Tue Garttiy Dara Sanvice (see Armexons I, Ciarran I)