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    W D Gann The Basis of My Forecasting Met

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    howe mans Pnoriven Couueunee Ww. D. GANN NEW YORK 5, N.Y. THE BASIS OF MY FORECASTING METHOD Mathemotico ia the only oxact scionce. All power under hoaven end on eorth is given unto the man who masters the simple science cf mathematics. Emerson said: "God does indeed geometrize." Another.wise nan said: “There is nothing in the universe but nathematicel points." Pythagoras, one of the greatest matho— maticians that ever lived, after experimenting vith numbers and finding the proofs of dil natural lavs, said: "Before God vas numbers," He believed that the vibration of numbere crected Ged and the Diety, It hes been said, 'Pigures don't lie." Men have basa convinced that numbors tell the truth and that oll probleme can be solved by them, ‘Thp chemist, engineer, astronomer would be lost without the science of mathenetics. It ts 80 simple and ecsy to solve problens and get correct answers ond re— sults with figures that it'seons strongo so few people rely on then to forecost tho futuro of business, stocks and commodity siarkets, The basic principies ere easy to learn and understand. Ne matter whether you-Use geonetry, trigonometry, or caicuive, You uso the simple ruloe of arithmetic. You do only two things: You increcse or decrease ‘There aro: two kisids of numbers, odd and evon. We cad numbers together, which io incrgosing, We multiply, which Is a shorter way to increase. We sub= tract, shich decreases, and we divide, which clso decreases! With the use of higher mathenatics, ve fing ¢ quicker ond eazier way to divide, subtrect, odd and meltiply, yet very simple wnen you understend if, Everything in neture is male and female, white and black, harnony oF Amhormony, Tight and left. The market nove only twe ways, up and down. There are three dimensioas which we know hév to prove-vidth, length and hoight. Ve use three figures in geonetry—-the ‘circle, the square, and the triangle. Ve get the square and triangle points of a circle to deternine points of time, prics and space resistance, We use the circle of 360 degrees to measure Time ond Price. Thore ané three kinds of angies——the vertical, the horizontal, ané the diagonal, which we use for measuring tine ahd price movements. We use the square of edd and oven aunbers to get not only the proof of market movements, but the HOW TO MAKE CHARTS Gharts ard records of pest market novements. ‘Tho futur? ie but o repetition of the past. There Le nothing aov. As the Biblo saye-—"Tho thing that hath bean, 1t ts thot whlch shell bo.” iistory repeats and with charts and rules we determine vhen and how it is going te repeat. Therefore, the first ene most important point to learn is how to nake charts correctly because if you make on error in the chert, you will mate an error in applying the rulea to your trading: XWARLY CHARE: You should Koop a yoarly high and law chart, that is, recording tho oxtrono low and the extrene high price nade during the ealondar year on one line, Tho spacing for the prise can be used one point to each 1/8 inch or two points or mora, according to the activity end range of the stock. MONTHLY CHART: You must elways Koop up ¢ monthly high and ow chart, which is tho most importent chart of ali in determining tho main trend, This chart resords the extreme high and extrono low price fer the culondar month on one Line, end sach epaco or 1/6 inch on the cross-section chert papor shovld represent one point or $2 per chara WEEKLY CHAR: The noxt and ono of tho very importent charts to Koop is a woekly high ond low chart. ‘hero stocks are solling bolow 60, it usually peys to make this chart up using cach 1/6 inch to reprosont one-half poiut, or wo epeces to represent one full point, or four points for each cno-inch spoco. When stocks booome vory active, ospecially when thoy are solling above $100 por sharo, thon you can make up tho wookly chart using ooch spaco or 1/8 inch on tho chart poper ta ropresont cno point or $1 por share. SEMI-WEEKLY OR S-DAY CHART; ‘Tho next chart of importance to the Wookly Chart is a Sealy chart, thet is, taking tho oxtroma nigh ond extreme low price made from tho oponing of tho market ox Monday merning until tho close on Wotnosday wight, closing the chart oa Woduesday aight~ thon fron the opening on Thursday to the close on Saturdey, teking the oxtromo high and low end closing tho chart on Saturday. This gives you a time period showing one-half of the voek. This chart is ory importent as will bo oxplained later on in tho instructions. The spacing for this chart can to the same as for tho wookly high and low chart, NSSKLY MOVING-AVERAGE OR WEAN POINT. To got_a Wookly Moving-Avorugo, wo take tho oxtromo low for the weok ad tho ox- trone high for the woek end divide by 2, getting the half-way or neon point for the wocks This cam be recorded on the weekly high end low chart or on @ soparete chert, recording the Woekly Moving-Averago with a dot and using on line oa the chart for onch vock, Importence of this Wookly Moen Point will Ye explained late DAILY CHART: Whon you are trading in a stock that ds active, you should always ~~~" Koop up a deily high uiq low chat, but for study purpocos it is enough to keep up the Weekly ond Monthly Charts, which give you the main trond, ‘The Daily Chant-shows tho minor troné and shows a ohengs in trovd mich oftonsr ‘thon ony ef the other charts, but tho indication doos not lest es long or rm ¢o fer. This chart sholé be kopt up tho samo os tho othors, oxcopt whon stocks are solling below §0 or whan thoy aro in aa inectivo trading range- thon tho spacing should bo 1/2-point to each 1/3-inch pn tho chert papor, allowing two spacos to Topresont ono full point er $1 por sharo, Whon stooks aro active ond advancing vory fost, making © wide. rango ach day, thon you can mako tho Daily Chart the sono aa the Wookly er Monthly, that is, using eno point for oack 1/é~inoh on the chart popor, Thie epacing outs cho chart dows and koups it in a rongo whore it is oasy to soo ané rocd whon fluctuations ere wido+ No spaces are skippod oa tho Daily Cheré for holidays or Sundays, therefore the time poriod 46 for cotual markot days ond not calendar days, However, you should cerry the calender days along at loast overy two wooks, as letor, tnder rulos for Tmo Poricds for change in trend, you will find that it is nocessary to check up and know when tho stock is $0,'60, 80, 120, 155, ote. days fron a top or a bottom, which moma calonder days, tho exact moceurenont of Pino for tho daily chart. Often tho Daily Chart on actual daily movements comes out on ca oxast mathonaticn] ungle of tino moacuronont at tho samo time the ealondar days como out on ozact timo monsuronent:, making it x doubly important point for chango in trond. GEOMETRICAL ANGLES After long yours of practical oxpertence, I heve discovered thet Geometrical Angler measure tocurately Space, Mimo, Volune end Price. Uathometios is the only exact ecienco, as I have eaia before. Byory nation on the face of the earth ngreos thet 2 and 2 moke 4, no mattor what Language is speaks. Yet ell thor sciences are not in acccrd ac mathomatioal science. “Wo find different mon in 4ifforent professions along sofentifio lines. di sugrooing on problons, but there can bo no disagrocment in methematioal ealewlotion. There ere S60 degreos Jn a circle, no wetter horlarge or how snail the circle may bo. Cortein numbors of theso dogroos and angles aro of vast importance and Andioate when important tops and bottons occur on stocks, as well as denote Amportunt Kesistanoo Levels, Whon once you havo thoroughly mastoreé tho Goonctri- eal Anglos, you wil} bo ublo te solve any problem ond detornino tho trond of any atook, After 26 yonrs of roscarch, tests and practicel applicetions, 1 have per- fected end proved tho most importast axgies to bo vsod in determining the trond of tho stock market, Therefore, concontrate on those aigles until you thorough Uy méorstand thom.” Study ond oxpordnont with ooh rule T gio you, and you Wii) malo € success. Me use geonetrisel angles to measure Spooe and Time periods becmise it is a shorter and quicker method than addition or multiplication, provided you folloiz the rules and drew the gles or lines accurctely fron tops aud bottoms or ox- ‘rone highs and lows, You may meke e mistake in addition or multiplication, but the geometrical angles sccuretely crew: will conreot this uistake, Por exemple: Is you should cout across the botton of your chart 120 spaces, which represents 120 eye, weeks, or noxtas, then you begin at "" and nunbor vertically on your chart up to 120- thon from this top point et 120 draw a 45-dogreo angle moving dows, thie will cone ont at "O” on 120 poimts over from the beginning. If you have modo a mistake in nonboring, tits will correct it. Angles drawn on 0 chart alwaye koop bofore you the position of the stook and its trond whorens if you hed a resistance peint on time written dows, you might mislay it or forgot ib but these angles are always on tho chart in front of yous These angles or moving-avercge trend linos correctly dram will keep you from meking mistakes or misjudging tho trond. If you wait and follow your rules, these orgies will show you whon the trond changes. The moving-average as commonly used is obtaiaed by taking tho extrene low price end the extreme high price of tho calonder day, week or month, ona dividing At by two to got the moan cr average price for the day, wesk or month, and oon— ‘timuing thie af the ond of ccch-time porSod, This is ea irroguiar novement in spaces or points por weak tecavse at ono sine At may nove up 2 points por weok ond at eothor 5 pointe por wook, while tho tine porfed 49 a rogular mit, Thero- fore geonetrioal anglos, which aro roally moving-avorages, move Up or down at cn uniform rato fron any vovton or top on a daily, Wookly or monthly chart. TOW 70 DRA OROMBIRIOAL aNGLES Thora aro threo important points that ws ean prove with mathemetics or geometry: the Circle, the Square, end the Trimgle. stor I have odo tho Square I cen draw a Circle in it using the seme diametor, and thoreby produce the Tri- angle, the Square ond the Circle. The dmglos or moving-trend-line evorages nossure end divide Time end Price imto proportionate parts, efor to Form "I", whore 1 havo dravm the square of 26. You will uote thet this is 26 high and 28 wide~ in other words, 28 up and 28 agross, Tt is the same as a square room which has a totton or floor, a top or petling, and side walls. Bvorything has width, leagth, und height. aD runs fron "0" to "28" diagonally, This is a diagonal line moving on a 45° angle and divides the lergs Square into two equal parts, Thon note angle “BY ut "14" fornis énother 45° ongle moving from tho N. W. cornor ¢#% the S, B. corner, cross— ang "14" ot the oxast half-way point. You goa by this that if wo draw tho first we draw Lines from the other directions, we divide it into four equal parts- then by drawing the two lines from eech corner, we divide the square into 6 equal perts and produce 8 triangles. As you look at this Square, it shoulé be easy for you to vell with your eye where the strongest support point Js or resistance point is. Iv is at the center where all the angles cross. Four angles cross at this point, eo naturally this would be a stronger support point than e place where only one angle cresses. I could divide each one of these emaller squares inte four om eignt equal parts by drawing angles in the sane way. Later, when I give you the rules and exanples, Iwill explain how to square the Range of a stock, that is, the difference be- bween the extreme low and the extreme high prices, or the difference between any low point and any high point, and also how to square the bottom price. Por ex- ample: If the top of a stock is 28, this Square of 26 x 28 would represent squaring the Price by Time, because if we have 28 points up in Price, and we move over 28 spaces in Tine, we square the Price with Time. Therefore, when the stock has moved over 28 days, 28 weeks, or 28 inonths, it will be squaring ite price range of 28. PAMIGRN CHART FOR GEOMETRICAL ANGLES The Square of 90, or the Fatuern Chart, shows all the measured angles that are important to use in determining the position of a stock. These angles are as follows: 38, 7£, 15, 16%, 264. 30, 332. 374, 45. 524, S64, 60, 638. 7l4, 75, 824, 864, and 90 degrees. Iv is not necessary to measure these angles with a protractor. Al] you have Lo do to get the angles correct 1s to count the spaces on the chart paper, using 8x 8 to the inch, and draw Uhe lines of angles accordingly. On ths square of 90, which you will receive with these instructions, note how equal angles drawn from the top and fron the bottem prove themselves by the point at which they cross. For example: The angle of 8 x 1 drawn from "O" and the engle of 8 x 1 drawn from "90" down both cross at 45, 5-5/6 points over fron "0" counting to the right. Then, the angle of 4 x1 from "0" and the angle of 4 x 1 down from "G0", you will notice, cross at ld on 45, equidistant fron the other angle and iwice the measure. The reason why these angles prove this way is because the 45° angle or 48 points or degrees from "oO" to 45 is one-helf of 90 Therefore, paralie argles beginning at "0" going up and at 90 coming down, must cross On a 45° angle or at the gravity center. HOW TO DRAW ANGLES FROW A LOW POINT RECORDED BY A STOCK An example marked "Form 2" shows you the most important angles to use when @ stock is working higher and advaneing. (See page 6) FIRST IMPORTANT GEOMETRICAL Lt The first and always most important angle to 45° or hx 1 draw is a 4S-degree angle or a moving-average Uhat moves up one point per day, one point per week or one point per month. This is 2 45° angle tecause it divides the Space and Time Periods into two equal parts As long as Uke market cr a stock suays above the 45° angle, it is in a strong posivion and indicates higher prices. You cen buy every Line stock reste on the 45° angle with a stop lass order one, two or three points under the 45° angle, but remember the rule— never use a stop GA-8 losa order nore than 5 points wey, Unless stocks are noar the low levols or ast starting in 2 bull narket or selliag at vory low pricos, I alvays nove stop loss order one point wider the 45° angle. if this ongle is brokm by ono paint, you will usually find Chat the trond hay ehangod et leayt tonpornrsly and tho Btook will go lowers an ousy way to calowlete cccurately how to put on this 459 angle is: For oxamplo: If the timo is 28 days, 28 wooks, or 28 months fron tho point whero tho stock was bottom, thon tho angle of 45° must bo 28 points up from the botton and would cross at 28. This is ono of the easiest cngles to pat on and one of tho simplest to leara, You can boat the market by troding againét the 45° anglo alono if you stick to the rule-~ wait to buy a seek on the 45° angle or weit to sell it against the 45° angle. NEXT_IMPORTANT ANGLE is the angle of 2.x 1, or the moving-average which moves up Zs st the rate of 2 points per day, week or month. It divides the space between the 45-degreo engle and the vertical angle inte two oqual parts ond measures 652° That is why it is the next ctrong- est and most important angle. As long as a stock holds atove this angle, it is iu a stronger position than when it is resting on a 45° angle becguse it is a more eovto angle. When « stock breaks wider this angle or 2x 1, or two points for etch time poriod, then it indicates that it will go lower and reach the 45° angle. Remember tho rule of ali anglas: No matter what engl tho stock broake under, it indicates a decline to tho noxt angio bolow At. THIRD IMPORTANT ANGLE, which is still stronger as long as a stock hole above it, “TERY ~~" is the angio which novos up 4 points per day, wook, or south, ‘Ibis angio is ¢x1, or 4 poimtsor Speco equal one period of Pine. It noasures 75° and divides the space between the angle of 2 x 1 and the 909 angle into two oqual parts. ny otock that continues to advance 4 points per day, 4 points por wook, or 4 points por month, end romaine abovo this angle te in a vory strone position as long as it stays above it, but when de breaks udor, it indicates the noxt anglo or next support point secording to the position of tho stock ou no, FOURTH IMPORTANT ANGLE is tho angle of 8 x 1 or the ono that moves up 8 points eT por day, weok or nonth, This anglo nossures 822°, As long as 6 stock .cen hold above this angle on daily, wook~ ly or monthly chart, it is in the strongest possible position, but when it rever— ees trond and declines below this angle, then it indicates a decline to the next angle. NEU ANGLE; It is possible to uso an angle of 16 x 1, or 16 points of Price to Tex one poricd cf Tino, which nosures 0649, bub thig angio is only weed 4n fast, evarcing martots, 2ike 1929; when otocke cre moving up or dowa 16 pointe or nore por wook or par worth. ‘hore are very fev cteske thet will move up 16 points per dey, wook or month, and vory seldom, You will note that with those four inportant angles we show tho strong oF vulligh sido of the narket. ALL tho tine by dividing tho Spaoo with anglos wo are gobting the half-way point or tho gravity ceater of Time ond Price. SX LANGLS: Hote the anglo drawa in Groen, marked "Sx 1", which moves up et tho “~~ __ tate of 8 points por day, weok or month, measuring 7122. This anglo is important at times after markets have had a prolonged advance and ares long distanco up from the totton. It ic on importont angie to use ou Monthly end Wookly charts. Thoso aro all the ongles you need ts long as a stock continues to advance and work up und stays above tho ongle of 45° or tha moving-averago of one point por day, wook or month. Wnilo thoro are 360 dogroes in a cirele ond aglos can form at any of thoso @egroes, all of tho Amportant angles form betwoon "O" and 90" becauso 90 is straight up ond dom and the most ocute angle on which a stock can risc. For exemple: The 45° eaglo divides tho space from "o" to "So" 4m half. The angio of 185° is cimply mothor agle of 45° tocause it is ono-helf of tho noxt quadrant batwaon 90 ond 160, 225 ond 516 in a circle are also 45° anglos. Thorofere ali of the anglos valueble in dotornining the trond of a stock aro found Botwaon "0" and "90" degroce. Whon wo divide 900 by 8 wo got the most important angloe to uso~ thon divide At by 5 wo got 30 ond 6° anglos, which are important to uso Lor Tne ond Rosistonce Points. WHAT XID OF BOTTOMS TO DRAW ANGLES OR MOVING-AVERAGE LINES FROM DATLY_CEAR: Ufo stock hao boon doolining for sono time- thon starts to rally (by rallying fren e bottom ie must make higher bottoms ovory ay and higher tops)~ thon after © S-day rally on she daily high ani low chars, you gan put on tho 46° angio and the engle of 2 = 1 trom tho bettom or low point a rule, {6 will only bo necessary to put on those two moles at firee. “Te thie vottom holds aud ty not vrokon, than vettom, oY one pUt on the obher unglus trem tho WERKLY WOT: If 6 stock ic declining od rents for nore then one Wook end con- tinues dowm, vo will sey, for three wooks or wore, thon starts to rally and advancos to Wooks or wore, you would start te put tho angles on from tho low point of thu doclino, only using the anglos abovo tho 45° angle until tho stock egain broaks andor the 45° onglo- aftor thet you would use the othor onglos on the lowor or bocrish side of tho Square, WEAT 10 DO APTER THE 46° ANGLE FROM BOTTOM IS BROKEN Aftor a stock makes top, oithor tenperery or othenvise, and breaks under tho 46° angle and starts moving dowm, then the first thing you de is to draw angles Delow tho 45° ungle, starting fron the bottn or low point. Note oxemplo merked Porm $3": EIRST ANGLY ON BHAR SIDE OF THE SQUARE; The first angle that you draw on ths ZEL pear side of the Square i the angle of £ x 1 or 2 points oor und one point up, Which novos at tho rete of one-half point por day, wook or nonth and mossures 264°, This ic tho fret eupport angle which tho stock onowld roach efter it br under tho 45° angle. Ac a general rule, when the stock reaches this angle, it WALL rovoive support und rally. Somotdmoa it will roet on dt far © long porkod of tino, holding on this angle oxd melcing highor bottoms. But whon this angle of 2 x 1, or noving-avorage of ono-holf point per dey, wook or month is broken, ‘thon you must drew tho next angle of 4 x 1, NBW OPONTANT ANOLE: The next important englo ox tho boar sido of the Squarc, =i wateh moves up et tho rate of 1/4-point per dey, is the eagle of 4.x 1, moasuring 15°, It vill be tho toxt strong sapport englo which tho stock should get support on ond rally from, NEXD ANGLE § x2: Thon after tho 4 x 1 mele is broken, the noxt important angle thet you wii1 pat on your chart is the anglo of 8 x 1, Which moves at tho rate of 1/8-point por day, wook or month and moasures 72°. Tais is often a vory strong support angle. After a stock has hod a big declino, % will often rest on this onglo sovoral timos or mey make finel bottom and start up from this onglo, crossing othor angles and gotting back into a ctrong position egain, Thoreforo this eagle is importont to uso on e monthly or woolly, cnart after e prolonged decline, ANGLE 1€ x1: This englo con bo usod on a nonthly chart aftor a long poriod of nce Whe cag, _bimo has elapsod from an important bottom. Ii wovos cb the roto ef 1/16 peant per nouth and moasures $295 AIGHBOF $ x1; This englo, draw in rek ink, 4s a Yory Smportont angle, voostee tomy, moseuring 18]9." rT strongly edvise using ie ae a1] thames ond kooping it up on noathiy charts fron aay amportene buttons Te can Chee ened fo edvantago at tinos cn woolly charts, bit ie eolden of muck value sea daly chart, It moves at tho rato of ono-thind print por day, weok, er mowhs By aravieg this on the nozthly chart for a long poriol of youre, you will soon bo convinood of its veluo and also by tosting it on a weekly chart, will find it valuable, This completes cll of the angles thet you will mi ot cay time, ed to use fron any bottom HOW 10 DRAM ANGLES FROM TOPS OM DAILY, WEUKLY OR MONTHLY CHARTS SR PATLY, WEEKLY OR MONTHLY CHARTS POSITION UNDER 45° ANGLE DRaWOT PROM TOP; Aver a stock has made top end declined “three dene, thee nese, wn (fort reasonedle leugeh of ines say, three days, three wooks or threo mouths, breaking previous bettoms, thes foe start to drew mgles don from the top. Noto oxanple maylod "Porn fa" wich Le the pattern for drawing angles from the top under the 46° angle, (soe page 10) 49° ANGLE FROM 20P: The first angle you draw is the angle of 45° ox = noving- sr mown, de dons agttOTAS® Which indicates a decline of one point per day. woek or month, As long as tho stock is below this angle, it is in the weakest position and in a bear market, QTHER ANGLES; In many cases a stock will start doclining on average of 8 points vets nae ag, POT Bove Meek or month, or 4 points par day, woek or month, or 2 points por doy, weok or month, thorofere you should put on all of those angles from the top, Which move down fastar than the angle of 45°, NBAKEST POSITION: Tho stock is in the weakost possiblo position when i doclinos ang Keops under tho angle of 8x 1. It is in the next weal est position whon it is cropping dom at tho rate of 4 points por day, weok or mouth, or under the angle of 4x1. It 1e im Its next weakest position when it is dropping dom wader the engle of 2 x dy STRONGE POSITION: The stock is in a stronger position and indicates « better rally when it crosses the angle of 2 x1, but this depends on how far it is down from the top ond how for the engles ere apart, as will be oxplained later under the rules. GHANGING TREND; as long es a stock is declining one point per dey, woek or hontk, or falling bolow or under the 45° engle, it is still dn a bear market and in a very weak position. When « stock rallies end crosses the aslo of 46° after a prolonged declinoy then you are reedy to put on the angles on tho othor cide of tho 48° angle, waish shows thet the stock is in a stronger position im e boar markot md way be getting resdy to change into a bull markot. Perret Refer to Form #8, which is the pattorn for drawing engles cbove tho 45° angle from tho top,” (Soo page 11) axd \GLZ FROM TOP: Tho first angle or movingraverage you draw after the 45° ongle from tho top de sroacod ané after the stock indi— OnaLL catos that 4 has mado a tonperary botton Ls tho angle of 2 x 2, moving over 2 pointe ond dom ono point, or 1/2-polut por wit of Timo, This is noving dom at the rate of 1/2-point per wonth, wook or day. 4X 2MOLE, Me noxt is the angle of 4 x 1 which moves dom ab the rato of SARS a/s-point per dey, wock or month, 8 x LANGLE: Tho noxt mgle is tho angle of @ x 1, which woves down at the rate SHAAEES Of ono point every & days, Bvocle oF 8 months, or 1/b-posnt por ‘time poriod. - . STRONG POSITION: Actor Cho stock Les crossed tho angle of 45 ahd rolliod up ~~" to tho angio of 2 x 1, it will moot selling end roast to somo engle coming up'fron the bottom of the last move, but it is in a stronger pociticn whon it holds above this angle of 2 «1 and 4s in the noxt strongest position when it erosses tho mgle of 4x1, dressing the angle of 8 x 1, which 4s of loast Importanos, it indicates thet if ic in a vory strong position again from tho top. You must always considor a movonont coming up fro bottom and its position on englos from the bottom to determina its strongth. Tt is important +0 consider the mumbor of points it has moved up fron the bottom and hoy many points it is down fron the top, 3% 1MNGLE: Tho angle of 5 x1 drom in rod on Ferm #5 moves down eb tho rato ©f ono point every threo days, threo wooks or thyoo months, or ono— ‘hire point por day; nook or month, This aiglo is snportant to use aftor pro- Jonged deo3inos. This complotes tho forns of c11 tho anglos that you will moed.to uso at any timo from tops or bottoms. Practico patting those angles on tops md bottons un~ +41 you thoroughly unduretand how to do thom and Imow that you aro gotting thom raed absolutely accurate, Thon you con bogin te etvdy the rules for dotermining the trond sccording to tho position of the stock on angles. DOUB: BAND TIPLE TOPS oR BOTTOMS ANGLES CROSSING EACH OTHER: Whon thor is a doublo bottom sovoral days, wooks "or months apart, you @rav angles from these bottous, which oro moor the sano price levols. Fer example: Prom tho first bobtom draw a 45° ongle ond fron the cocond bottom drow on angio of 2 x 1- thon whon those mgles cross sash other, it will, be an importart point for a change in trend. Yote on chart marked Form #6 that T have drawn the 45° engl from the first bot— ton "IB" ond the angle of 2 x 1 om the right hend side of the 45° angle. Then, fren the second botton "28" I have drawn a 45° angle and the ongle of 2 x 1, which gains 2 points por day, weok or-nonth, on the left hand or bull side of the 45° angle, You will note thet the angle of 2 x 1 fron the second bottom crosses the englo of 2 x 1 on the bear sido from the first bottom ot 48, ad thot when the stock breaks under these angles, o change in trend takes place md it goes lover. Nove that the mgle cf Z x 1 from the third bottom "SB" crosses the aglo of 2x1 on the bear sido from the first bottom ct 5é$ and crosses the 45° angle Srom tho second bottom at 58, ‘This vould be a point to watch for okange in trond. T have placed a girels where those angles irom tho different bottoms couo together Apply this ralo to dewelo tops and triple tops Sn the sano way. It 4s not novossery for tho tops or bottans to be exactly ob tho camo price level, but near tho sano lovel. Romamber, always drmr 45" mglos from all inportant tops ad bottons. | Parollol anglos or lines run from important tope ond bottoms. As proviously oxplained, the 45° anglo is tho most inportant and should ba dram from all. important tops ond bottoms, If a stock ctarts advancing, wo draw a 45° angle from tho bottom thon if tho stock nakos top, declines and maltos a highor bottom thea uavancos ond makos a Aighor top, wo draw a 45° onglo from tho firct top, running the lino up. This wild give tho oscillation or width of fluctuation sna parallel votweon the 45° angle from the bottom ond the 45° engle running up fron the top. Often a stosk will advance to tho 45° angle from the Zirst top, fai) to cress it, then deolino ond rost on the 45° mglo fron the first botton- then cavence again, working up for = prolonged Lull campaign between these parallel angie: + When tho anglos are very fer eport, you cas draw enothor 450 angle equi @istant betvoon then, which is ofto a strong support angle fron vhick o stock will relly, bat whon it brosks undor, it deolinas to the bottom parallel. Parallols can form betroon tho anglos of 2.x 1 or 4x1 just the sano as ‘votwoen 45° ongles, which often occurs in slow-moving atocks « GEOMETRICAL ANGLES OR MOVING-AVERAGE “LINBS DRA FROM Yo" Wien @ stosk reaches bottom and starts up, you have beon instructed to draw mgles from this oxest low point, which shows the support 1a time poriods, Dut thore oro sthor angles thot loter on will be just os Important and sometimes moro important thea tho aiglee dram from the bottom of a stock, Those are the mglos thet bogin st "0" or sero and move up at the same rate thut they nove up fron tho votton. The starting point most be on tho aano line that tho bottom is made on as tho tino period togins from this bottom, but the cnglec move up fren "0", Thoso eagles should be started ovory timo a stock makoa a battom, oeponinily on wookly and monthly cherts, snd showld also be carried Up on important movements on tho daily chart, Exatplo: Soo chart marked Form #7 on page 14, If a stool makos low ct 20, as shown on tho chart, starting the 45° anglo from "o", whoa vill this ongle reach 207 snewor: It will roach 20 in 20 .doys, 20 wooks or 20 nonths from the botton or its starting point. In other words, in 26 doye, 20 wooks, or 20 months, i> will bo up 20 frem "0" and ct tho Price whore the stock mado bottom, Thon tho ongle will contjuve on up at the suite rate, and lator, when the stock breaks under tho 45° angle from the actual bottom made at 20 and breaks the other support anglee drawn fron the eetual bottom at20, the next important point for support will be the angle of 45° meving up from’ "0", Vonon this sngle is troken, it is in the voekest possible position and indicates much lower prices, but this depends on how high the stock is selling and how much it has declined et tho tine it broaks the 45° angla from "Ov, These angloc drawn fron "O", ospectally the 45° angle, proves when Frice and Mme ero balanc— ing or when the stock is squaring out. from its bottom. NO" ANGLES STARE’ NG AT THE TD TOP Ts MADE When a stock reashos oxtrene top on a deily, woolly or monthly chart and the trond turns dow, you should start an angle of 450 from "0" moving vp from the exact space and date that the top is mado. ‘This will prove the square of the tima period, Tt is very important whon thia angle is reashed and indicates a chmge in trond. Tt is tho lost strong support and whon brokon, it will indicate much lover prices. I havo instructed you in ach ouso to first drow tho 45° angle from votton, ‘top ond fron *O" ot bottom md top, but this dees not maan that you mist not uso ‘the othar ongles. ALI of tho othor angles con bo used from "OM, but tho 45° gnglo 4s the first ond most importmt. Aftor this anglo is broken, thon you con use tho other angles. It is not necessary te carry all of them along until you ona nood thom, but on the monthly chart, after a long sories of yoars, those other angles should be carried along when tho stock tegins to approach tho levels whore they Would bo brokon or whore the steok would rost on then ene receive suppert. 45° JNGLE FROM "ot 70 TOP AND BOTTOM: Whon a 460 angle moving up fron "O* a porohas the line or price of the bottom, At de vory Amportant- thon again when it reaches the point of tho oxtroma high price, it is very inportant for a change in trexd. You should carry 45° angles nd othor angles up from "0" from ell important firot, second, ond third higher bostoms, especially those where vary much tine has olepsod between these bottoms, You showld also start the .ongle of 45° up from "0" from the first, second, and third Lower tops, ospecially those which show muck time period elepsed, “These angles are the most inportant to be carried on the weekly end monthly cherts.. Nover overlook keoping up the angles from "0" because they will tell you when Time is oquaring out with Price fron tops ond bottoms and will lecate eup- port angles or moving-average lines at a point on the boar cide after the first 45° mele from a bottom 4s broken. You could not looate this eupport point in any other way except bythe anglos from "0", You should go back over past records and bring up these angles and square out different tops and bottoms so that you can prove to yourself the groat value of using those onglas. ANGLES FROM COPS DO! 70 "0" AND UP AGAIN A 49° angio starting down rrom any important top on g monthly cr wookly chart should be continved dowa antil ib reaches *O" end thon startod up again at tho vame rate. After « long mumbor of yoarc botwoon important tops and bot~ tone, thie ongle coming down ond gomg up again is importast. 4 45° ¢glo oan also’be continued down from any inportant bottom-to “O" ond thon sterted up again, This will show tho aquoring of Price with Timo fron oither top or bottom. Jaglos con be started from "0" ot the timo my importent time cyeke runs out. For exemple: U, S. Stool made extrene low in 1904. May, 1924 would be the ond of o 20-your cyclo or 120 months, In May, 2924 $teol, made top st 109 against a 45° angio bogiming ct "0" at the time totton was mado at 56 in Februery, 1816, On oscount of tho importence of this top ond a 20-year cyclo running out hore, we would start a 46° anglo end other angles, if we nood thom, fron 40" in May, ised May, 1951 wowld ond a T-yoar eycle of G4 months from 1926, The 45° melo running up fron "0!l in Mey, 1924 crossed ct 64 in May, 1832. Woto that ‘Stool meda law nt 83% in Juno, 1851. Jn June, 1924 Stsel made the last low at 942, showing tha importunoa of tho ond of the 20-year cycle, The 45° angle noving up from "Ol" dn Sue, 1924 crossed at 84 in Jime, 1951, and Stool doclined and rostod on this englo. TNO 45° ANGLOS FROW OWE save BOTTOM __Aa we have previously oxplainod, tho 46° angle mores up at the point por nonth end moves down at the rate of one point por month, Refer to exemple on Chart 48: You will note thet the lew on thts chart 42 chown az G2 and tho stock nove up bo w high of CY. A450 ungha 1a dvwm up from the boltan, end aftor the eteck roashas top and starts to york dow, it broaks the 45° ongle, gotting under st at a prico of 59, You will noto that T havo drnm anothor 45° anglo down from tha dobton at §2. itt the point vhoro tho stock broaks undor tho 45° anglo moving up ron 52 to tho 45° angio moving down from $2, tho Gistanoo in points is 16, thoro- foro tho englos hevo widoncd until tho stock sould doclino 16 points, if it wont straight dom, bofore it ronchod tho 46° anglo moving dow fron tho bottom, Yoto thet I havo showa én tho chart that tho stock contintos down until 4 rousiioa 40, whore it roste oa the 45° engle fron the bottom at 52. This Would Indiocto tile strongest support poine and at loast a vonporary relly, ospocially ae sho stock Se down 25 poince from the tops Lator you will find tater "Resist ence Levels! thet 22h to 24 pointe deo atrong supper? point, u, SEREL: fake tho oxtvono low pelnt of U, §. Steel at 1112 in Ionsary, 1927. Start a 45° melo on tho monthly chart moving up at tho rato of fone point por month- ‘then start e 45° emglo moving comm at tho samo rato, ‘this shows the spreading of the anglos cad whet con happon whon Stool broaks imdor tho 45° onglo coming up from thet bottom ond tho point where it oan decline in ox- trono panicky markets, like 1951 and 1932. Tho 48° angle coming up fron tho low of Jenuary, 1827 crossed at 186 in October, 1890, Whon U, S, Stoel broko this aglo iz wont right on down to 1948 An Doconber, 1950, whore it rested on tho anglo of z x 1 trom this bottom of Jamu ary, 1927 then ré2liea to Fobruery, 1881, and st tho timo 4t proko under the angio of 45° from 2114, it was on the 46th moath, onother indication of « sherp, sovare doclinc, Foro wo look at the 48° angle noving dom from 112 end find 46 is 90 points dom from the 45° angle moving up f¥om 1113, Those onglos coparcte at tho rato of te points por month ond toing 45 months tron tho bottom, tho ctock would have to doclino 90 points to strike tho 45° anglo meving down from tho bot~ tom. ho anglos toing so wido apcrt indicated that tho stock could have a wide opea broek, This happonod in Decotber, 1931, whoa Stoo) broke wndor tho 450 angle moving dom from 1112, pusting it into’s vory weak pocition~ in foct, in ‘tho weakost position that o stock con got in uatil it cen rocovor this angio. In Juno, 1982, whon U. §. Stocl coclined to 214, it hed dropped undor the 48° eagle moving dovm from tho Last low of 115§ madd in March, 1925, and olosod xo months bolow this angle bofere it startod to resover anglds, This shows that whoa a stock gote imbo a vory oak position by dropping win dor inportant anglos moving down from bottons, aftor having broken strong angles moving up from bottons, it can doclino to wry low lovols. Thoso extreme Pluctuem tions and declinos have happened in tho past amd will happon ogain in tho Suture. Tais proves tho squaring out of Tino on the dowa side or tho baloncing up of Brico ond Tina, Hore is mcthor illustration of the balancing of Prico with Timo; Tho englo of AS? noving up from "0" from tho bottom ot 21£ from Ockcber, 1907 crossed at 252 in September, 1929 and Steel ecvenced to Z6lf, vnich shows that in 252 menths fron the bottom in 2907 Steel had e@venced an equivalent of one point per mouth. By striking the 48° angie and fuiling to cross it, st indicated that the Time was ug and thet the stock was turing cowtrend for a prolonged Dear market y ANGLES OR MOVING AVERAGE LINRS FROM ONE SOP 20 THE NEX? TOP Refer to example on Chert #9 on pege 17. You will soe that we have started tho bottom ab 60, ‘fhe stock advances six months to 74, to 9 point marked "I ond makes top-reacte for three months to €4, ‘rocking tho 45° anglo but resting on tho mglo of 2 x 1 from tho bottom——thon starts advansing ond finally crosses again the 45° angle trom 60, gotting into a stronger position, having rocained this onglo, Ia order to determine whore it might moct rosistince, as it is in new high territory, we draw a 45° ong fron tho top at,74. The stock advances to 90 on the Zend month from the bottom, strik- ing tho 45° angle from the first top ab 74, on the 16th month fron the first top, Being 16 points up abovo tho first top, tao Time oquals tho aévenco in tho Price stove tho first top. The 45° englc shows tast this is a strong Kosistanco point end a place to go short with stop ous to three points above the 45° angle, A Goclino sterts ma in the third.month the stock agein breaks under the 45° engle from tho botton (at 60) et a vory high lovel. Im other words, ib is 2 points up from tho botton and is now in a much woaker position, bocauso it is v0 fer fron tho baso of support, axd indicates a doclino again to the angle of 2 x 1 (marked in greon). Don't overlook this rvle: After a stock has advenced to a new high levsl, then declines to the old top at 74, this nay be a support point unless it breaks % points vader it. If it does and’aiso broaks the engle of 2x 1, it will be in a weaker position end Lhe next point te waten for support end a rally would be the next botton at 64, ANGLES FROW ROPTOM OF FINS? SHARP DECLINE When a stock thet has been advancing for some time, makes top ond holds for several days, soverel weeks or several wonths, thon turns the trend dom and has 8 sharp, severe dociino, there is clwcys a rally efter this first docline, It usually nakes a lowor top on this socondury rally ond then starts to work Lover again, The bottom of the first decline is e very important point to draw angles from, ospoosally tho 46° mio moving dom, us I have done on the chart unrkot Form if10, = Pera) This chart chove the ctook rallying up te aromd 75, where the 5° angle coming up fron the last bottom crorsos tho angle of 2 x 1 coming dow from the top. Thon tho decline stertod end at 68 the stock broks back under tho angle cf 45° from tho top, which put it in a very wack position. It éeclino’ to tho onglo of 45° coming down from tho bottom of tho first sharp declino, This would to the squaring out of timo from tho bottom ond would be a placo to buy for a rolly. A stock will often declina and drop c little below this engle from tho potton—then if it holds for severe] deys sr wooks undor this angle or on it, it is @ place te buy Zor n rally, On a Monthly Chart always carry this angle down from the bottom of the first chazp decline, ea it often becomes very important later ox in © canpaigas After a stock has boen advancing for come time end thon hae © sharp break lasting 2 to 5 days, 2 to 3 weeks, or 2 to 3 monthe--than rallies and aftorward breaks under the lows of this first sharp break, it indiestes that the main trend hos turned down ond that it is going lowor. Apply the sone rule whon @ stock has been declining for a long time end thon uakes @ sharp, quick recovery for 2 to 3 duys, 2 to S woeks, or 2 to 3 months, then reacts and thon crosses this first rally point thet if nat, en indication of higher prices, Last sine NA DULL OR DEAR MARKEY It is importent to draw angles from the point whore tho narket starts up end makop ite lect run ino bull markot, Refer te Chart #11 on pege 19. In this exemple note point marlad "last bottom. In the last stego of the wull merlot a fest udvance follows to a price cf 84, We havo dram tho angle of 2 x1 (a gain of 2 points por dey, wook or month) and tho 45° angle from this Yotton. Whon the englo of 2 x 1was broken, it indieated chat the trond had turaot dom. Tho etook declined and raatod on tho 452 englo-—thon rnlliod snd mode a socond lewer top— thon broke tho 45° anglo- declinod sharply ond rosted on tho 45° engle draim fron the top ot 84, which indicated that Timo ad Price had squarod out or wore ogual. This would be a point to buy, with o stop lose ordor 2 to $ points under this onglo, for @ rally-beck to the englo of 2 x 1 from tho top, as shown on tne chart. In very active fast-moving narkets a stock may stay above tho angle of 4x 2 ys tho angle of 8 x 1 from tho "last bobtom," bat on tho daily er wockly chart aftor this first acuto anglo is trokon, it indicates that tho trend has turned down. Alweys romembor that aftor a prolonged savance,.whon the nain trond turns dowa, it is eafor to wait for rallies end soll short then to buy against the trond, ALL of those rulos aro reversed at tho ond of « besr market or shurp do~ cline. It is important to note vhen tho markot starts down from tho lest top. or relly end makes its last rum ¢o bottom, Drew angles from this last top and watch when tho markot ronches these important onglee end crosess thon, For exemplo: On Merch 9, 1932 tho Dow-Jonos $0 Industrial Averages mado Inst tep at 90, fron which a decline followod, with vory emall rallios, reachiag bottom ct 41 on duly 8, 1952. Noto on tho soekly chart that tho angle of 2 x 1 from the top at 90 crossed at 50 in tho wook oncing July $0, 1982 ana aftor thoy crossed this lovel thoy nover dechinod te 60 agein, ard advaacod to 01 in Soptombor, 1932, The cross— ing of unis angle was the first definite indication Unt the sain trerd had turned up. It ig also important to review the major owing from November @, 1931, when the Averages reached a high of 1103, to the low at 40i in July, 1932. This was the last big swing of the bear market, a decline of 79 points. The half-way point of this was at 80. In September, 1932 the Averages rallied to 8l-~ then after they reacted to 50 and advanced, getting above the half-way point, and crossed 81, they indicated an advance to 119 anyway, After they crossed the helf-wey point the second time and advanced above 81, they never sold down to it again until they advenced to 1494 in Noverber, 1938. After 2 stock has been advancing for a long time, in the last run when there As @ lot of monentum, it may cross angles from previous tops or bottoms, vhen Tall back under them, Which is an indication of weakness. When & stock has @ sharp decline and is making bottom, it will drop under important angles and then re- cover quickly, getting above them, which shows thal it is getting into @ strong position and changing trend. ANGLES PROM HIGHER BOTTOMS AND LOWER TOPS. What rule should de followed when stocks make higher bottoms end lower tops? As stocks advance and make higher bottoms on the monthly, weekly er daily chart, you should always draw engles from higher bottoms. Then, in the lest section of a bull market, if these important angles are broken from the last bot- ‘om, you know that the trend has turned down. Apply this sane rule as a market declines. Draw the angles from each lover top and watch thet angles until the stocks again cross the 45° angle froma second, third, or fourth lower top. The second lower top or second higher ‘bottom 1s al- ways very important vo draw angles from and to nessure Time Crom as well. Example: Dow-Jones Industrial Avereges— September 3, 1920 - Brtrene high- Novenber 13, 1029 ~ Botton of First sharp decline- April 17, 1089 - Big rally in bear market, second lower top- July 8, 1932 ~ Bxtrome low, final bottom Septenber 8, 1952 - Top of first sharp advance after bear market ended~ March, 1933 - Second higher bottom frem which bull market was resumed. ‘These ere the most important tops and bottoms to draw angles fron. TONS OF MARKET CAMPAIGNS. AlL market campaigns, up or down, move in 3.v0.4 sections. When an advance evarts, the market runs for several weeks or several months and hen halus for several weeks or months, moving up and down over a range of 5 te 20 points, ec- cording tothe price of the steck--then the advance i recuned and the stock crosses the high level of the first section, moves higher, halts again, and reacts for a period of time-- then crosses the top of the second section ani moves up egain for another period of time and elts for the third tine, which is a very important point to watch as markets often culminate at the end of the third section and a digger decline follows, Moot markets run out in chree Important sections er campaigns. However, efter resting and reectirg, if a stock crosees the third top, it will then nove up to the top of the fourth saction, This fourth advence may be @ shorter period of tim than the previcus sections, or in seme cases may consume a greater period of time, especially if the stock is very active and high-priced. Thie fourth top is very important end generally marks a culmination end a reversal for a bigger decline. For example: On Merch 12, 1935 CHRYSLOR MOTORS declined and made low at Sl-- FIRST SECTION of the advance carried the stock up to 49% on May 16 then the stock declined to 414. SECOND SECTION— On June 27 the edvance svarted ard the stock advanced to new high levels, reaching 62% on August 10, which was top of the second section- then there wes a reaction to $74 anda resting pericd. THIRD SECTION— Then there was another advance which started Auguat 28. The stock crossed the top of the second section and reached high at 74 on September 11, top of the third section. Then followed a reaction to 68 on September 21. FOURTH SECTION— In Ocvober the top of the vhird section was crossed and on November 18 Chrysler reached 90, top of the fourth section, where it held for 5 veeks in a 6-point range while distribution wes teking place. This was a most important point to wateh for a final top end e change in trend. Then the Urend turned down, Reverse this rule in a bear narket. Watch the action of the market when it makes the third and fourth decling. But, remember, ina beer market when ral~ lies com, they may make only one section or one move or in extrene cases only make the second section- then reverse ard follow the main trend down, You will find it very helpful to study and watch these various sect iene of @ campaign and by applying the angles from tops and bottoms you can detect the First minor end major changes in trend, STRENGTH OR WEAKNESS DENOTED BY POSITION ON ANGLES _ ‘The angles on the Monthly and Weekly Charts ere of greater importance then those on the Deily Chart because the daily trend can charge quite often, while griy the major changes are chown according Lo the engles on the Monthly and Week- iy Charts, Always consider the distance a ctocl ic from ite beginning point when it breaks any important angle or crosses any important angle. The Curther away from the beginning point, the nore important the change in trend, whether this, ic crossing an angle fron the top or breaking under an angle from the bottom. WHEN A STOCK 1S IN THE WEAKEST POSITION: A stock is in the weakest position when it has completed distribution end broken under @ 45° angle trom an important botton on the weekly or monthly chert. Ty is eleo in the weakest position when it has broken under tne half-way point Detween any important top or bouton, The longer the tine period has run ard the higher tte price, the weaker the position, for example? Hf a stook hag advance! to 150 and Aas only moved down 26 podnts whon tho 45° cnglo from un oxtrone low on a woolly ox a menthly chart de broken, thon it 4. in a vory weak position becuuso it is so far above tho half-way point on its price novonont, alroady having equered oxt tho time poriod with price. Weakness in a stock dovelops whon St breaks the $/4-point, tho 2/5~point, the 1/z-point, otc., but the position on tho timing englos from tho bottom tells you still more about the woek position. A stock shows its first wocknoss whon it brocks the first inportont angle coming up from tho lest bottom in tho final run in a bull market. WMT A STOCK Is HS STRONGEST FOSITIO A stock is slvays In tho strongest position coming up from a bottom whon it is holding above tac very scuto mglos on tho dally, wookly or monthly charts, aspociclly on monthly and weekly charts. As long 09 @ stool holds stove the angle of 2 x 1 (a gain of 2 pointe por doy) on the eily chert, if is im a vory strong position ca far as the botton is cencornod.. In fact, it is always ino strong positien on the daily as lone cs it holés above the 45° angle. The sao applies to weokly and monthly charts, which are the most importent trond indicators. I heve found that the stocks which have the biggest advances are those thet alvays holé cbove the angle of 2 x 1 on the monthly chart or gain 2 points por month for o long poriod of tine. I heve seon stocks rest 10 or 15 tines cn the angle of 2 x 1 ond nover break it until they hove advanced 100 points or uore. In this vay o stock stays ahoad of timo and steys within the square of tino by boing Tar ebove the angle of 45°, and thoroforo is in a very strong position. But the time must come whan the Cycle has run owt and the nain trend begins te change from ¢ bull morket tc « bear merket--then the breaking of the engle from tho last bettom howe a chenge in trond. Another indication that a stook Ss in a strong position is when it advances and moves up above the helf-way point of the previous price ovement ané then holds the holf-wey point, that is, advances above it and then reacts and fails to broak under it, ‘This is just the same as recting on a 45° engle ond indi- cotos 2 vory strong position. STRONGRS? BUYING AND SELLING POINTS: ‘The cinch buying point is when a stock rests on a 45° angle, placing a stop loss order below St. nother peint to buy is on tho helfway point of the pri 8 stop loss erdor wnder the halfway point. © movement, placing Yan the main trond is up, St ia alec snfa to bay whon a stock roasts to tho angle of 2x1 (a gain of 2 points por time period) on tho woolly or monthly REGAINING ANGLES OR CROSSI Lawes: Remember, whon any stock breaks under the 45° angle fron the extreme low point of e move on the deily, woekly or monthly chart, it is then in a very wes! position end indicates a decline to tho next onglo, However, when © stock ean Ga-23 rogain the 45° angio, it ic iz ¢ ctvenger position. ho samo rule applic: to a 48° angle dram up fron cny top. Whon @ stook crosses the angle on the daily, weokly or monthly ond stays cbove tho 45° angle or ony other angle to tho left of the 45° onglo, it is in « very strong position, After a stock onco drops below or gots sbove any important onglo ond thon rovorses its position by gotting back cbove tho mngle or cropping back bolew it, it changes tho trend again, YAMA STOOK Is I STRONG POSTION FROM BOTTOM AND DI WEAK POSITION FROM OP: A stock is in a strong position from tho bottom whon it is keoping above tho englo of 48° or tho anglo of 2 = 1, but at the samo tine it can be in 0 woak position when it rallies up ond strikes against a 45° ongle or the anglo of 2x1 coming down from the top— then it is a short sale until it can cross these angles or cross provious tops. When it troaks tho angles fron the bottom, it is in a woak position ond indicates lower. A stock om be in a strong position from the top and in a weak position from tho bottom, thet is, it my cross some important ‘angles from tho top after a long poriod of time, but ct tho sane timo moy break under the 2x 1 englo or 45° ongle from the bottom, which would indicate that it is in a weak position ond getting rocdy to go lower. WHEY ANGLES FROM EXTREME TOP The 46° angie draim from the oxtrono high point of a stock is most importent ond when it is crossod, a major move nay te expected. For exanplo On the weekly chart of the Dow-Joncs Industrial Averages, note tho 45° onglo moving domm from 386, the high of Septonber 3, 1929. January 12, 1985 wes 279 wooks fromthe 1828 top. Taking 279 from $86, wo got 107, tho price at which the angle of 469 would cross. Thoso Averages advanced to 105$ tn tho woek ending Joauary 12, 1959-— thon roustad to 100 2m the wook onding Fobruary 9. This was tho first tine that thoy had held within one-half point of this angle and the first tino thet they had over reachod it since the top was mado. During tho ook cnding Fobruery 16, 1985, the Averages eroseed tho 46° anglo ot 108 fer tho firet tine, and during tho wok onding Petruary 28, 1985 ndvaneed to 108, whore thoy hit tho onglo of 45° moving up fron the Tow ef BSb in Soptonber, 1934, and also hit tho angio of 2x1 coming up fron the low of July 8, 1952, | Tris was a strong resistance point and tho Avoragor rocctod to 98 in tho wook onding arch 18, 1935, whore they rested on tho 45° englo from tho 1929 top ond alse where the 5 £1 mflo (a gain of 1/5 point por vook) from Septonber, 1929 coning up fren "OQ" crossod tho tnglo of 45° coning dam from the 1929 top. This was « strong support point for & chonge in trond. ‘tho aévenco started end the Avercgos moved up to now high lovols. This proves tho importance of angles, especially tho 48° anglo dram from aay oxtrone Sop, and tho point at vhsch any other angle ezesses tho 46° onglo. Wateh the 48° angle from 1929 top when S+ vasches YOM or whom it is S66 wooks down fron tho top, ‘This will be im tho lettor part of Jenuary, 1857. Note what happens at that tino, Tho semiwvockly chart is ct help et tho ona of oxtreno advances or extrenes declines. By applying all of the rules ani using the geonetricel angles fron tops and boltoms on the semi-weekly chert, you will often'get an indication of 2 change in trend two to three days before @ change in trend is shown on the weekly chart. 4 change in trend on tne semi-weekly ctart is of greater importance than a change In trend on the dally charv. Iu [8 much betuer vo rely upon this chart Uban on the daily chart when markets are In a narrow trading range. ANGLES POR NEW LISTED sTOoKS. Years of experience and research, which has cost me a lerge amount, of noney have enabled me to develop a method that will account for 211 market, movenonts and give rules to determine the trend from any top or bottom. It is important to know how to determine the trend hen a stock is first Listed on any exchange. When a stock has never fluctuated before, we have no top or bottom to draw angles from, Therefore, in order to determine the trend, we use the square of 90, which is 90 up and 90 across, and put 21] the natural argles on, 1ike the Patvern’Chart. As we have said before, the square of 90 is very Important because ib is one-quarter of a circle of 380°, and as 90° or the ver~ vical argle is vhe greatest angle that can be used, all of the other angles are found between "0" and "sO", If a new stock opens at 18 o any point below 222, then you could make out a square cf 22h to determine the position of the eteck on angles. If the otock opened at 36 or any point between 224 and 45, you could make up a square of 45. If it opened at 50 or between 45 and 67, you could make up a square of 674. How- ever, you could place any stock opening at any price below 90 in the square of 90 and get its proper position and strength or weakness on angles. If the stock opened 2t 100 or ebove 90 and under 135, you could make up a square of 135, or could make another square of 90 numberifig fron $0 to 180. You could start a monthly chart ona square of $0 at the price where the Stock opens or trading begins, as shown on U. S, Steel, (Refer to Special Analy- sis of U.S, Steel.) Arter the stock breaks any of these ratural angles drawn from "OF it is just the same es breaking under an angle drawn fron a dottem. When it crosses any of the angles drew down from "$0", it is just the same as crossing an argle from a top, a6 you can sce by experimenting with U. 6. Steel or any other stock, but always consider price resistance levels and how much the stock is up or down from the botton er Lop. You can determine the fire change in trend by the 3-day or semi-weekly Chart, daily chart, and weekly chart by bringing up the important Gsonetrical Angles from any higher or lower bottom ac the market Movements develop. -—QUICK CALCULATION OF ANGLES It is not necessary to drew these angles fron a point a long way back, ‘You can meke the calculation and devermine where they cross. For example: Sup~ pose in 1600, in the month of January, a stock made bottom at 15, and we wish to calculate where the 45° angle will cross 10 years later in January, 1910, The 45° angle rises at the rate of one point ser month- then IO years vould be 120 points or menths-~ add this to 15 at thy Sottom-— then the 45° angle would eross at 13 in January, 1910. All of the other angles nay be calculated a lone period back in the same way, ious DOM SX 2 ANGLE: This onglo of 2 x Z on tho lof sido of the 49° angle risos at the "pate of" 8 points in 12 nonths, A stock mast show a gein of G/4-point por month in order to keep cbove thie angle, Tais angle con bo used whon other Suportant unglas from the botton hava eproad fer apart, nz it will show the position ond rosistanco er support point betwoon tho other angles. LATITUDE AND LONGITUDE Oa ll charts—daily, wockly or monthly——the price mist nove up or dom ox the vertical angles, Thorofore, the prico movement is tho sano es letituds. You showld bogin with zoro or “0" on my Chart—~daily, weolly or nouthly--cnd ares tho Amportunt anglos ond rosistanoo levels ccross, which measuro Latitude. Noxt,, mnbor the tino points in days, wooks or months cozose,, end grey cho horizontal eagle at cngh Important natured eagle, auch as, 1M, 242, S88, 45, Sek, 073, rol, 90, 1022, 11h, 120, otc. Thon you will kiow whom prico roachos theco important angloe ind neste toietenco Longitude moasuros ‘tho time rurming oeross the chert, as it novos ovor acy, wook or month. Thorofore, you must koop your chert numborod from ccc important top ad totton in order to got the ting moaguromants, according to englos. Those important onglos, such as, 114, 22h, S82, 45, 564, 60, 67% $0, ot. fron och Dottom ond tép will show yoa whore tho strongost resistence an prico tad time takes place. Thoco angles provo ‘the paraliol or oro! Study post records sed see whit hes happened when prices on monthly cherts rec these dmportaut angles or time pericds. For exenplo, 90 poipts.ap in price from "oO" we drew an angle horizonclly serese the chart, Thon 90 days, woeks cr mouths, going to the right across the chart, wo draw a vortsec) engle up, which will erege the horizontal ongle at 99 end prove the square, By ksoping All these angles up mé understmding them on your charts, you will know when inpertant time eyeles are running out Tg tho price of a stock at 60 comes owt on the 60th doy, woek or month, it will meet strong resistance because it hes recshed the square of price with Tt is at the same Intitude or price and the same longitude or timo poriod. You cen alwrys put tho squcre of 90 on « chert--oither daily, weekly or monthly-. use tho naturel engles, but I advise only using this on tho weekly snd monthly. You cen begin this square of 90 from mny botton or top, thet is, going up 90 points, or fron the natural points, which are 90, 183, 180, but you mist not rail to square the oxtrome low ond high price us well as the second ond third lower tops and higher bottoms with Mno. HUIE POR XEPING TIME PERTONS ON CHARTS Xt is very important that you koep tho tine periods on cll of your charts, rying then ceross from the botton end top of each important move in order to chock up end Imow that you have your cngles or moving-averages at the corroct point and to seo where major and minor cycles indiente chonges in trend. Ting PERIODS RON BOTTOMS: “hon a stock makes bottom one month and then the following month makes a higher bebtom and o higher top, or anyway, after i makes a higher bottom ond rallies for one month er mere, you oen start aunbering fron thst betton, The month that it makee the lew be— Longs to the 01a or Gewward mevenont and to the Test nove dom. You Pirst month up es one end then number scross on the 1/2-Inch squares, thom ecross, edding four each time. For example: If ¢ stock has made bottom ond advanced 60 points, you look dom at the botten of the chart and Pind that you are on the 25th month- then the eagle of 2x 1, noving up 2 poiats por month, woulé cress et 50, while the 45° angle, moving up one point per mouth, would be at 28, and if the stock broke back under $0 the following month, it would bo falling under the angle of 2 x 1 ond indicote a further decline, ‘Nor, if you had an error on the chart in the timing or numbering across from the bottom, then tho noving-everege Line or engle would not cone out correctly. TIS PERIODS PROM TORS: Artor a stock has advanced and made on extreme high end reacted for a few days, a ferweoks, or a fow months, ané you start putting on the aagles from the top down, you must then togin te number tho time poriods acrose fron tho top. Apply the came rule for the top: The month, wool or day that a stosk makes ox- ‘trome high finishes the vpward movement and is not te be counted. You can count the number of days, weeks or months moving scross after thet, ellowing the top month to be "0", the next month, woek or day over to be "1", adding 4 across on the squares to get the correct position, If this Mne Period is cerriod across on ell the charts correctly, then you can always check up and find out if you have made any mistake in bringing down the engles or moving-cverage lines. For exomple: After a stock has declined 75 points, either on a weekly or monthly chert, the angles move down the same, exsopt where the spacing is dif- ferent. Assusing that the spusing is one point pr oue-eighth inch, after it hos moved down 75 points and a}l tho angles are drevm down fron the top, there nay be eo error ia the angle of 2 x 1 besausy your ruler may havo slipped and you nay not heve placed it correctly after it 4: dom a Aistanco from the top. Now, in order to prove exactly where tho onglo of 2 x 1 cones out, you determine the number of time periods there are. ff 40 gaye, wooke or nonthe heve boon required to docline the 75 points, the angle of 2 x 1 moving dom ? points per unit of time, would be down 80 from the top. If you find that this angle does not cross at 80, thon you mow that you mado an error and should correct it. This is a simple vay to alrays mow when the engles or woving-Linos ere correct because you simply add the novenont to the botton and subtract it fron the top. Suopose the price referred to above, when the stook has declino’ 75 points, wos 150, thon subtracting 80 fron the tep st 150, the angle wonld cr at 70, "end the prico of the stock dowm 75 points would be et 75, theroforo it would've above the angle of 2 x1 fron the top and in position for a rally if, ‘the time cycle indicated it. PORTS FROM WHICH 20 NUMDER TIME Ps ‘os, Ant on, The most importent p 9 Fonthly high and low chart to cerry the time period from is from the extrams low of tho life of s stock ond sleo from the dete of incorporstion or from the date trading in the stock began on tha New York Stock Exchange. From tho oxtremo low point the time poricd showld al- ways bo carried across on tho chart just the samo as tho Anpertant angles should be continued right along for years. The next important point to number fron is a second or th! é higher bottom, but you should not consider bottom shed until uhe market has held up or advanced three Lo Four monuhs, hen commence numbering frem hat botron if Lt appears to be important. Fer example U.S. STREL was incorporated February 26, 1901, Numbering the months across you will note that February, 1931, was 360 months, or 30 years, fron the date of incorporation. Then start a new cycle and begin numbering across from "O", This will be working out the second cycle or circle of 360°. ‘The next important point is the extrene low of 6} made May 14, 1904. On Une monthly chart carry the numbers across from this bottom, because it is the lowest bottom and therefore the most inportant. Note this 30-year cycle or 360 months ended May, 1934, ‘The next important point vo nunber from and draw the angles fron, is the low of 21 in Gcuober, 1907, the first higher bottom. Then, the next important is the third higher bottom made in February, 1915. Always draw the angles and nun ber the motiths ecross from eny other important, bottoms where campaigns stert. Use this same rule at tops. After top is reached and the trend turns down, then cerry the vine numbers across from the top, but after any top is crossed or otto is broken that you are numbering from, then do not count thet top or DovLom of imporyance to number from; except to determine a tine period on another cycle 5, 5, 7, 10 or 20 years ahead. Tops that stay for a long time without be- ing crossed are always the nost important to carry the Time Periods from. The extreme high reached by a stock is alvays most important until vhat high is crossed- then the next high point made on a secondary rally, which 1s always a Lower vop, is the next most. important top to number from. Por example! On U.S. Stee] you would cerry the monthly measurement across first trem the high in April 1001~ then from Une extreme high in October, 1909, and next from the high in May, 1017 then from the final high in Septenber, 1929, be ing the most impertant to measure from, and also number from the April, 1980 Yep ANDUBTRIAL AVERAGES: The Dow-Jones 30 Industrial Averages reached oxtreme high on September 3, 1929-— then declined sharply in the panic, Feaching low in Noverber 1929-~ from this low there was e rally to April, 1930, whlch was the leet high and very important to number from because it was ‘a secondary top, the last rally ine bull market. After final low of the bear market was reached on July 8, 1982, a sharp rally followed to September, 1932, when Lop Was reached— then & slow decline followed, reaching botton in late February and early 1958, making this a secofdary higher bottom, fron which stocks advanced to new high levels. The Dottom in 1992 is the mst important to number from and the next dovtom of March, 1933 is next in importance. Apply this same rule to weekly and daily bottoms and tops. Discontinue the Line periods when any minor top or boutom is exceeded and carry only the main figures on Lime periods from important tops and boltoms es long as they remain unbroken, The rule for discontinuing the use of tops and bottoms for Time Periods is: When a bottom er top is exceeded by Uhree points, then discontinue the tine period from that bottom or top. Always note the aunber of months between extreme high and between extreme low points and nove what angle the Lops and bottoms come out on, 19 1 This is one of the most important and valusble discoveries that I have ever made, and if you stick strictiy to the rule, and always watch a stock when Price is squared by Tine, or when Time ani Price cone together, you will be able to forecast the important charges in trend with greater accuracy. The squaring of Price with Time means as equal number of points up or down balancing an equel number of tine pericis--either days, weeks or months. For example: If a stock has advanced 24 points in 24 days, then moving the 45° angle or moving-everege-line up at the rave of one point par day, the timing Line or sine period end the price of the stock are at the same level and the stock is resting on @ 45° angle and you should watch for an important change in trend at thie point. If a stock is to continue uptrend end remin in a strong position, it mist continue to advance and keep above the angle of 45°, If it breaks back under this argle, then it is out of ite equare on the beer cide of che 45° angle end in a weaker position. When you are squaring out Time on a daily chart, look at the weekly high and low chart and monthly high end low chart ani see if the stock is ina strong position and has yet to run out the tine periods, because on a daily chart it has to react and then recover a position, squaring its price many tines, as long as the weekly and monthly point up. Market corrections or reactions are simply the squering out of minor time periods ani later the big declines or big advances are the squaring out of mejor tine periods. SQUARING 1 Refer vo Form #12, where a renge of 12 points is shown from 49 lov to 60 high. Hox, suppose a Stock remains for several weeks or several months, moving up or down, in this range, never getting more than 12 points up from the bottom and not breaking the bottom: We start the 45° angle from the bottom of 48 and move it up to the top of the range to 60, then when we see the stock is holding this range and not going higher, we move the 45° angle beck to the bottom: then back to the top of the range again, moving is up or down over this range until the stock breaks out into new low Jevele or new high levels. You will find that every time the 45° angle reaches ube Lop of this range or the bovtom of this range, there is sone inportant change An trend of the stock. ou san also use the angles of 2x 1 to the right of the 45° angle and the 2x I to the left ce they eysin divide une Tine Period into two equal parts and If a stock finally moves out of this range on the up side, then the angles would begin at the new and higher bottom and move up, but from the point where the stock went inte new high, or from any important bottom made while it wae in the range, especially the last bottom that it made, which would be most important you should then begin an angle at that bottom and Continue on up again; watch When this angle is broken or when Time is squered out again with Price, which would be important for another change in trend, either major or minor. oxtromo high, with Pino- shon tho and l- 9 cen square tho Range, that is, the mumbor of points from oxtreme low to ware the oxtrone low point with Tamo- und square oxtreme high point with Time, Tihoa the market passes out of these squares dréuks important angles, the ‘trend changes up or dom, The range thet a stock nakes botweon extreme high end extrono low can be squered so long as it remains in the same price range. I? the range is 25 points, it squares with 26 pericisof Time—- days, weeks or nonths, Continue $0 uso "this time period as long as it steys in the sane range. SQUARING TIME WITH BOTTOM OR EXTREME Low PRICE: The next important Price to equere with Time ic tho lowost price or bottom of ony importent decline, For example; If the bottom of a etock is 25, then at tha end of 25 days, 25 weeks or 25 mouths, Time and Price ure equel. Ther watch for e change in trond as based on its bottom or lowest selling price, os a stock coutinues to hold one bottom and advances, you cen alvays ase this time period ruming scross and continuing tho tine period, noting overy time it passes out of tho squares, Yatch especially when the stock roaches the third square, the fourth square, and again the soventh end ninth squeres of its tino poricd. These squares only cocur frequontly on the daily or weekly charts, es tho nouthly, in most cases, would move owt of c range, up or doim, before it squared a bottom as meny as 7 or 9 tines. However, this does sometimes hopgen when a stock is in a narrow renge for neny yeurs, SQUARING TREE WITE TOP OR ALTREME HICH PRICE The other important point to

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