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Don’t Invest Blindly: Use Charts to See the Best Time to Buy and Sell 173

3 Telltale Patterns That Launch Big Moves

As a political history buff, I’m always struck by how little things change
from decade to decade, even century to century. New players and issues
come and go, but the core arguments and debates remain essentially the
same. Why? Because it all comes back to human nature, and human nature
never changes.
It’s the same with the stock market. And if you understand and accept
human nature for what it is, the seemingly chaotic behavior of the market
will make more sense—and you can make more money.
I’m bringing this up because as we go through the 3 main patterns that
alert you to a potential big move, I want you to keep in mind that these are
not random shapes on a chart. They’re a reflection of human emotions:
Hope, fear and greed. And just like the price and volume action, they have
a story to tell.

The Patterns Don’t Change

Because human nature doesn’t change, the shapes of these telltale patterns
also remain the same.
At the beginning of How to Make Money in Stocks, Bill O’Neil showed the
charts of 100 of the top-performing stocks over the last 100+ years. Whether
it was General Motors in 1915, Coca-Cola in 1934 or Priceline.com in 2006,
those patterns (also known as “bases”) were identical. You’ll find the same
shapes today and the same patterns decades from now.
By learning to spot these bases, you’ll be able to get in early on
the best stocks—year after year.
Think of a chart pattern like a “launching pad”: It’s the starting point for
the stock’s big new move. So once you learn to spot these 3 common bases,
you’ll be right there for “takeoff.” That’s why it’s so profitable to use chart
patterns to time your buys.
As I said before, it takes some time and effort to read charts properly. But
stick with it. It’s not as hard as you may think, and as the table below shows,
the payoff can be life-changing.