Page 256 - How to Make Money in Stocks Trilogy

138 A WINNING SYSTEM

Ascending Bases
Ascending bases, like flat bases, occur midway along a move up after a stock
has run up off an earlier base. They have three 10% to 20% pullbacks with
each low in price during the sell-off being higher than the preceding one,
which is why I call them ascending bases.
Each pullback occurs due to the general market declining at the time.
Boeing formed a 13-week ascending base in the second quarter of 1954
and then doubled in price. Redman Industries, a builder of mobile homes,
had an 11-week ascending base in the first quarter of 1968 and proceeded
to increase 500% in just 37 weeks. America Online created the same type of
base in the first quarter of 1999 and resumed what turned out to be a 500%
run-up from the breakout of a 14-week cup with handle in October 1998.
So you see, history does repeat itself. The more historical patterns you
learn to recognize, the more money you should be able to make in future
markets. (See chart examples in Chapter 1, and also Simmonds Precision,
Monogram Industries, Redman Industries, America Online, and Titanium
Metals.) The buy point is as soon as the stock makes a new price high after
the third 10% to 20% pullback.

Price
Simmonds Precision 60
Weekly Chart 50
40
Buy point t t 34
Buy pointu
ypointoint
30
26
22
19
C 16
A A A A B B 14
12
g g
Ascending
A Ascending basbasbndinggg bas se see 10
8
3 3 3 pullbacks, each topullbacks each toullba 7
3 3
a higher low priceghighergher 6
a a higher low pricelow pricew
a a
V V Volume uppolume upolume upum 5
3/1
Volume © 2009 Investor’s Business Daily, Inc.
80,000
50,000
30,000
18,000
Dec 1964 Mar 1965 Jun 1965 Sep 1965 Dec 1965 Mar 1966 Jun 1966