Page 301 - How to Make Money in Stocks Trilogy

178 A WINNING SYSTEM

America Online Price
160
Weekly Chart 140
120
100
80
70
60
50
Buy pointoy
40
34
30
26
22
19
16
14
2/1 2/1 2/1
Volume © 2009 Investor’s Business Daily, Inc.
80,000,000
40,000,000
20,000,000
Dec 1997 Mar 1998 Jun 1998 Sep 1998 Dec 1998 Mar 1999 Jun 1999
Answers to the Market’s Great Paradox
Now that you know the Great Paradox, would you still pick the same stock
you did earlier in the chapter? The right one to buy was Stock A, Syntex
Corp., which is shown on the next page. The arrow pointing to July 1963’s
weekly price movements indicates the buy point. This arrow coincides with
the price and volume activity at the end of the Stock A chart, adjusted for a
3-for-1 split. Syntex enjoyed a major price advance from its July 1963 buy
point. In contrast, Stocks B (Halliburton) and C (Comdata Network) both
declined, as you can see from the charts given on the next page. (The arrows
indicate where the corresponding charts shown earlier left off.)

Search for companies that have developed important new products or
services, or that have benefited from new management or materially
improved industry conditions. Then buy their stocks when they are
emerging from sound, correctly analyzed price consolidation patterns and
are close to, or actually making, new price highs on increased volume.