Page 345 - How to Make Money in Stocks Trilogy

M = Market Direction: How You Can Determine It 221

A follow-through signal doesn’t mean you should rush out and buy with
abandon. It just gives you the go-ahead to begin buying high-quality stocks
with strong sales and earnings as they break out of sound price bases, and it
is a vital second confirmation the attempted rally is succeeding.
Remember, no new bull market has ever started without a strong price
and volume follow-through confirmation. It pays to wait and listen to the
market and act on what it tells you. The following graphs are examples of
seven bottoms in the stock market between 1974 and 2003.

1974 Dow Jones Industrials Market Bottom Index
Scale
800
750

700
F F Folloollollo ww-throughthroughtht h h h h g
7th
7th
Day y 7th daydayd y 650
Day 1111
Day
600
550
Daily Chart
© 2009 Investor’s Business Daily, Inc.
NYSE Volume Volume (00)
260,000
195,000
130,000
65,000
October 1974 November 1974 December 1974 January 1975

1978 Dow Jones Industrials Market Bottom Index
Scale
850

F F Folloollowww-throughthroughu h h 800
8th
8 8th daydaya y
Day y
Day 11a
750
Daily Chart
Volume (00)
NYSE Volume 520,000
390,000 © 2009 Investor’s Business Daily, Inc.
260,000
130,000
February 1978 March 1978 April 1978 May 1978