, 82Buy signals, 19, 10, 144. See alsoPurchase of stock, timing ofCapital account, 17–18, 151–152Capital gains tax, 84213
214Capitalization, 161Capital management, 55, 135Cash ﬂow, 75Cash positions, 100–101, 103, 134,157, 160, 166Cash reserve, 78, 80–83, 88,163–164Charts, applications of, 59, 70, 75,141Cheap stocks, 83, 159Chicago, Milwaukee & St. Paul, 18Chrysler, 119Chrysler, Walter, 105–108Chrysler/Mercedes, 39Circuit City, 39Circulating capital, 135Cisco Systems Inc. (CSCO), 31,54Coca-Cola (KO), 21, 27Commission, brokers’, 92, 103Commitment, importance of,15–16, 140, 148, 151, 155Commodity trading, 16, 30–31, 48,151Communications Sector, 33Computer Sector, 33Conservative trading, 10, 19. Seealso Prudent tradersConsolidating Base, 65–66, 72Consolidations:implications of, generally, 53, 73,134, 161pivotal points, 68Continuation Pivotal Points:evaluation of, 52–57implications of, 59–60, 65–67, 73,82, 87–88, 101Copper, 30–31Corrections, see MarketcorrectionsCrowd psychology, 2–3Current events, impact of, 75, 133,161
INDEX
Dache, Harry Edgar, 116, 118Daily planning, 121–122Danger signals/signs, 19, 62–64,127, 129–130, 150, 162–163Decision-making process, 29, 103,113, 172Declining market, 10–11Declining stocks, 10–12, 19Deductive reasoning, 75Depreciation, 18Determination, importance of,107–110Deviation, implications of, 71Distribution phase, 71, 73–74Dollar average, 79Dow Jones Internet CommerceIndex (ECM), 34Downward Trends:characterized, 147, 167Secret Market Keys, 171–178,180, 186, 192, 194, 196, 198,200, 206, 208Due diligence, 40–43DuPont, T. Coleman, 105–106Earnings, inﬂuential factors, 18, 75,88Economic indicators, 133Electronic markets, 136Emotional Control, see Fear;Greed; Hope; Ignorancehuman mind, 97–98losses and, 105–107media news and, 104–105psychological balance,components of, 115–116rules of, xsigniﬁcance of, 97, 99–104, 130,138, 158, 164–167stock tips, 110–113will/determination, 107–110Emotionalism, 75Energetic stocks, 134
Index
Exit signals, 62Exit strategy, 16–17, 79–80, 85–86,103, 134, 136, 162Experience, beneﬁts of, 165–166Exploratory orders, 101Extraordinary Popular Delusionsand the Madness of Crowds(Mackay), 76Factory capacity, 75False Pivotal Point, 55Fear, vii, 3, 16–17, 70, 99–100, 102,108–109, 112, 127, 151, 166Final Mark-up Phase, 55Financial Sector, 33Ford, 39Forecasts, 33–34. See alsoAnticipationFriendships:Baruch, Bernard, 76, 116Dache, Harry Edgar, 116, 118Hutton, E. F., 5–7Fundamentalists, 75Fundamental value, 75Future time, 132–133, 161Gambling, 3, 16General Electric (GE), 20, 27General Motors (GM), 23, 27, 39,119German Dax, 136Get-rich-quick adventurers, 138,151Greed, vii, 3, 15, 70, 99–100, 102,108, 111–112, 166Greenspan, Alan, 125Group action/leaders, 144–145, 162.See also Industry Group,leaders inHalliburton, 38Harrah’s Entertainment, 38Herd psychology, 100
215High prices, 10, 19Hope, vii, 16, 70, 99–100, 102–103,108, 112, 135, 151, 166Hot stocks, 161Housing Group, 34–36Human factor, 41, 75, 137, 140Human mind, 97–98Human nature, 99–100, 103–104Hutton, E. F., 5–7Ignorance, vii, 70, 99, 102, 111–112,166Impatience, 112Impulsivity, 153Industry Group:focus on, 32–36, 42–43, 45leaders in, 29–34, 51, 83movement in, 34–36stock tracking, 119Industry Sectors, 33Inside information/insiders, 84,111, 153Instinct, trading on, 66, 69, 80,112Intel (INTC), 26, 27, 35, 44Interest, 84Internet Group, 34–36Internet Industry Group, 34–35,38Inventory, 134Investment stocks, 18Involuntary Investor, 18, 80, 167Jesse Livermore—World’s GreatestStock Trader, vii, 6, 77–78,110–113Judgments, conﬁrmations of, 14,16, 31, 78, 141, 152, 158–159Kelley, Ed, 105–108Key executives, advice from, 84,111, 124Key Price, 171–172, 176, 208
216Knowledge, power of, 127–128,138, 155, 160, 166Kranyak, Dennis, 41Law, John, 76Leaders, see Industry Group,leaders inchanges in, 31–32, 86, 145characteristics of, 29–32, 45identiﬁcation of, 137, 144–145,159, 162trading, 154, 164Leisure Gambling Group, 38Lines of Least Resistance:determination of, 13–14implications of, 37–39, 44, 63,100–102, 157, 161–162Liquidity, 83Listless Drifters, 134Livermore, Jesse, generally:annual New Year’s ritual, 92–95bankruptcy, 7, 81career development, 2–6childhood, 2daily planning, 121–122friendships, see Friendshipslifestyle, 7, 121momentum, 4motivation for, 3personality characteristics of,1–3physical description, 3, 117reputation of, 10Livermore, Jesse, Jr., 99, 118, 121,123Livermore, Patricia, vii, 92Livermore, Paul, 99, 118–121Long-term trends, 50, 161Long trades, 69, 102–103Loss(es):averaging, 19, 80, 144–145dealing with, 16–17, 19, 68,105–107, 145–146, 158–160
INDEX
prevalence of, 310 percent rule, 79–80, 83,163–164Lost opportunities, 80–81, 135,156Lucent Technologies (LU), 22, 27,31, 66, 72Luck, 124, 160McDonald’s Corp., 71Mackay, Charles, 76Margin calls, 6, 18, 80, 89, 91, 147Margin requirement, 80Market action, 17, 146–147, 149Market bottom, 41Market conditions, 10–12, 33Market corrections, 75, 134, 163Market cycles, 32, 159, 165Marketing, 75Market leaders, 102. See alsoIndustry Group, leaders in;LeadersMarket operations, 139Market psychology, 49, 97Market rallies, 31, 68, 71, 130, 144,149, 167Market recovery, 125Market timing, 158Market trends, see TrendsMathematical formulas,applications of, 59, 165Media news, impact of, 104–105Medical Sector, 33Memory/memory bank, acting on,80, 165Merrill Lynch & Co. (MER), 39–41,49–50, 52, 60–61, 67, 69Microsoft (MSFT), 24, 27, 31, 35,44, 61, 70Mississippi land bubble, 76Mistakes:dealing with, 5, 86, 121–122learning from, 157
217
Index
Momentum, sources of, 30, 50, 58,102, 134Money Management:importance of, 138, 147–148, 158rules, see Money Managementrulesstops, 163Money Management rules:cash reserve, 80–81overview of, xposition establishments, 78–79proﬁt points, 86reasons for buying/selling, 81–8210 percent loss rule, 79–80, 83,163windfall trades, saving, 82–83,148Morgan, J. P., 101Morgan Stanley (MWD), 39, 41, 43,53Motivation/motivators, see Fear;Greed; Hope; IgnoranceMutual funds, 10–11, 18, 84, 110Nasdaq Composite Index, 38, 41,44, 59, 65–66, 73, 132Natural Rally, Secret Market Key,170–171, 174–178, 184, 186,190, 192, 194, 202, 206, 208Natural Reaction, Secret MarketKey, 170, 171–178, 180, 182,184, 186, 188, 194, 196, 198,200, 202, 204, 208New High Break-out Formation,70, 74News, market impact, 14, 124–125,139–140, 172–173. See alsoMedia news, impact ofNewspaper, as informationresource, 122–123, 125New Year’s ritual, 92–95New York, New Haven & HartfordRailroad, 18
New York Stock Exchange, 110Normal Reaction, 128–129, 150Number of stocks, see PositionestablishmentObservations, viii, 43–44, 63, 157,165Ofﬁce design, 117–119Oil Well Drilling Group, 38One-Day Reversals, 62–64, 69,161Open market, 12Operating expense, 84Opinions, 14–15, 48, 130, 140, 146,151, 154–155Overbought market, 14Oversold market, 14Overtrading, 152Paine Webber, 2, 4Patience, as success factor, 32,50–51, 55–57, 66–67, 73, 81,84–85, 101, 115, 127–129, 135,140, 145, 156, 160, 163Pattern recognition, generally:beneﬁts of, 75break-outs, 64–70Continuation Pivotal Point,52–57, 59–60False Pivotal Point, 55One-Day Reversal, 63–64Pivotal points, 48–49,52–61Reversal Pivotal Points,47–57, 59spikes, 62–63trend lines, 56–61volume factors, 50–51, 70–76Personality of stocks, 149–150, 160,164Philadelphia Housing Sector Index(HSO), 36Pierce, Alfred, 93
218Pivotal Points:implications of, 48–49, 52–61,70–71, 82, 85, 87–88, 100,127–128, 147, 152, 155–156,159, 161Secret Market Key, 176–177, 180Poise, importance of, 115, 165Pool runners, 71Position establishment, 158–159,162–164Price movement, 30Price stop, 135Probe system, 78–79, 163–164Professional money management,89–92Proﬁt points, 86Proﬁt-taking, timing of, 16–17Proﬁt target, 84–85Proﬁts, perception of, 17, 82, 88,140, 148–149, 158Prominent stocks, 154Prudent traders, 32, 53, 101,169Psychological time, 49Purchase of stock, see Buy signalsnumber of shares, 78–79position establishment, 158–159,162–164timing of, 18–19Pyramiding, 86–88Railroad stocks, 18Rationalization, 166Recordkeeping, 138–139, 141–142,145, 155Reminiscences of a StockOperator, viiiResearch, beneﬁts of, 160,166Reversal Pivot Points, 47–51,55–57, 59, 65–66, 69, 101–102,132, 161Risk management, 80–81, 147
INDEX
Risk/reward ratio, 84–85Round lots, 86Rumors, trading on, 133Sale of stock, timing of, 16–18. Seealso Sell signalsS&P 500, 74Saucer pattern, 65–66, 72Secondary Rally, Secret MarketKey, 170, 175, 180, 182, 186,196, 198, 202Secondary Reaction, Secret MarketKey, 171, 184, 190, 202, 204Secret Market Key:applications, generally, 119,169case illustration, 178–209components of, 170–173explanatory rules, 173–177terminology, 170–171Self-discipline, 16, 120–124Self-preservation, 111Selling pressure, 57Sell signals, 9–10, 19, 136, 161Short sales, 10–12, 31, 101, 109, 149Short-term traders, 146Sideways market, 160–162Silence, beneﬁts of, 115, 117,120–124Sister stock trading, 39, 42–43, 85Size of position, 30, 78–79. See alsoPosition establishmentSmitten, Louis, 12Solitude, beneﬁts of, 117, 122Speculation:implications of, 10, 14, 16–18, 48,76, 78, 90, 111, 131, 138–139planning strategies, 165success factors, 150–153Speculators:characterized, 127, 129–130danger signals for, 150emotional control, 107–109
Index
functions of, generally, 165price movement and, 159–160success factors, 139–141,150–153, 158Spikes, 62–63Stafﬁng, 119Standard & Poor’s 500 (SPY), 44Steel stocks, 122, 172. See alsospeciﬁc steel stocksStock-group behavior, 29, 45. Seealso Industry GroupStock market collapse/crash:of 1907, vii, 30, 45, 101, 165of 1929, 30, 45, 48, 76, 101–102,112, 165reaction to, 45of 2000, 45Stock picking system, 3–4Stock tips, 3, 66, 110–113, 116, 122,124–125, 165–166Stock tracking, see Tracking stocksStop loss point, 85–86Stress reduction strategies,120–121Success factors, 138–141, 150–153,158, 165Successful traders, qualities of, 115Sun Microsystems (SUNM), 25, 27,31Support and resistance, 56–57Tandem Trading, 39, 42–43Taser Intl. (TASR), 87Technical analysis, 75Technical indicators, 84Technical traders, vii, 76, 88Telecommunications LongDistance Group, 38Telephone lines, location of, 116,119, 12510 percent loss rule, 79–80, 83,163–164. See also Bucket Shoprule; Bucket shops
219Terrorist attack (9/11), impact onmarket, 14Ticker tape, 117–118, 159–161,165–166Time:as dimension, 131–137future, 132–133, 161Time stop, 135, 137Timing, signiﬁcance of, ix–x, 5,9–10, 14–15, 138, 142, 154–156,160, 162Top Down Trading:beneﬁts of, generally, 162characterized, 36–45checklist, 37, 44Reversal Pivot Points, 51rules for, 160successful trades, 40Tandem Trading, 39tracking the industry group, 38Toronto Stock Exchange, 136Tracking stocks, 33, 38, 43, 119Trading cycles, 103Trading discoveries:due diligence, 40–43industry group movements,32–36, 45Top Down Trading, 36–45trade only the leaders, 29–32Trading Room, 116, 118Trading triggers, generally, ix–x,14–16, 85Trend lines, 56–61Trend reversals, 141. See alsoReversal Pivot PointsTrends, see Downward Trends;Upward Trendschanges in, 100–101deﬁned, 30implications of, 147trading with, 44–45Trendy, in-favor stocks, 161Trust funds, 18
220Tulip mania, 7624-hour-a-day trading, 136U.S. Steel:Secret Market Key, 178–209stock purchase, 33–34, 162,171Upward Trends:implications of, 19, 60, 134, 147,155Secret Market Key, 167,171–177, 182, 186, 190, 200,202Utility stocks, 31Valuation, inﬂuential factors, 65Verisign, 60, 68Volatile stocks, 83Volatility, impact of, 58, 61, 63, 88
INDEX
Volume:as alert signal, 71, 73changes in, 72impact of, 50–51, 74–76, 153,161–163importance of, 15, 70Warning signs, 64, 73. See alsoDanger signals/signsWealth distribution, 19Windfall trades, 82–83, 90–91, 148,162Wishful thinking, 130Work environment, 116–117Work habits, 116–117Work space, 115–116. See alsoOfﬁce designYahoo (YHOO), 31, 49–50
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