HOW TO DETECT EARLY LEADERS IN A BULL MARKET
Stocks which decline and make bottom and show accumulation before other
stocks reach bottom indicate that they will be early leaders in a bull market.
When stocks cross the tops of previous years or the high point of the past
few months ahead of other stocks, they indicate that they will be early leaders.
In every bull market there are early leaders or stocks that advance first and
then make tops ahead of other stocks. The stocks that made bottom early and
accumulated in 1931 while other stocks were declining were among the first to
advance in 1932 and 1933. For example:
American Commercial Alcohol: April, 1929 extreme high 90; October, 1931
extreme low, 5, making bottom 8 months before the low of the general list in 1932.
Note the narrow range and big accumulation. In May, 1932, when other stocks were
making new lows, this stock crossed all tops of the past year end showed uptrend.
September, 1932 high 27; February 1933 low 13, two points higher than the previous
bottom. In May, 1933 crossed the 1932 high and in July, 1933 reached a high of 90,
the failed to cross this level. This being a double top, is where you should have
sold out long and gone short with a stop 3 points above the 1920 high. July, 1934
low 20 ¾; December high 34 ¾; June, 1935 low 22 ½. Holding 1 ¾ points above the
previous bottom, it showed good support. It held for 7 months between 23 and 28,
and in October, 1935 crossed 28, showing uptrend: in November, 1935 crossed the
December, 1934 high at 34 ¾. It will have to advance 3 points above that level to
indicate higher prices.
U.S. Smelting: This was another early leader that showed plainly ahead of
time that it was going to have a big advance. April, 1929 high, 72 7/8; September,
1931 low 12 3/8; in November rallied to 26; June, 1932 extreme low 10, which was
the lowest in its history. Note the Yearly Chart: 1907 low 24 ¼; 1915 low 20; 1916
high 81 ½, the record price up to that time; 1923 low 18; 1929 high 72 7/8, making
lower tops since 1916; then in June, 1932 made a new all-time low.
Big accumulate took place in a narrow trading range. In April, 1933 U.S.
Smelting crossed 26, above all tops back to 1930. See Chart No. 4 on page 48. Here
you should start buying and would pyramid as the stock worked higher. A fast
advance followed. In July, 1933, it crossed 73, the 1929 high, a sure indication
for much higher prices and a place to buy more; then crossed 81, the high of 1916,
the highest in its history. Here would have been the place to buy more stock and
continue to pyramid. In 1933, September, October and November made high around 105,
and in February, 1934 crossed 105, where you would buy again. It reached extreme
high of 141 in July, 1934, up 131 points from its low, at the time when other
stocks were making bottoms. After this quick advance against the trend of the
general market, the stock worked lower, showing downtrend, while other stocks still
showed uptrend. In September and December, 1935 it sold at 92.
