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Technical Analysis of Stock Trends Tenth Edition Bassetti
Digital Instant Download
Author(s): Bassetti, W. H. C.; Edwards, Robert D.; Magee, John
ISBN(s): 9781439898192, 1439898197
Edition: 10th ed
File Details: PDF, 46.16 MB
Year: 2012
Language: english
 TECHNICAL ANALYSIS of STOCK TRENDS
TENTH EDITION TECHNICAL ANALYSIS Finance and Investing

W.H.C. (Charles) Bassetti

Managing Partner, john magee technical
analysis::delphic options research ltd;
edwards-magee.com
Read the Reviews of Previous Editions:

“The 9th edition also contains some ‘jewels’ developed from Magee’s work, Basing Point
analysis and risk management, as well as additional material demonstrating the power of chart
analysis in commodity trading. … I am pleased to recommend this edition to new readers and
Edwards
of STOCK TRENDS TENTH EDITION
Sixty-five years. Sixty-five years and
Technical Analysis of Stock Trends
still towers over the discipline of
technical analysis like a mighty redwood.
Originally published in 1948 and now
Client and then student of John Magee,
W.H.C. (Charles) Bassetti has more than
old readers alike.”
—John Murphy, author of Technical Analysis of the Financial Markets and Intermarket Analysis
Magee in its Tenth Edition, this book remains
the original and most important work
fifty years of trading experience. He was a Bassetti on this topic. The book contains more
Principal and Vice President of California’s “With a focus on pragmatic portfolio theory, editor Charles Bassetti significantly contributes to than dry chart patterns; it passes down
first licensed commodity trading advisor, the technical analysis body of knowledge, especially related to tactics, and has created a book accumulated experience and wisdom
Commodity Investment Service Inc., worth a space on every technician’s bookshelf.” from Dow to Schabacker to Edwards

of STOCK TRENDS
TECHNICAL ANALYSIS
CEO of Options Research Inc. founded —Mike Carr, CMT in Technically Speaking, Market Technician’s Association to Magee and has been modernized by
by Blair Hull of Hull Trading Company W.H.C. Bassetti.
of Chicago. He founded Micro Options “... teaches us how to profit from chart patterns regardless of what the market is doing. This
Research Corporation (President), which classic book on chart patterns is a must for the savvy trader.” See what’s new in the Tenth Edition:
as a joint venture partner of Standard and —David Robinson, The Bull and Bear Financial Report
Poor’s implemented the Options Monitoring • Chapters replacing Dow Theory
System on S&P computers with Prudential “Whatever you might think of technical analysis in general, and charting in particular, this book • Update of Dow Theory Record
Securities as its flagship client. He is the is the classic work on the subject.” • Deletion of extraneous material on
editor of the second revised edition of —Mark Hulbert, The Hulbert Financial Digest manual charting
Magee’s General Semantics of Wall • New chapters on Stops and Basing
Street, the editor/coauthor of the eighth, “Completely updated with the latest information, this universally acclaimed investors’ classic is Points
ninth and tenth editions of Edwards & the definitive reference on analyzing trends in stock performance through technical analysis.” • New material on moving average
Magee’s Technical Analysis of Stock —Yale Hirsch, Stock Traders Almanac, The Hirsch Organization, Inc. systems
Trends, coauthor of the second edition of • New material on Ralph Vince’s
Analyzing Bar Charts for Profit (2002) “This book is a classic—the standard of excellence against which everything in technical analysis Leverage Space Model
(retitled The Introduction to the Magee is measured. I am delighted to know that another generation of investors will be able to learn
System of Technical Analysis). He has from this wonderful book.” So much has changed since the first
published five other books available on —Ralph Acampora, Prudential Securities edition, yet so much has remained the
Kindle and at edwards-magee.com: Zen same. Everyone wants to know how to
Simple: Beat the Market with a Ruler; “The #1 all-time classic on analysis of bar charts. Many knowledgeable technicians consider this play the game. The foundational work of
StairStops; Sacred Chickens, the Holy to be the best book on chart patterns ever written!” the discipline of technical analysis, this
Grail and Dow Theory; Signals; and Ten —Edward Dobson, Traders Press, Inc. book gives you more than a technical
Trading Lessons. formula for trading and investing; it gives
TENTH EDITION you the knowledge and wisdom to craft
long-term success.

K14297
ISBN 978-1-4398-9818-5
90000 Robert D. Edwards • John Magee
9 781439 898185 W.H.C. Bassetti
K14297_Dustjacket_final_revised.indd 1 11/9/12 9:53 AM
TECHNICAL ANALYSIS
of STOCK TRENDS
TENTH EDITION
This page intentionally left blank
TECHNICAL ANALYSIS
of STOCK TRENDS
TENTH EDITION

Robert D. Edwards • John Magee

W.H.C. Bassetti
Dow-Jones℠, The Dow℠, Dow-Jones Industrial Average℠, and DJIA℠ are service marks of Dow-Jones & Company, Inc., and
have been licensed for use for certain purposes by the Board of Trade of the City of Chicago (CBOT®). The CBOT’s futures
and future options contracts based on the Dow-Jones Industrial Average℠ are not sponsored, endorsed, sold, or promoted
by Dow-Jones℠, and Dow-Jones℠ makes no representation regarding the advisability of trading in such products.

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Contents
Preface to the tenth edition ..........................................................................................................xv
Preface to the ninth edition ....................................................................................................... xix
Preface to the eighth edition .................................................................................................... xxiii
In memoriam ...........................................................................................................................xxxiii
Preface to the seventh edition ................................................................................................ xxxv
Preface to the fifth edition ..................................................................................................... xxxix
Preface to the fourth edition ....................................................................................................... xli
Preface to the second edition ....................................................................................................xliii
Foreword ...................................................................................................................................... xlv

Section I: Technical theory

Chapter 1 The technical approach to trading and investing .............................................3

Definition of technical analysis..................................................................................................... 4

Chapter 2 Charts .........................................................................................................................7

Different types of scales .................................................................................................................8

Chapter 3 The Dow Theory .................................................................................................... 11

The Dow Averages ........................................................................................................................ 12
Basic tenets ..................................................................................................................................... 12
Tide, wave, and ripple .............................................................................................................. 14
Major trend phases................................................................................................................... 14
Principle of confirmation ........................................................................................................ 16

Chapter 4 The Dow Theory’s defects ...................................................................................21

The Dow Theory is too late ......................................................................................................... 21
The Dow Theory is not infallible ................................................................................................ 23
The Dow Theory frequently leaves the investor in doubt ................................................. 23
The Dow Theory does not help the Intermediate Trend investor..................................... 23
The Dow Theory in the 20th and 21st centuries ....................................................................... 24

Chapter 5 Replacing Dow Theory with John Magee’s Basing Points Procedure ........ 31
The fractal nature of the market ................................................................................................. 31

Chapter 6 Important Reversal Patterns ................................................................................41

Important Reversal Patterns ........................................................................................................42

v
vi Contents

Time required to reverse a trend ................................................................................................43

The Head and Shoulders .........................................................................................................44
Volume is important ..................................................................................................................... 45
Breaking the neckline ................................................................................................................... 47
Variations in Head-and-Shoulders Tops .................................................................................... 49
Price action following confirmation: the measuring formula ................................................ 53
Relation of Head and Shoulders to Dow Theory ..................................................................... 55

Chapter 7 Important Reversal Patterns: continued ...........................................................57

Head-and-Shoulders (EN: or Kilroy) Bottoms.......................................................................... 57
Multiple Head-and-Shoulders Patterns ..................................................................................... 59
Tendency to symmetry ................................................................................................................. 61
A leisurely pattern.........................................................................................................................65
Rounding Tops and Bottoms ....................................................................................................... 66
How Rounding Turns affect trading activity ............................................................................ 70
The Dormant Bottom variation ................................................................................................... 73
Volume pattern at Tops ................................................................................................................ 75

Chapter 8 Important Reversal Patterns: the Triangles .....................................................77

Symmetrical Triangles .................................................................................................................. 78
Some cautions about Symmetrical Triangles ............................................................................80
How prices break out of a Symmetrical Triangle .....................................................................80
A typical Triangle development .................................................................................................. 82
Reversal or Consolidation............................................................................................................ 86
The Right-Angle Triangles ........................................................................................................... 92
A planned distribution ................................................................................................................. 92
Descending Triangles ................................................................................................................... 94
Volume characteristics same as the Symmetrical type ............................................................ 95
Measuring implications of Triangles .......................................................................................... 98
Triangles on weekly and monthly charts................................................................................... 99
Other Triangular formations ..................................................................................................... 100

Chapter 9 Important Reversal Patterns: continued .........................................................103

The Rectangles, Double and Triple Tops ................................................................................. 103
Pool operations ............................................................................................................................ 105
Relation of rectangle to Dow Line ............................................................................................ 108
Rectangles from Right-Angle Triangles ................................................................................... 109
Double and Triple Tops and Bottoms ....................................................................................... 111
Distinguishing characteristics ................................................................................................... 113
Double Bottoms ........................................................................................................................... 116
Triple Tops and Bottoms ............................................................................................................ 117

Chapter 10 Other Reversal phenomena ...............................................................................121

The Broadening Formations ...................................................................................................... 121
Volume during Broadening Formations .................................................................................. 122
A typical example........................................................................................................................ 123
The Orthodox Broadening Top ................................................................................................. 124
Why no Broadening Bottoms?................................................................................................... 126
Right-Angled Broadening Formations..................................................................................... 128
Contents vii

The Diamond ............................................................................................................................... 129

Wedge Formations ...................................................................................................................... 130
The Falling Wedge ...................................................................................................................... 134
Wedges on weekly and monthly charts ................................................................................... 135
Rising Wedges common in Bear Market Rallies ..................................................................... 136
The One-Day Reversal................................................................................................................ 136
The Selling Climax ...................................................................................................................... 140
Short-term phenomena of potential importance .................................................................... 144
Spikes ............................................................................................................................................ 145
Runaway Days............................................................................................................................. 147
Key Reversal Days ...................................................................................................................... 148

Chapter 11 Consolidation Formations..................................................................................151

Flags and Pennants ..................................................................................................................... 151
The Pennant: a pointed Flag ...................................................................................................... 153
The measuring formula .............................................................................................................. 154
Reliability of Flags and Pennants ............................................................................................. 156
Where they may be expected .................................................................................................... 157
Flag pictures on weekly and monthly charts .......................................................................... 158
Rectangular Consolidations: an early phase phenomenon .................................................. 159
Head-and-Shoulders Consolidations ....................................................................................... 160
Scallops: repeated Saucers ......................................................................................................... 162
Modern versus old-style markets ............................................................................................. 166

Chapter 12 Gaps ........................................................................................................................171

Which gaps are significant? ....................................................................................................... 171
Closing the gap ............................................................................................................................ 171
Ex-dividend gaps ........................................................................................................................ 172
The common or area gap ....................................................................................................... 173
Breakaway gaps ...................................................................................................................... 174
Continuation or runaway gaps and the measuring rule .................................................. 177
Two or more runaway gaps .................................................................................................. 179
Exhaustion gaps ..................................................................................................................... 181
The Island Reversal ..................................................................................................................... 184
Gaps in the Averages .................................................................................................................. 186

Chapter 13 Support and Resistance ......................................................................................189

Normal trend development ....................................................................................................... 190
The explanation ........................................................................................................................... 191
Estimating Support–Resistance potential ................................................................................ 193
Locating precise levels................................................................................................................ 196
Significance of Support failure .................................................................................................. 197
Popular misconceptions ............................................................................................................. 198
The round figures ........................................................................................................................ 200
Repeating historical levels ......................................................................................................... 200
Pattern Resistance ....................................................................................................................... 202
Volume on breaks through Support ......................................................................................... 205
Support and Resistance in the Averages .................................................................................. 206
viii Contents

Chapter 14 Trendlines and Channels ...................................................................................207

The Trendline ............................................................................................................................... 207
How Trendlines are drawn ........................................................................................................ 208
Arithmetic versus logarithmic scale ......................................................................................... 211
Tests of authority ......................................................................................................................... 211
Validity of penetration................................................................................................................ 214
Amendment of Trendlines ......................................................................................................... 216
Double Trendlines and trend ranges ........................................................................................ 216
Trend Channels............................................................................................................................ 218
Experimental Lines ..................................................................................................................... 219
Consequences of Trendline penetration: Throwbacks ........................................................... 220
Intermediate Downtrends.......................................................................................................... 221
Corrective trends: the Fan Principle .........................................................................................225

Chapter 15 Major Trendlines..................................................................................................229

Major Downtrends ...................................................................................................................... 237
Major Trend Channels ................................................................................................................ 238
Trendlines in the Averages ......................................................................................................... 244
Trading the Averages in the 21st century ................................................................................ 244

Chapter 16 Technical analysis of commodity charts .........................................................247

Technical analysis of commodity charts, part 2: A 21st-century perspective ..................... 251
Rocket scientists .......................................................................................................................... 252
Turtles?.......................................................................................................................................... 253
The application of Edwards and Magee’s methods to 21st-century futures markets.......254
Stops ......................................................................................................................................... 258
A variety of methods .................................................................................................................. 261
Everything you need to know as a chart analyst trading futures ........................................ 261
The return of the great markets of the 1970s ........................................................................... 262

Chapter 17 A summary and concluding comments...........................................................263

Technical analysis and technology in the 21st century: the computer and the
Internet: tools of the investment/information revolution .................................................... 267
The importance of computer technology ................................................................................ 269
Summary 1 .............................................................................................................................. 270
Other technological developments of importance to the technical Magee analyst
and all investors .......................................................................................................................... 270
The Internet: the eighth wonder of the modern world (EN9: Appendix B,
Resources, for the ninth edition has been enormously expanded and is of
paramount importance to modern investors.) ................................................................... 270
Marking-to-market ................................................................................................................. 271
Separating the wheat from the chaff ................................................................................... 272
Chaff ......................................................................................................................................... 272
Summary 2 .............................................................................................................................. 272
Advancements in investment technology, part 1: Developments in finance theory
and practice .................................................................................................................................. 273
Options .................................................................................................................................... 273
Quantitative analysis ............................................................................................................. 274
Options pricing models and their importance .................................................................. 275
Contents ix

Futures on indexes ................................................................................................................. 275

Options on futures and indexes ........................................................................................... 276
Modern Portfolio Theory ..................................................................................................... 277
The wonders and joys of investment technology .............................................................. 277
Advancements in investment technology, part 2: futures and options on futures on
the Dow–Jones Industrial Index at the CBOT......................................................................... 277
Investment and hedging strategies using the CBOT® DJIASM futures contract ............ 278
Settlement of futures contracts ............................................................................................. 278
Marking-to-market ................................................................................................................. 278
Fungibility ............................................................................................................................... 278
Differences between cash and futures ................................................................................. 279
Dow Index futures ................................................................................................................. 279
Using stock index futures to control exposure to the market .......................................... 279
Investment uses of Dow Index futures ............................................................................... 281
Situation 1: Portfolio protection .................................................................................. 281
Situation 2: Increasing exposure with futures ......................................................... 282
Situation 3: Using bond and index futures for asset allocation ............................. 282
Perspective ..............................................................................................................................284
Options on Dow Index futures .............................................................................................284
Option premiums ................................................................................................................... 285
Volatility...................................................................................................................................285
Exercising the option ............................................................................................................. 286
Using futures options to participate in market movements ............................................ 286
Profits in rising markets ........................................................................................................ 286
Exploiting market reversals .................................................................................................. 287
Using puts to protect profits in an appreciated portfolio ................................................. 287
Situation 1 ...................................................................................................................... 287
Improving portfolio yields.................................................................................................... 287
Situation 2 ...................................................................................................................... 287
Using option spreads in high- or low-volatility markets ................................................. 288
Situation 3 ...................................................................................................................... 288
Situation 4 ...................................................................................................................... 289
Perspective .............................................................................................................................. 289
Recommended further study .................................................................................................... 289

Section II: Trading tactics

Midword ....................................................................................................................................... 291

Chapter 18 The tactical problem ............................................................................................ 295

Strategy and tactics for the long-term investor. What’s a speculator, what’s
an investor? .................................................................................................................................. 299
One definition of the long-term investor ................................................................................. 301
The strategy of the long-term investor..................................................................................... 301
Rhythmic investing ..................................................................................................................... 302
Summary ......................................................................................................................................304

Chapter 19: The all-important details ...................................................................................305

The simplest and most direct way to use a computer for charting analysis .....................306
Summary ...................................................................................................................................... 307
x Contents

Chapter 20 The kind of stocks we want: the speculator’s viewpoint ............................309

The kind of stocks we want: the long-term investor’s viewpoint ....................................... 310
Changing opinions about conservative investing .............................................................310
The kinds of stocks long-term investors want: The long-term investor’s viewpoint ....... 311
Construction of the Index Shares and similar instruments .................................................. 312
An outline of instruments available for trading and investing ....................................... 313
The importance of these instruments: diversification, dampened risks, tax, and,
most important, technical regularity ........................................................................................ 314
Summary ...................................................................................................................................... 316

Chapter 21 Selection of stocks to chart ................................................................................ 317

Chapter 22 Selection of stocks to chart: continued ............................................................321

Chapter 23 Choosing and managing high-risk stocks: tulip stocks, Internet

sector, and speculative frenzies ........................................................................ 327
Managing tulipomanias and Internet frenzies ....................................................................... 328
Detailed techniques for management of the runaway issues ............................................... 330
Hope springs eternal and there is one born every second ....................................................334

Chapter 24 The probable moves of your stocks..................................................................343

Chapter 25 Two touchy questions .........................................................................................347

The use of margin........................................................................................................................ 347
Short selling .................................................................................................................................348

Chapter 26 Round lots or odd lots? .......................................................................................353

Chapter 27 Stop orders ............................................................................................................355

The progressive stop ................................................................................................................... 357
Stop systems and methods ........................................................................................................ 359
A brief survey of stop methods ................................................................................................. 360
Some other stop methods........................................................................................................... 360
Average True Range ............................................................................................................... 360
Parabolic stop and reverse .................................................................................................... 361
Target stops ............................................................................................................................. 361
A natural method used by the Turtles...................................................................................... 361

Chapter 28 What is a bottom, what is a top? .......................................................................363

Basing Points................................................................................................................................364
Basing Points: a case analyzed .................................................................................................. 366
The Basing Points paradigm...................................................................................................... 367
Key to Figure 28.2 analysis .................................................................................................. 368
A narrative of the events in the chart .................................................................................. 369
The complete Basing Points Procedure: taking into consideration the setting of
Basing Points on both wave lows and new highs .................................................................. 370
The complete Basing Points procedure .............................................................................. 371
Two charts giving a long-view perspective on the complete (Variant 2) procedure .... 372
The representative case fully analyzed using wave lows and new highs ..................... 372
A narrative of the events in the chart ....................................................................................... 373
Contents xi

Chapter 29 Trendlines in action............................................................................................. 375

Buying stock, “going long”........................................................................................................ 376
Liquidating, or selling a long position ..................................................................................... 377
Selling stock short ....................................................................................................................... 380
Covering short sales ................................................................................................................... 381
Additional suggestions .............................................................................................................. 381
General outline of policy for trading in the Major Trend ...................................................... 382

Chapter 30 Use of Support and Resistance..........................................................................385

Chapter 31 Not all in one basket ...........................................................................................391

EN: diversification and costs ..................................................................................................... 392

Chapter 32 Measuring implications in technical chart patterns ....................................393

Chapter 33 Tactical review of chart action ..........................................................................395

The Dow Theory.......................................................................................................................... 395
Head-and-Shoulders Top ........................................................................................................... 402
Head-and-Shoulders Bottom..................................................................................................... 403
Complex or multiple Head-and-Shoulders ............................................................................. 405
Rounding Tops and Bottoms .....................................................................................................405
Symmetrical Triangles ................................................................................................................408
Right-Angle Triangles................................................................................................................. 410
Broadening Tops.......................................................................................................................... 410
Rectangles..................................................................................................................................... 410
Double Tops and Bottoms .......................................................................................................... 411
Right-Angled Broadening Formations..................................................................................... 411
The Diamond ............................................................................................................................... 411
Wedges .......................................................................................................................................... 412
One-Day Reversals...................................................................................................................... 412
Flags and Pennants ..................................................................................................................... 412
Gaps .............................................................................................................................................. 413
Support and Resistance .............................................................................................................. 416
Trendlines ..................................................................................................................................... 416

Chapter 34 A quick summation of tactical methods .........................................................419

Get out of present commitments .............................................................................................. 419
Make new commitments............................................................................................................ 420

Chapter 35 Effect of technical trading on market action..................................................421

Chapter 36 Automated trendline: The Moving Average ..................................................423

Sensitizing Moving Averages .................................................................................................... 424
Crossovers and penetrations ..................................................................................................... 424
The PENTAD Moving Average system from Formula Research ......................................... 426

Chapter 37 The same old patterns .........................................................................................429

Not all the same ...........................................................................................................................430
xii Contents

Chapter 38 Balanced and diversified ....................................................................................483

September 28, 1985: an oversold market ................................................................................. 488

Chapter 39 Trial and error.......................................................................................................489

Chapter 40 How much capital to use in trading .................................................................491

Chapter 41 Application of capital in practice......................................................................493

Put and call options .................................................................................................................... 495

Chapter 42 Portfolio risk management ................................................................................497

Overtrading: and a paradox ...................................................................................................... 498
Risk of a single stock ..................................................................................................................500
Risk of a portfolio ....................................................................................................................... 501
EN9: Risk and trend ................................................................................................................... 501
Value-at-Risk Procedure ............................................................................................................. 501
Pragmatic Portfolio Theory (and practice) ............................................................................. 502
Pragmatic portfolio risk measurement ................................................................................... 502
Determining the risk of one stock ...................................................................................... 502
Determining the risk for a portfolio ................................................................................... 503
Measuring maximum drawdown, or maximum retracement ............................................504
Pragmatic portfolio analysis: measuring the risk ..................................................................504
Portfolio Ordinary or Operational Risk ..............................................................................504
Portfolio risk over time .......................................................................................................... 505
Portfolio extraordinary or catastrophic risk ....................................................................... 505
Controlling the Risk ................................................................................................................... 505
Summary of Risk and Money Management Procedures ...................................................... 505
Infinitely more sophisticated risk and money management procedures—Ralph
Vince and optimal f ..................................................................................................................... 506

Chapter 43 Stick to your guns ................................................................................................507

Appendix A The Dow Theory in practice ............................................................................509

Five years of Dow interpretation .............................................................................................. 509
The first severe test ..................................................................................................................... 510
Failure to confirm ........................................................................................................................ 512
Signs of Major Turn..................................................................................................................... 513
The Bull signal ............................................................................................................................. 515
The first correction ...................................................................................................................... 516
Bull Trend reaffirmed ................................................................................................................. 517
The Rails falter ............................................................................................................................. 518
The spring of 1946 ....................................................................................................................... 519
Final Up-Thrust ........................................................................................................................... 521
The Bear Market signal............................................................................................................... 521

Appendix B Resources .............................................................................................................525

Section 1: important and indispensable sites .......................................................................... 525
Section 2: references for further study ..................................................................................... 526
On risk ..................................................................................................................................... 526
Contents xiii

On candlesticks ..................................................................................................................... 526

On futures .............................................................................................................................. 526
On portfolio management .................................................................................................... 526
Section 3: investment-oriented sites ......................................................................................... 526
Brokerage Houses ................................................................................................................... 528
Section 4: the Sharpe Ratio......................................................................................................... 529
Section 5: calculating volatility.................................................................................................. 529
Section 6: the essence of fundamental analysis ...................................................................... 530
The Elliott Wave Theory: perspective and comments ...................................................... 530
Section 7: software packages and Internet technical analysis sites...................................... 533
AIQ: TRADING EXPERT PRO ............................................................................................. 533
METASTOCK 9.0 .................................................................................................................... 533
Tradestation 2000i and Tradestation 8.................................................................................534
The Internet: prophet (http://www.thinkorswim.com) ...................................................534
The Internet: http://www.stockcharts.com ........................................................................534
A brief summary ....................................................................................................................534
Section 8: the Leverage Space Portfolio Model .......................................................................534

Glossary ........................................................................................................................................ 539

Bibliography ................................................................................................................................. 565
Index ............................................................................................................................................. 567
This page intentionally left blank
Preface to the tenth edition
A tenth milestone
Sixty-three years. Sixty-three years and Technical Analysis of Stock Trends still towers over the dis-
cipline of technical analysis like a mighty pine. An evergreen ponderosa. And now a tenth edi-
tion. It is a propitious moment to refresh it for the new millennium, to prune its solecisms and
obsolescences, and to further develop the—sometimes—prescient work of its originators.
With this premise in mind, I have attempted to make the book shorter, simpler, and
more usable in the modern context. I know there are still manual chartists out there.
Occasionally they are ecstatic when they find that—as a profit-losing service—I still have
TEKNIPLAT™ chart paper in my attic. Like travelers in the desert finding an oasis.
But they are the 1%. Everyone else uses software, desktop or Internet, to do his chart-
ing. (See note “About Gender” in the Preface to the eighth edition.) So I have excised the
material on manual charting from the new edition. Budding manual chartists may always
turn to the eighth and ninth editions. I have also deleted Magee’s chapters on “Composite
Leverage” (Chapter 42 in the seventh edition, Appendix A in the eighth) as they are
abstruse and cumbersome in the modern context—not to mention being rooted in manual
chart analysis. I have made every attempt to summarize and replace Magee’s work, as I
believe it has intellectual validity. Primarily this is done in the present Chapter 42. I repeat:
Magee’s thinking and practical work predated much modern portfolio management and
volatility theory. And Modern Portfolio Theory has still not caught up to his work on trend
analysis and risk. All this material is available in previous editions.
I have moved perhaps the most difficult chapter in the book, Chapter 4, to Appendix
A. Edwards’ chapter on the minutiae of the operation of Dow Theory has stopped more
than one reader cold. Now it is available to the detail scholar, and the general reader is
relieved of the necessity of slogging through it.
Many critics deplored Chapter 16 from the seventh edition, which I relegated to an
appendix in the ninth edition. This chapter covered an analysis of futures and derivatives
using number-driven analysis. Critics said it was shallow. More important, it was com-
pletely extraneous to the theme of the book, which is chart analysis, not the exploration of
statistical routines and indicators, which is a different branch of technical analysis. There
are numerous books on the subject, starting with Murphy, Kirkpatrick, and Kaufman. I
have deleted it along with other material in the book that was not compatible with Edwards
and Magee’s original intent.
I quote here appropriate remarks from the preface to the eighth edition:

About apparent anachronisms

Critics with limited understanding of long-term trading success
may think that discussions of “what happened in 1929” or “charts of

xv
xvi Preface to the tenth edition

ancient history from 1946” have no relevance to the markets of the

present millennium. They will point out that AT&T no longer exists
in that form, that the New Haven has long since ceased to exist as
a stock, that many charts are records of long-buried skeletons. This
neglects the value of the charts as metaphor. It ignores their represen-
tations of human behavior in the markets which will be replicated
tomorrow in some stock named today.com or willtheynevergetit.
com. Even more important, it ignores the significance of the past
to trading in the present. I cite here material from Jack Schwager’s
illuminating book, The New Wizards of Wall Street. Schwager, in con-
versation with Al Weiss: “Precisely how far back did you go in your
chart studies?” Answer: “It varied with the individual market and
the available charts. In the case of the grain markets, I was able to
go back as far as the 1840s.” “Was it really necessary to go back that
far?” Answer: “Absolutely. One of the keys in long-term chart analy-
sis is realizing that markets behave differently in different economic
cycles. Recognizing these repeating and shifting long-term patterns
requires lots of history. Identifying where you are in an economic
cycle—say, an inflationary phase vs. a deflationary phase—is critical
to interpreting the chart patterns evolving at that time.”

Identification of original manuscript and revisions

True believers (and skeptics) will find here virtually all of the original material written
by Edwards and Magee, including their charts and observations on them. Changes and
comments introduced by editors since the fifth edition have been rearranged, and, when
appropriate, have been identified as a revision by that editor.
Maintaining this policy, where updates to the present technological context and mar-
ket reality were necessary, the present editor has clearly identified them as his own work
by beginning such annotations with “EN” for Editor’s Note. (The eighth edition was the
first to use editor’s notes. Editor’s notes for the ninth edition are identified as EN9, and
notes added for the present edition are identified as EN10.)
So we have here a simpler, shorter, clearer edition of the famous book. Easier to
read, easier to understand, and easier to use. None of the considerable virtues of the
book has been affected. I have attempted to add to these virtues with my work on
Magee’s Basing Points Procedure (see Chapter 28) and portfolio control and risk (see
Chapter 42).
In spite of my remarks, I have listened to critics of the hand-drawn charts in this
book. These charts are the glory of the book and of the discipline of technical analysis.
Their application to modern markets seems ridiculously obvious to me. And I am perhaps
a dinosaur. So I have decided to take a number of examples of the manual charts and
post them at http://www.edwards-magee.com along with the same data charted by com-
puter so that skeptics can compare the two methods. These will be found at http://www.
edwards-magee.com/manualcharts.html.
The Internet so extends one’s capabilities and is so easy to use that it would be irre-
sponsible not to avail oneself. In Figures 9.2 and 9.3 I have printed charts that demand—
scream—to be viewed in a larger format. These will be found at http://www.edwards-magee.
com/supercharts.html.
Preface to the tenth edition xvii

The reader is urged to read the prefaces to the eighth and ninth editions. I have not
repeated here all the editorial conventions detailed in those prefaces.

W. H. C. Bassetti
San Francisco, California

Acknowledgments for the tenth edition

So many colleagues and friends contribute to a book like this that one is in danger of
getting into the Academy Awards syndrome—endless thank-yous and acknowledgments
until they bring out the hook and pull you off stage. So I will not thank my parents and
aunts and uncles and wife and family, although they should be and by this mention are
thanked.
More particularly, acknowledgments are due to my editorial and research assistant,
Carlos Bassetti.
My colleagues at Golden Gate University (GGU) are an invaluable source of advice, wis-
dom, and support, particularly Professor Henry Pruden. It is no mystery why he is inter-
nationally known and respected—besides being a world authority on Wyckoff. GGU has
also furnished me with an unending supply of bright, formidable graduate students who
have made major contributions to my work and to my thinking. Nehemiah Brown does his
best to keep me semiorganized as to spreadsheets. Matt Mullens and Brian Brooker have
assisted me with many of the Basing Point studies herein. Stergios Marinopoulos has stim-
ulated and challenged me in my systems work. All these people are members in the local
technical analysis fraternity and our much valued organization, the Technical Securities
Analysts Association of San Francisco.
More remote colleagues have also assisted me in many invaluable ways—Jack
Schannep with Dow Theory data, Robert Colby also with Dow data, Tim Knight with
Prophet data (now part of http://www.thinkorswim.com, http://www.tdamertrade.com),
Chip Anderson at http://www.stockcharts.com, and Scott Brown of Metastock for support
with charting software.
I am indebted to Ralph Vince and Nelson Freeburg for material found herein that
increases the value of this book.
And finally, amigo Français and fellow chart enthusiast Chris Glon, http://www.
publicharts.com, for his charts, assistance, and friendship. He has supplied some of the
most interesting charts in this book.
This page intentionally left blank
Preface to the ninth edition
Warp speed universe. Warp speed financial markets. The eighth edition of this classic
book appeared when it seemed that the millennium and paradise had been achieved and
that, like McKay’s tulipomania, the price of stocks would rise forever and men would
rush from the world over and pay whatever price was asked for what-was-its-name.com,
Internet.groceries, or ihype.com or icon.com or gotcha.com. And, feature this, Dow 36,000.
The bubble was just in the process of bursting, of course. Before it burst, fabulous fortunes
were made by roller blader and scooter tycoons and by young geeks with nothing but
chutzpah and a laptop. One of my favorite stories is of the young entrepreneur who said,
“Why don’t I deserve it (the $100 million he made in the IPO)? I’ve devoted three years of
my life to this project.” (Now dead.)
Now, many of those people are in prison and the hangover lingers on. Lying, cheating,
and stealing on all sides. From Enron to Arthur Andersen. Billions, if not trillions, into a
black hole. As all this developed I warned of the impending collapse in the John Magee
Investment Letters on the Web. There was nothing magic or brilliant about seeing what
was going on. Perspective and perception came from applying the lessons taught in this
book by Edwards and Magee. Like Benedict XVI (in a different area) I am a humble worker
in their vineyard.
I press on, attempting to modernize (where necessary) and extend their work, fit
it to the modern situation, and make it even more useful to current day traders and
investors.
In this ongoing labor of love I have been immeasurably assisted by my graduate stu-
dents and colleagues at Golden Gate University in San Francisco. In constant interaction
with them I have been stimulated to see important aspects of Edwards and Magee’s work
and develop and emphasize these elements in my teaching and in this new edition.
Specifically, both long-term and short-term traders will fi nd important new mate-
rial in this edition. In my graduate seminars I have seen the power of what Magee
called the “Basing Points Procedure” and so have extended the treatment of this mate-
rial. My interest in and respect for Dow Theory have recently increased as the result of
a paper done with Brian Brooker for the Market Technicians Association (“Dissecting
Dow Theory”). Material from that paper will be found in this edition. Short-term trad-
ers and futures speculators will appreciate extensive new material on commodity trad-
ing. These traders have been entirely too influenced by mechanical number-driven
systems of recent years and need to restore perspective by mastering the material of
this book.
It was never the intent of this book to forecast or analyze current markets. Rather its
purpose was, and is, to learn from history and the past so as to be better able to deal with
the present and the future. Current markets are analyzed (and forecast?) at the John Magee
website. Nonetheless, the very process of keeping current involves picturing issues and

xix
xx Preface to the ninth edition

instruments in play. The major indexes themselves in 2005 are in play, as are gold, silver,
and oil. We don’t know how they will pan out. But we can make an analysis with the data
we have. For this is the situation the analyst is faced with every day. He doesn’t know how
it will turn out. But by following the methods and principles taught in this book, he can
put himself on the right side of the probabilities.
This is no idle remark. The power and effectiveness of classical chart analysis can
be seen by examining how it performed in the past at critical times. At the John Magee
Technical Analysis website the following comment was made in January 2000:

Dow: The Dow can expect to find support at 10000 and is buyable,
but in small commitments or portions of a portfolio or additions
thereto. We expect to see it in a very large see saw from 9-12000 for
some time and would hedge at the high end and increase commit-
ments and lift hedges on oversold conditions at the low end.

In November 2000 the following comment was made:

November 18, 2000

There is really only one chart pattern of significance in these
markets, and that is the big one, more than 12 months long now,
and the pattern is a big serpent, whipping back and forth, and as
Shakespeare said, signifying nothing. Nothing that is but more of
the same. How will we know when it signifies something? Well we
won’t really know till we know, but we’ll let you know when we
know. So we would continue to pick likely shorts and employ short
term trading strategies for traders, and hedge at interim tops and lift
the hedges at bottoms. Based on the chart picture and last week’s
anemic behavior we would not trade for bounces in the NASDAQ. If
anything it is a short, but a risky one.

These past letters dramatically illustrating the effectiveness of the methods of this
book may be found online through links at the address specified below. Your editor, per-
sonally, is not a genius for having made these analyses. It is the method which is to credit,
and any number of my graduate students can make the same analyses, as can any alert
chart analyst.
The reader should not skip the prefatory material to the eighth edition. The same prac-
tices outlined there have been followed in this edition. Magee said the reader should not
skim through this book and put it on his library shelf. Instead it should be read and reread
and constantly referred to. And so the reader should, yes, so he should.
Richard Russell, the dean of Dow Theory Analysts, has reportedly said that the price
of the Dow and the price of gold will cross in coming years. He has also remarked that
the S&P appears to evince a 10-year head-and-shoulders pattern. Robert Prechter believes
we are at the crest of the tidal wave and the tsunami cometh.
Dow 36,000. Dow 3,000. This book contains the best tools to cope with whatever the
future holds.

W. H. C. Bassetti
San Francisco, California
May 1, 2005
Preface to the ninth edition xxi

A special note concerning resources on the Web

In the age of instant and easy (and free) access to information on the Internet, it would be
foolish to ignore the opportunities available to interact with the material of this book. So
the reader will find free materials that augment the book at http://www.edwards-magee.
com. For example, when the reader learns in Chapter 28 of the Basing Points Procedure,
he will be able to go to the website and print out a PDF of material that he can place beside
Figure 28.2 for instant and easy cross-reference, instead of having to turn pages constantly
back and forth from the chart to the keys and commentary, or having to bend the book
into pretzels at a copy machine. In general, wherever references are made in the text to the
website, it is for this purpose, to give the reader easy and flexible usage of the material.
And, likewise, at this address the reader will find links to past letters that show how the
method functioned in real time in real markets.

A special note about Dow Theory

Senator Everett Dirkson said one time that trying to get U.S. senators herded together and
moving in one direction was like trying to transport bullfrogs in a wheelbarrow. Trying
to synchronize the signals of the various Dow Theory analysts is a similarly challenging
proposition. No Ayatollah exists to issue the final fatwa as to whether the signal is valid.
Always one to abhor a vacuum, I have organized a committee at Golden Gate University
to evaluate pronouncements of signals and opine as to whether the signals are valid. This
committee died an unnatural death, unfortunately, for lack of demand as to its expertise.

Acknowledgments for the ninth edition

For professional assistance: Jack Schannep, Robert W. Colby, Curtis Faith, Greg Morris,
John Murphy, Tim Knight, and Chi Huang.
For assistance at Taylor & Francis: Richard O’Hanley, Raymond O’Connell, Pat
Roberson, Andrea Demby, and Roy Barnhill.
For research assistance and manuscript preparation: Brian Brooker and Grace Ryan,
my fearsomely bright and efficient teaching and research assistants. And my inimitable
technical assistant, Samuel W. D. Bassetti.
At Golden Gate University for ongoing support and assistance: Professor Henry Pruden,
Barbara Karlin, Janice Carter, Tracy Weed, and Cassandra Dilosa.
Special appreciation goes to makers of software packages and their supportive execu-
tives for software used in the preparation of this and previous editions.

John Slauson
Adaptick
1082 East 8175 South
Sandy, UT 84094
http://www.adaptick.com

Steven Hill
AIQ Systems
P.O. Box 7530
Incline Village, NV 89452
702-831-2999
http://www.AIQsystems.com
xxii Preface to the ninth edition

Alan McNichol
Metastock
Equis International, Inc.
3950 S. 700 East, Suite 100
Salt Lake City, UT 84107
http://www.equis.com
Preface to the eighth edition
Here is a strange event. A book written in the mid-20th century retains its relevancy and
importance to the present day. In fact, Technical Analysis of Stock Trends remains the defini-
tive book on the subject of analyzing the stock market with charts. Knockoffs, look-alikes,
pale imitations have proliferated in its wake like seagulls after a productive fishing boat.
But the truth is they have added nothing new to the body of knowledge Edwards and
Magee originally produced and Magee refined up to the fifth edition.
What accounts for this rare occasion of a book’s passing to be a classic? To be more, in
fact, than a classic, to be the manual or handbook for current usage?
To answer this question we must ask another. What are chart formations? Chart for-
mations identified and analyzed by the authors are graphic representations of unchanging
human behavior in complex multivariate situations.
They are the depiction of multifarious human actions bearing on a single variable
(price). On price converges a galaxy of influences: fear, greed, desire, cunning, malice, deceit,
naiveté, earnings estimates, broker need for income, gullibility, professional money manag-
ers’ need for performance and job security, supply and demand of stocks, monetary liquidity
and money flow, self-destructiveness, passivity, trap setting, manipulation, blind arrogance,
conspiracy and fraud and double dealing, phases of the moon and sunspots, economic cycles
and beliefs about them, public mood, and the indomitable human need to be right.
Chart formations are the language of the market, telling us that this stock is in its death
throes; that stock is on a rocket to the moon; that a life and death battle is being waged in
this issue; and in that other, the buyers have defeated the sellers and are breaking away.
They are, in short, the inerasable fingerprints of human nature made graphic in the
greatest struggle, next to war, in human experience.
As Freud mapped the human psyche, so have Edwards and Magee mapped the human
mind and emotions as expressed in the financial markets. Not only did they produce a
definitive map, they also produced a methodology for interpreting and profiting from the
behavior of men and markets. It is difficult to imagine further progress in this area until
the science of artificial intelligence, aided by yet unimaginable computer hardware, makes
new breakthroughs.

If it is definitive, why offer a new edition?

Unlike Nostradamus and Jules Verne (and many current investment advisors), the authors
did not have a crystal ball or a time machine. Magee did not foresee the electronic calcula-
tor and made do with a slide rule. And while he knew of the computer, he did not anticipate
that every housewife and investor would have 1,000 times the power of a Whirlwind or
Univac I on his (her) desk (see “About Gender”). In short, the March of Time. The Progress
of Science. The Inexorable Advance of Technology.

xxiii
xxiv Preface to the eighth edition

Amazingly, the great majority of this book needed no update or actualization. Who is
to improve on the descriptions of chart formations and their significance?
But insofar as updates are necessary to reflect the changes in technology and in the
character and composition of the markets, that is another story. Human character may not
change, but in the new millennium, there is nothing but change in the character and com-
position of the markets. And while regulatory forces might not be completely in agreement,
the majority of these changes have been positive for the investor and the commercial user.
Of course, Barings Bank and some others are less than ecstatic with these developments.

An outline of the most important additions made to this book

to reflect changes in the times, technology, and markets
Generally speaking, these additions, annotations, and updates are intended to inform the
general reader of conditions of which he must be aware for investing success. In most cases,
because of the enormous amount of material, no attempt is made to be absolutely exhaus-
tive in the treatment of these developments. Rather the effort is made to put changes and
new conditions in perspective and furnish the investor with the resources and proper
guide to pursue subjects at greater length if desired. In fact, an appendix has been pro-
vided, titled “Resources” (EN10: now Appendix B), to which the reader may turn when he
has mastered the material of the book proper.
The stubborn individualist may realize investment success with the use of this book alone
[and paper, pencil, ruler, and chart paper (see the section on TEKNIPLAT™ chart paper)].

Technology
In order to equip this book to serve as a handbook and guide for the markets of the new
millennium, certain material has been added to the text of the fifth and seventh editions.
Clearly the astounding advances in technology must be dealt with and put in the context
of the analytical methods and material of the original. To achieve success in the new, brave
world, an investor must be aware of and utilize electronic markets, the Internet, the micro-
computer, wireless communications, and new exchanges offering every kind of exotica
imaginable.
The advanced investor should also be aware of and understand some of the devel-
opments in finance and investment theory and technology—the Black–Scholes Model,
Modern Portfolio Theory, Quantitative Analysis. Fortunately, all these will not be dealt
with here, because in truth one intelligent investor with a piece of chart paper and a pencil
and a quote source can deal with the markets, but that is another story we will explore
later in the book. Some of these germane subjects will be discussed sufficiently to put them
in perspective for the technical analyst, and then guides and resources will be pointed
out for continued study. My opinion is that the mastery of all these subjects is not wholly
necessary for effective investing at the private level. What need does the general investor
have for an understanding of the Cox–Ross–Rubinstein (CRR) options analysis model to
recognize trends? The Edwards–Magee model knows things about the market the CRR
model does not.

Trading and investment instruments

The new universe of available trading and investment instruments must be taken into
account. The authors would have been in paradise at the profusion of alternatives. In this
Preface to the eighth edition xxv

future world, they could have traded the Averages (one of the most important changes
explored in this book); used futures and options as investment and hedging mechanisms;
practiced arbitrage strategies beyond their wildest dreams; and contemplated a candy
store full of investment products. The value and utility of these products would have been
immeasurably enhanced by their mastery of the charting world of technical analysis. As
only one example, one world-prominent professional trader I know has made significant
profits selling calls on stocks he correctly analyzed to be in down trends, and vice versa—
obvious (or, as they say, a no-brainer) to a technician, but not something you should attempt
at home without expert advice. Techniques like this occasioned the loss of many millions
of dollars in the Reagan Crash of 1987.

Changes and developments in technical analysis

Have any new chart patterns (that is to say, changes in human behavior and character)
emerged since the fifth edition? Not to my knowledge, although there are those who take
the same data and draw different pictures from them. How else could you say that you
had something new! different! better!? There are other ways of looking at the data that are
interesting, sometimes valuable, and often profitable, which goes to prove that many are
the ways and gateless is the gate to the great Dow. Point and figure charting have been
used very effectively by traders I know, and candlestick charting depicts data in interest-
ing ways. Furthermore, since Magee’s time, aided by the computer, technicians have devel-
oped innumerable, what I call number-driven technical analysis tools: (the puzzlingly
named) stochastics, oscillators, exponential and other moving averages, etc., etc., etc. It is
not the intent of this book to explore these tools in depth. That will be done in a later vol-
ume. These concepts are briefly explored in an appendix supplied by Richard McDermott,
editor of the seventh edition.
I have also made additions to the book (see Chapter 18) to give a perspective on long-
term investing, since Magee specifically addressed the second part of the book (on tactics)
to the speculator. I have substantially rewritten Chapters 24 and 42 to reflect current ideas
on portfolio management and risk management. I have expanded on the idea of rhyth-
mic trading—an idea which is implicit in the original. I have expanded the treatment of
runaway markets so that the Internet stocks of the 1990s might be put in perspective (see
Chapter 23).
And then, paradigms. Paradigms, as everyone should know by now, are the last refuge
of a fundamentalist when all other explanations fail.

Paradigm changes
Whenever the markets, as they did at the end of the 20th century, depart from the
commonly accepted algorithms for determining what their prices ought to be, funda-
mentalists (those analysts and investors who believe they can determine value from
such fixed verities as earnings, cash flow, etc.) are confronted with new paradigms.
Are stock prices (values) to be determined by dividing price by earnings to establish
a reasonable price/earnings (p/e) ratio? Or should sales be used, or cash flow, or the
phase of the moon, or—in the late 1990s—should losses be multiplied by price to
determine the value of the stock? Technicians are not obliged to worry about this
kind of financial legerdemain. The stock is worth what it can be sold for today in
the market.
xxvi Preface to the eighth edition

The crystal ball

Investors will get smarter and smarter, starting with those who learn what this book has
to say. The professionals will stay one step ahead of them, because they are preternatu-
rally cunning and because they spend all their time figuring out how to keep ahead of
the public, but the gap will narrow. Software and hardware will continue to advance but
not get any smarter. Mechanical systems will work well in some areas and not in others.
Mechanical systems are only as good as the engineer who designs them and the mechanic
who maintains them. Buying systems is buying trouble. Everyone should find his own
method (usually some variant of the Magee method, in my opinion). All good things will
end. All bad things will end. The bag of tricks with which the insiders bilk the public will
get smaller and smaller. New and ingenious procedures will be developed by the insiders.
The well of human naiveté is bottomless. For every one educated, a new one will be born
in a New York minute. It is deeply disturbing at the turn of the century that the owners of
the NASDAQ and the NYSE should be thinking of going public. Could there be any more
ominous sign that enormous changes are about to occur?
Vigorous development of the systems, methods, procedures, and philosophy outlined
in this book is about the only protective shield I know of to guard against inimical change.

W. H. C. Bassetti
San Geronimo, California
January 1, 2001

About the editorial practices in this eighth edition

Needless to say, one approaches the revision of a classic work with some trepidation. Every
critic and reader has his or her (see “About Gender”) opinion as to how revision should
be done—whether the authors’ original text should be invisibly changed as though they
had written the book in 2000 instead of 1948 and were omniscient, or whether errors and
anachronisms were to be lovingly preserved, or footnoted, or … etc., etc. (I have preserved
Magee’s favorite usage of “etc., etc., etc.” against the protestation of generations of English
composition teachers because I like its evocation of an ever-expanding universe.)
Notwithstanding every reader’s having an opinion, I am certain all critics will be
delighted with the practices followed in this third millennium edition of the most impor-
tant book on technical analysis written in the second millennium.

Integrity of the original text

By and large, the fifth edition has been the source of the authors’ original text. Amazingly,
almost no stylistic or clarifying emendation has been necessary to that edition. This is a
tribute to the clarity, style, and content of the original—one might almost say awesome,
if the word were not in such currency on Saturday Night Live and the Comedy Channel.
Considering that it was written in the middle of the last century, and considering its com-
plex subject, and considering that the markets were one-tenth of their present complexity,
awesome may be the appropriate word. No change or update has been necessary to the
technical observations and analysis. They are as definitive today as they were in 1950.
While I have preserved the authors’ original intent and text, I have taken the liberty of
rearranging some of the chapters. Novices wishing to learn manual charting will find the
Preface to the eighth edition xxvii

appropriate chapters moved to appendices at the back of the book, along with the chapters
on Composite Leverage and Sensitivity Indexes.

About apparent anachronisms

Critics with limited understanding of long-term trading success may think that discus-
sions of “what happened in 1929” or “charts of ancient history from 1946” have no rel-
evance to the markets of the present millennium. They will point out that AT&T no longer
exists in that form, that the New Haven has long since ceased to exist as a stock, that
many charts are records of long-buried skeletons. This neglects the value of the charts
as metaphor. It ignores their representations of human behavior in the markets that will
be replicated tomorrow in some stock named today.com or willtheynevergetit.com. Even
more important, it ignores the significance of the past to trading in the present. I cite here
material from Jack Schwager’s illuminating book, The New Wizards of Wall Street. Schwager,
in conversation with Al Weiss: “Precisely how far back did you go in your chart studies?”
Answer: “It varied with the individual market and the available charts. In the case of the
grain markets, I was able to go back as far as the 1840s.” “Was it really necessary to go back
that far?” Answer: “Absolutely. One of the keys in long-term chart analysis is realizing that
markets behave differently in different economic cycles. Recognizing these repeating and
shifting long-term patterns requires lots of history. Identifying where you are in an eco-
nomic cycle—say, an inflationary phase vs. a deflationary phase—is critical to interpreting
the chart patterns evolving at that time.”

Identification of original manuscript and revisions

True believers (and skeptics) will find here virtually all of the original material written
by Edwards and Magee, including their charts and observations on them. Changes and
comments introduced by editors since the fifth edition have been rearranged, and, when
appropriate, have been identified as a revision by that editor.
Maintaining this policy, where updates to the present technological context and mar-
ket reality were necessary, the present editor has clearly identified them as his own work
by beginning such annotations with “EN” for Editor’s Note. Figure insertions are identi-
fied as “x.1, x.2.”

Absolutely necessary revisions

Not too long ago my youngest son, Pancho, overheard a conversation in which I referred
to a slide rule. “What’s a slide rule, Dad?” he asked. Well, needless to say, the world has, in
general, moved on from the time of Edwards and Magee when instead of calculators we
had slide rules. Where time has made the text useless, moot, or irrelevant, that problem has
unobtrusively been corrected.
Where the passage of time has made the text obsolete, I have either footnoted the
anachronism and/or provided a chapter-ending annotation. These annotations are marked
in the text with “EN” also. It is absolutely essential to read the annotations. Failure to do
so will leave the reader stranded in the 20th century.
In some cases, these annotations amount to new chapters—for example, trading
directly in the averages was difficult in Magee’s time. Nowadays if there is not a proxy
or option or index for some Index or Average or basket of stocks, there will be one in
less than a New York minute (which, as everyone knows, has only 59 seconds). This
xxviii Preface to the eighth edition

new reality has resulted in major additions to this new edition. These are detailed in
the Foreword. Major chapter additions necessary to deal with developments in technol-
ogy and fi nance theory have been clearly identified as this editor’s work by designating
them as interpolations, viz., Chapter 18 (with the exception of Chapter 23, which I have
surreptitiously inserted).

Absolutely necessary revisions that will have arisen in

the 30 minutes since this editorial note was written
In a number of instances, the book relayed information that, in those days of fixed com-
missions and monopolistic control by the existing exchanges, remained valid for long peri-
ods of time, for instance, brokerage commissions and trading costs. It is no longer possible
to maintain such information in a printed book because of the rate of change in the finan-
cial industry. It must now be filed and updated in real time on the Internet. Consequently,
readers will be able to refer to the Internet for this kind of ephemeral data. The general
importance of the ephemera to the subject is always discussed.

About gender
I quote here from my foreword to the second edition of Magee’s General Semantics of Wall
Street (charmingly renamed according to the current fashions, Winning the Mental Game on
Wall Street):

About Gender in Grammar

Ich bin ein feminist. How could any modern man, son of a
beloved woman, husband of an adored woman, and father of a joy-
ful and delightful daughter not be? I am also a traditionalist and
purist in matters of usage, grammar, and style. So where does that
leave me and my cogenerationalists, enlightened literary (sigh) men
(and women) with regard to the use of the masculine pronoun when
used in the general sense to apply to the neuter situation?
In Dictionary of Modern American Usage, Garner notes: “English
has a number of common-sex general words, such as person, anyone,
everyone, and no one, but it has no common-sex singular personal
pronouns. Instead we have he, she, and it. The traditional approach
has been to use the masculine pronouns he and him to cover all per-
sons, male and female alike… . The inadequacy of the English lan-
guage in this respect becomes apparent in many sentences in which
the generic masculine pronoun sits uneasily.”
Inadequate or not, it is preferable to s/he/it and other bastard-
izations of the English language. (Is it not interesting that “bastard,”
in common usage, is never used of a woman, even when she is ille-
gitimate?) As for the legitimacy of the usage of the masculine (actu-
ally neuter) pronoun in the generic, I prefer to lean on Fowler, who
says, “There are three makeshifts: first as anybody can see for him-
self or herself; second, as anybody can see for themselves; and third,
as anybody can see for himself. No one who can help it chooses the
first; it is correct, and is sometimes necessary, but it is so clumsy as
Preface to the eighth edition xxix

to be ridiculous except when explicitness is urgent, and it usually

sounds like a bit of pedantic humor. The second is the popular solu-
tion; it sets the literary man’s (!) teeth on edge, and he exerts himself
to give the same meaning in some entirely different way if he is not
prepared to risk the third, which is here recommended. It involves
the convention (statutory in the interpretation of documents) that
where the matter of sex is not conspicuous or important the mascu-
line form shall be allowed to represent a person instead of a man, or
say a man (homo) instead of a man (vir).”
Politically correct fanatics may rail, but so are my teeth set on
edge; thus, I have generally preserved the authors’ usage of the mas-
culine for the generic case. This grammatical scourge will pass and
be forgotten, and weak-willed myn (by which I intend to indicate
men and women) who pander to grammatical terrorists will in the
future be seen to be stuck with malformed style and sentences no
womyn will buy. What would Jane Austen have done, after all?

About Gender in Investors

As long as we are on the subject of gender, we might as well
discuss, unscientifically, gender in investors. Within my wide
experience as a trading advisor, teacher, and counselor, it strikes
me that the women investors I have known have possessed cer-
tain innate advantages over the men. I know there are women
gamblers. I have seen some. But I have never seen in the mar-
kets a woman plunger (shooter, pyramider, pie-eyed gambler). I
have known many men who fit this description. I have also noted
among my students and clients that, as a group, women seem to
have more patience than men as a group. I refer specifically to the
patience that a wise investor must have to allow the markets to do
what they are going to do.
These are wholly personal observations. I have made no study of
the question and can’t speak to the entire class of women investors—
and do not personally know Barbra Streisand (who I understand is
a formidable investor, especially in IPOs). But just as I believe that
the world would be better off if more women ran countries and were
police officers, I expect that the world of finance will benefit from
the steadily increasing number of women investors and managers.

A crucial question: sensitivity indexes and betas

Long before the investment community had formalized the beta measure—the coeffi-
cient measuring a stock’s volatility relative to the market—Magee and Edwards were
computing a Sensitivity Index, which, for all practical purposes, was the same thing.
Readers interested in this aspect of their work may find references in “Resources” (EN10:
now Appendix B) which will enable them to obtain betas to plug into the Composite
Leverage formula with which Magee intended to determine risk levels. The old appendix
on Sensitivity Indexes has been consigned to Appendix A, along with the chapter on
Composite Leverage, both originals of which have been emended to reflect current prac-
tices in finance theory and practice.
xxx Preface to the eighth edition

Betwixt and between, 1/8 of a dollar or 12.5 cents

As this edition went to press the financial services industry was once again threaten-
ing to implement decimals in stock prices. Pricing in eighths has endured long past
its time because it was in the self-interest of the financial industry—it allowed brokers
and market makers to enforce larger bid–ask spreads and fatten their profit margins.
The importance for this book, and for traders, is what will happen as full decimaliza-
tion occurs. Often in these pages, Magee will recommend placing a stop 1/8 off the
low or high, or placing progressive near stops in eighths. We do not yet know what
the psychological interval will be in the new era. It may be 12.5 cents, or more psy-
chologically, 10 cents, or for gaming purposes, 9 or 11 cents. This remains to be seen.
As all the charts in this book are in the old notation, that usage has been preserved
in this edition.

The editorial “I”

Readers will quickly note that the “editorial we” of Edwards and Magee has been replaced
by the first person voice—or the “editorial I” or perhaps the “professorial I.” Well, there
were two of Edwards and Magee, and there is only one of me. So my text is immediately
noticeable as mine, and the reader may discriminate quickly. As for the use of “I” as an
expression of ego, the reader is assured that after 40 years in the market the editor has
no ego left to promote. Perhaps the best way to put the editor’s sense of importance in
perspective is to quote Dr. Johnson’s definition of lexicographer from his dictionary. Some
people might have thought Johnson self-important in creating the first English dictionary.
His definition of his trade put that right. “Lexicographer: a writer of dictionaries. A harm-
less drudge.” An editor is something like the same.
As this book goes to the printer, the publisher, recognizing the importance of the work
done on this edition, will credit the editor as co-author of the eighth edition. John Magee
would be pleased. We had a cordial master–student relationship, and nothing pleases a
Zen master more than to transfer the dharma to a passionate student.

Acknowledgments
In General:
John Magee, for his ever-patient tutoring.
Blair Hull, for teaching me the mercurial nature of options.
Bill Dreiss, for teaching me the nature of trading systems.
Art von Waldburg, respected colleague and discoverer of the Fractal Wave Algorithm.
Fischer Black, who should have lived to get the Nobel Prize.
Bill Scott, friend and fellow trader.
For specific support and assistance in the preparation of this eighth edition: Professor
Henry Pruden, Golden Gate University, San Francisco, for invaluable support and advice.
Martin Pring; Lawrence Macmillan; Mitch Ackles, Omega Research Corporation;
Carson Carlisle; Edward Dobson; David Robinson; Shereen Ash; Steven W. Poser; Lester
Loops, late of Hull Trading Company; Tom Shanks, Turtle.
At St. Lucie Press, the dedication and support of the publisher, Drew Gierman, and
production associate, Pat Roberson, have been invaluable, as has been the dedication of
Gail Renard, the production editor.
And special acknowledgment to my research assistant, Don Carlos Bassetti y Doyle.
Preface to the eighth edition xxxi

Special appreciation goes to makers of software packages used in the preparation of

this and previous editions:

AIQ Systems
P.O. Box 7530
Incline Village, NV 89452
702-831-2999
http://www.AIQsystems.com

Metastock
Equis International, Inc.
3950 S. 700 East, Suite 100
Salt Lake City, UT 84107
http://www.equis.com

Tradestation
Omega Research
14257 SW 119th Avenue
Miami, FL 33186
305-485-7599
http://www.tradestation.com
This page intentionally left blank
In memoriam
This book is a memorial for John Magee, who died on June 17, 1987. John Magee was con-
sidered a seminal pioneer in technical analysis, and his research with co-author Robert
D. Edwards clarified and expanded the ideas of Charles Dow, who laid the foundation for
technical analysis in 1884 by developing the “Averages,” and Richard Schabacker, former
editor of Forbes in the 1920s, who showed how the signals, which had been considered
important when they appeared in the averages, were applicable to stocks themselves. The
text, which summarized their findings in 1948, was, of course, Technical Analysis of Stock
Trends, now considered the definitive work on pattern recognition analysis. Throughout
his technical work, John Magee emphasized three principles: stock prices tend to move
in trends; volume goes with the trend; and a trend, once established, tends to continue
in force.
A large portion of Technical Analysis of Stock Trends is devoted to the patterns that
tend to develop when a trend is being reversed: Head and Shoulders, Tops and Bottoms,
“W” patterns, Triangles, Rectangles, etc.—common patterns to stock market technicians.
Rounded Bottoms and Drooping Necklines are some of the more esoteric ones.
John urged investors to go with the trend rather than trying to pick a bottom before it
was completed, averaging down a declining market. Above all and at all times, he refused
to get involved in the game of forecasting where “the market” was headed or where the
Dow–Jones Industrial averages would be on December 31st of the coming year. Rather, he
preached care in individual stock selection regardless of which way the market “appeared”
to be headed.
To the random walker who once confronted John with the statement that there was
no predictable behavior on Wall Street, John’s reply was classic. He said, “You fellows rely
too heavily on your computers. The best computer ever designed is still the human brain.
Theoreticians try to simulate stock market behavior and, failing to do so with any degree
of predictability, declare that a journey through the stock market is a random walk. Isn’t it
equally possible that the programs simply aren’t sensitive enough or the computers strong
enough to successfully simulate the thought process of the human brain?” Then John
would walk over to his bin of charts, pull out a favorite, and show it to the random walker.
There it was—spike up, heavy volume; consolidation, light volume; spike up again, heavy
volume. A third time. A fourth time. A beautifully symmetrical chart, moving ahead in a
well-defined trend channel, volume moving with price. “Do you really believe that these
patterns are random?” John would ask, already knowing the answer.
We all have a favorite passage or quotation by our favorite author. My favorite quotation
of John’s appears in the short booklet he wrote especially for subscribers to his Technical
Stock Advisory Service: “When you enter the stock market, you are going into a com-
petitive field in which your evaluations and opinions will be matched against some of the
sharpest and toughest minds in the business. You are in a highly specialized industry in

xxxiii
xxxiv In memoriam

which there are many different sectors, all of which are under intense study by men whose
economic survival depends upon their best judgment. You will certainly be exposed to
advice, suggestions, offers of help from all sides. Unless you are able to develop some mar-
ket philosophy of your own, you will not be able to tell the good from the bad, the sound
from the unsound.”
I doubt if any man alive has helped more investors develop a sound philosophy of
investing on Wall Street than John Magee.

Richard McDermott
President, John Magee, Inc.
September 1991
Preface to the seventh edition
More than 100 years ago, in Springfield, Massachusetts, there lived a man named Charles
H. Dow. He was one of the editors of a great newspaper, the Springfield Republican. When
he left Springfield, it was to establish another great newspaper, the Wall Street Journal.
Charles Dow also laid the foundation for a new approach to stock market problems. In
1884, he made up an average of the daily closing prices of 11 important stocks, 9 of which
were rails, and recorded the fluctuations of this average.
He believed that the judgment of the investing public, as reflected in the movements
of stock prices, represented an evaluation of the future probabilities affecting the various
industries. He saw in his average a tool for predicting business conditions many months
ahead. This was true because those who bought and sold these stocks included people
intimately acquainted with the industrial situation from every angle. Dow reasoned that
the price of a security, as determined by a free competitive market, represented the com-
posite knowledge and appraisal of everyone interested in that security—financiers, offi-
cers of the company, investors, employees, customers—everyone, in fact, who might be
buying or selling stock.
Dow felt that this market evaluation was probably the shrewdest appraisal of condi-
tions to come that could be contained, since it integrated all known facts, estimates, sur-
mises, and the hopes and fears of all interested parties.
It was William Peter Hamilton who really put these ideas to work. In his book, The
Stock Market Barometer, published in 1922, he laid the groundwork for the much-used and
much-abused Dow Theory.
Unfortunately, a great many superficial students of the market never understood the
original premise of the “barometer” and seized on the bare bones of the theory as a sort of
magic touchstone to fame and easy fortune.
Others, discovering that the “barometer” was not perfect, set about devising correc-
tions. They tinkered with the rules of classic Dow Theory, trying to find the wonderful
formula that would avoid its periodic disappointments and failures.
Of course, what they forgot was that the Averages were only averages at best. There is noth-
ing very wrong with the Dow Theory. What is wrong is the attempt to find a simple, universal
formula—a set of measurements that will make a suit to fit every man, fat, thin, tall, or short.
During the 1920s and 1930s, Richard W. Schabacker reopened the subject of technical analy-
sis in a somewhat new direction. Schabacker, who had been financial editor of Forbes magazine,
set out to find some new answers. He realized that whatever significant action appeared in the
average must derive from similar action in some of the stocks making up the average.
In his books, Stock Market Theory and Practice, Technical Market Analysis, and Stock
Market Profits, Schabacker showed how the “signals” that had been considered important
by Dow theorists when they appeared in the Averages were also significant and had the
same meanings when they turned up in the charts of individual stocks.

xxxv
xxxvi Preface to the seventh edition

Others, too, had noted these technical patterns. But it was Schabacker who collated,
organized, and systematized the technical method. Not only that, he also discovered new
technical indications in the charts of stocks; indications of a type that would ordinarily be
absorbed or smothered in the averages, and, hence, not visible or useful to Dow theorists.
In the final years of his life, Richard Schabacker was joined by his brother-in-law,
Robert D. Edwards, who completed Schabacker’s last book and carried forward the
research of technical analysis.
Edwards, in turn, was joined in this work in 1942 by John Magee. Magee, an alumnus
of the Massachusetts Institute of Technology, was well oriented to the scientific and techni-
cal approach.
Edwards and Magee retraced the entire road, reexamining the Dow Theory and
restudying the technical discoveries of Schabacker.
Basically, the original findings were still good. But with additional history and expe-
rience, it was possible to correct some details of earlier studies. Also, a number of new
applications and methods were brought to light. The entire process of technical evaluation
became more scientific.
It became possible to state more precisely the premises of technical analysis: that the
market represents a most democratic and representative criterion of stock values; that the
action of a stock in a free, competitive market reflects all that is known, believed, surmised,
hoped, or feared about that stock; and, therefore, that it synthesizes the attitudes and opin-
ions of all. That the price of a stock is the result of buying and selling forces and represents
the “true value” at any given moment. That a Major Trend must be presumed to continue
in effect until clear evidence of Reversal is shown. And, finally, that it is possible to form
opinions having a reasonably high probability of confirmation from the market action of a
stock as shown in daily, weekly, or monthly charts, or from other technical studies derived
from the market activity of the security.
It is important to point out that the ultimate value of a security to the investor or trader
is what he or she ultimately receives from it. That is to say, the price the investor gets when
it is sold, or the market price obtainable for it at any particular time, adjusted for dividends
or capital distribution in either case. If, for example, he or she has bought a stock at $25
a share, and it has paid $5 in dividends and is now bid at $35, he or she has realized an
accrued benefit of $5 plus $10, or $15 in all. It is the combination of dividends and apprecia-
tion of capital that constitutes the total gain.
It seems futile to try to correlate or compare the market value of a stock with the
“book value” or with the “value” figured on a basis of capitalized earnings or divi-
dends, projected growth, etc. There are too many other factors that may also affect the
value, and some of these cannot easily be expressed in simple ratios. For example, a
struggle for control of a corporation can as surely increase the value of its securities in
the market as a growth of earnings. Again, a company may lose money for years and
pay no dividends, yet still be an excellent investment on the basis of its development
of potential resources as perceived by those who are buying and selling its stock. For
the market is not evaluating last year’s accomplishments as such, it is weighing the
prospects for the year to come.
Then, too, in a time of inflation, a majority of stocks may advance sharply in price. This
may reflect a depreciation in the purchasing power of dollars more than improvement in
business conditions—but it is important, nonetheless, in such a case to be “out of dollars”
and “into” equities.
As a result of their research from 1942 to 1948, Edwards and Magee developed new
technical methods. They put these methods to practical use in actual market operation.
Preface to the seventh edition xxxvii

And, eventually, in 1948 these findings were published in their definitive book, Technical
Analysis of Stock Trends.
This book, now in its seventh edition, has become the accepted authority in this field.
It has been used as a textbook by various schools and colleges and is the basic tool of many
investors and traders.
In 1951, Edwards retired from his work as a stock analyst and John Magee continued
the research, at first, independently, and then from January 1953 to March 1956 as Chief
Technical Analyst with an investment counseling firm.
Meanwhile, beginning in 1950, Magee started on a new road, which, as it turned out,
was destined to open up virgin fields of technical market research.
Using the methods of Dow, Hamilton, Schabacker, and Edwards as a base, he initiated
a series of studies intended to discover new technical devices. These investigations were
long and laborious, and, often, they were fruitless. One study required four months of
work, involved hundreds of sheets of tabulations, many thousands of computations, and
proved nothing.
But from this type of work, eventually in late 1951, there began to emerge some important
new and useful concepts—new bricks to build into the structure of the technical method.
The new devices are not revolutionary. They do not vitiate the basic technical approach.
Rather, they are evolutionary and add something to the valuable kit of tools already at
hand. The new studies often make it possible to interpret and predict difficult situations
sooner and more dependably than any other method previously used.
Mr. Magee has designated these newest technical devices the Delta Studies. They are
basically an extension and refinement of the technical method. There is no magic in the
Delta Studies. They do not provide infallible formulas for sure profits at all times in every
transaction, but they have proved eminently successful over a period of years in practi-
cal use in actual market operations as an auxiliary to the methods outlined in the book
Technical Analysis of Stock Trends.
Through his technical work, John Magee emphasized these three principles:

1. Stock prices tend to move in trends.

2. Volume goes with the trends.
3. A trend, once established, tends to continue in force.

A large portion of the book Technical Analysis of Stock Trends is devoted to the patterns
that tend to develop when a trend is being reversed. Head and Shoulders, Tops and Bottoms,
“W” Patterns, Triangles, Rectangles, etc., are common patterns to stock market technicians.
Rounded Bottoms and Drooping Necklines are some of the more esoteric ones.
Magee urged investors to go with the trend rather than trying to pick a Bottom before
it was completed or averaging down in a declining stock. Above all and at all times he
refused to get involved in the game of forecasting where “the market” was headed or
where the Dow would be on December 31st of the coming year. Rather, he preached care in
individual stock selection regardless of which way the market “appeared” headed. Finally,
his service recommended short positions as regularly as it did long positions, based sim-
ply on what the charts said.

Richard McDermott
Editor and Reviser
Technical Analysis of Stock Trends, Seventh Edition
January 1997
This page intentionally left blank
Preface to the fifth edition
During the 16 printings of the fourth edition of Technical Analysis of Stock Trends, very few
changes have been made in the original text, mainly because the lucid presentation of mar-
ket action by the late Robert D. Edwards covered so thoroughly the basic and typical mar-
ket action of common stocks. There has seemed no reason, for example, to discard a chart
picture illustrating some important technical phenomenon merely because it occurred
several or many years ago.
Instead, over the various printings of the book, pages have been added showing simi-
lar examples, or in some cases entirely new types of market action taken from recent his-
tory; but these demonstrate mainly that the inherent nature of a competitive market does
not change very much over the years, and that “the same old patterns” of human behavior
continue to produce much the same types of market trends and fluctuations.
The principal change in this fifth edition, and it is a spectacular improvement, is
that practically all of the chart examples drawn to the TEKNIPLAT™ scale have been
redrawn and new plates of these have been substituted. In the course of this work, several
minor errors of scaling, titling, etc., previously undiscovered, came to light and have been
corrected.
The difficult work of revision was initiated in our charting room by two ambitious
teenagers, Anne E. Mahoney and Joseph J. Spezeski, who took on the entire job of prepar-
ing the finished drawings and making necessary corrections. This enormous project was
undertaken and carried through by these two young people spontaneously. In order to
free them entirely from other distractions, their regular charting work was taken over for
a period of months by the rest of the chartroom staff, so that a great deal of credit is due to
the fine efforts of the entire chartroom group.

John Magee
December 3, 1966

xxxix
Exploring the Variety of Random
Documents with Different Content
well placed rounds should help to speed him on his way down the
track, and if the shots punctured some of the tanks, so much the
better. After the charges were laid, two men were to be assigned to
stay and do the shooting. They would rejoin us later.
Late the following morning, we broke camp. We carried only
weapons, ammunition, demolition charges and one day's ration.
Sammy Lee, the aidman for Blackie's section, also carried his aid kit
and extra dressings. I brought mine along for our section. We moved
out with extreme caution, our scouts well ahead. We could not afford
discovery now, of all times. At fourteen hundred hours we stopped for
rest and food. For a while I let the men relax. Then I gathered them
around me except for the guards.
"We separate here," I said. "Captain Balakireff and Lieutenant Pak
and his section will go to the virus factory and carry out the plan for
which you have all been prepared. Captain Makstutis, Lieutenant Kim
and I will lead our party to the bridge. From now on you must start
thinking and acting like Koreans, at all times. You must not speak
English under any circumstances. The Reds will be hunting for us
after the raid as guerrillas. If they find out that we are Americans the
chase will be ten times as fierce. It might even make the men in the
Kremlin decide to launch an open attack on the United States.
Certainly if they capture us it will give them an excuse to do so. You
must not surrender. You will take no prisoners." I looked around the
group and paused for effect.
"How many of you have had the S-Flu?"
To a man they raised their hands.
"Then remember that," I said, "whenever you feel soft-hearted. These
are the people who did it to you."
I turned to Blackie and Pak. "Itdah popsidah ... see you later," I said in
Korean and shook hands. The two officers sprang to attention and
with wide smiles on their faces gave me the communist salute. I
returned it. Pak faced his men, the smile gone. A stream of rapid
Korean orders poured from his thin lips. The change was amazing.
What had been a bunch of slouching G.I.'s having chow in comic
opera uniforms was transformed into heel clicking, jumpy NCO's
barking at slightly harassed, overly anxious oriental soldiers. They
quick-stepped down the trail and out of sight. A minute later we too
were on our way.

Ahead of me, as I looked back towards the virus factory area, the
tracks went straight over the single arch of the steel bridge that
spanned the narrow ravine and, slowly dropping, twisted to my left
behind a small hill to be lost about a half a mile away. I was lying in
the brush on top of the hill that rose in a steep curve out of the gorge.
To my immediate right, a deep cutting with jagged rocky walls slashed
through the hill from where the bridge jumped the gap. Fortunately for
us, the side of the ravine farthest from the virus factory, where I now
lay, was much higher than the other, which enabled us to control the
approaches. The rise in gradient would also slow the train. It was a
marvellous trap.
We had crossed the fast-running foamy little river higher up, where it
dropped down from the steep mountain ridges. Now, in the cleft
below, I could hear the deeper growling as it fought for space among
the heavy boulders of its bed. I was tired after the march; tired
enough to quit right there. A few feet away, over the reverse slope in
a little hollow, Lim On was concentrating on his demolition charges,
his skeleton face immobile and thin fingers working surely as he fixed
the special fuses. He had finished three, with two to go. Anders had
told us there were five tank cars. We had to get them all.
I rolled over a little, the better to reach my pants pocket where I had a
pair of tiny Japanese field glasses. The sun was warm and, under the
special steel of the American-made Russian model helmet, my
forehead was wet where the headband touched. Like all the others, I
was wearing one of the new lightweight plastic body armor suits
under the uniform. It was good to know that even a burp gun bullet
would bruise but not penetrate. Only high velocity rifle fire could cut
through the flexible weave but I wondered momentarily if it was worth
all the sticky discomfort to wear it. The glasses were up to my eyes
now and I waited, propped on my elbows. The round magnified world
was blurred by the heat waves and the exhaustion which blunted my
concentration and sent quick tremors through my tired arms. A fly
found me, his feet tickling my face as he sucked the sweat drops. The
crawling became intolerable and I had to brush him off. When my
eyes adjusted again to the glasses I saw Makstutis and Kim, with
seven men. They were filing down the edge of the cutting in full view.
As they neared the abutment, a soldier came out of the bushes at the
side of the bridge. Seeing the officers, he saluted smartly and, a
moment later, called to a companion who joined the group. Then Kim
and four men moved off across the bridge to where another pair of
guards had come out of hiding. Thirty seconds later it was all over. At
the near end of the bridge, two of my men had moved casually
behind the enemy soldiers as they talked to Makstutis. Suddenly they
wrapped their left arms around the victims' faces to stop a shout.
Their right arms came up and the commando knives flashed down
into that soft triangle behind the collar-bone. It was done almost in
rhythm, like some hellish ballet. The dying men writhed a little and
then went limp. By the time I swung my glasses to the other end of
the bridge, the scuffle there was already over. I lowered the
binoculars. My stomach churned a little as it had done on my first visit
to a slaughter-house. The rest of our men were now out of hiding and
working furiously on the bridge, setting up the charges. Up from
below, his face covered with sweat and breathing quickly from the
climb, came Makstutis. He sat down beside me.
"Dead easy, Doc," he said, as he got his breath.
"Dead, easy, is right," I said grimly. Killing of any kind always
depressed me.
He glanced sideways at me, "Feel OK?"
"I'll make it," I replied quietly, with much more optimism than I felt.
We zigzagged down to the bridge. Kim was dispersing his section
along the rim of the gorge and up on both sides of the cutting. We
would have to eliminate any Commies who were stranded on our side
by the explosion but we wanted to leave a line of retreat open for the
rest. None of our men would stay on the other side. Any who survived
on the far side of the ravine were welcome to go home ... and I hoped
they would. We settled down in the brush to the left of the bridge—
Makstutis, who was to set off the charges and then go where he felt
he was needed, Lim, who would be with me, and Sergeant Kang and
Corporal Hip Sing who were to cover us as we blew up the remaining
tank cars.
The sun was lowering to the hills now and soon would drop behind
them. The waves of its heat shook the rails in the cutting, the mirage
twisting them in fancy as the explosives would soon do in fact. A
weak little breeze came fitfully up the tracks and cooled my face. The
soft sad whistle of a locomotive drifted with it and seconds later a dull
thudding noise. I thought I heard a faint crackling of rifles.
"And away we go," I said inanely.

As Blackie told me much later, the first part of the attack went off as
smoothly as a Tri-Di melodrama.
"I took the men down the trail at a good pace," he said. "I wanted to
get into position and take a long look at the layout in daylight. There
wasn't much movement, a guard or two patrolling the fence and in the
gatehouse, with my glasses, I could make out a couple of soldiers
playing rummy or poker or whatever these people play. We didn't
dare get out behind the plant for a look but I could hear some noises
and occasionally an engine huffed and puffed like they do when they
are shunting. About seventeen hundred hours a loud bell signal went
off. I was frightened it might be an alarm but it must have been chow
call or the end of a shift. Anyway, a few more men came out and
walked about here and there and the guards changed.
"Getting close to eighteen hundred I was wondering if anything had
gone wrong when I saw the guard get up and answer the phone.
Maybe this was it. I alerted the men. About three minutes later I saw
a tall man I thought was Anders coming down the front steps of the
factory with a haversack slung over his shoulder. He moved towards
the gate and we came down off the hill, going fast. By the time we got
there the guards were out, watching us come, and Anders was
apparently clueing in their leader.
"Why, hello, Captain Balakireff," he said as I came up. "I didn't know
you were out in this part of the world. Are you the group searching for
the guerrillas?" I admitted we were and said to the sergeant of the
guard, "Let us in. I have to report to the Commissar."
"He opened the gate and we began to enter as the train whistle blew.
I was stalling for time, exchanging small talk with Anders, when the
explosions came and then the shots.
"It must be the guerrillas! Behind the plant!" I yelled. "Follow me." I
took off on the double with the boys coming right behind. I skidded
around the corner and, by Golly, I ran smack into the Political
Commissar's fat belly. Anders told me later who he was. When I got
to my knees I saw he had four Russian guards with him so I guessed
he must be a honcho. There was no time for argument. If I tried to
play along and he found out, we were finished.
"Get them!" I shouted in Korean, and jumped on the Commissar
again as he got up. Our men were fast with the knives but one guard
got off a few rounds with his tommy-gun as he died. They hit poor
Kwong Lin, our demolitions man ... punched holes in him through his
thighs and his neck where the suit didn't cover. Sammy says he
couldn't do a thing for him. I didn't wait around to see.
"Hold this old fool and keep him quiet a minute. We may need him," I
said to one of the boys. "The rest of you cover while Pak and I clean
out the power house." I stooped down and pulled the bag of
explosives from Kwong's body. Pak was away ahead of me. He was
already going up the steps and hit one guy in the belly with a couple
of slugs as they met in the doorway. Knives were no use now. We
whizzed around inside that place like a couple of squirrels playing
tag. Up and down the ladders, and everywhere we went we slapped
beehive blasters with quick fuses, on generators, transformers,
anything that looked important. The first ones were going off as we
set the last and one of them blasted me out the door with the shock
wave. I picked myself up for the second time, feeling like the last pin
in a bowling alley, and looked about for my burp gun. I found it just in
time to join in a nice firefight. The Reds had caught on by now. The
doggoned alarm bell was making the dickens of a racket and a bunch
of soldiers came charging around the corner from the railway yards.
The boy with the Commissar fired first and knocked down three and
the kids covering us at the powerhouse got two more as they
scrambled for cover back around the corner. We started for the gate
with Benny Quong and Joe Park covering the rear. Meantime some
bright so-and-so had got up on the second floor and he leaned out
and dropped a grenade down between them. We got him right after
the bang but it didn't do those two any good. The shrapnel went up
under their helmets and caught their legs as well. I hope they died
fast. Sammy wanted to go back for them but I dragged him along with
me. I figured we had to get Anders out of there with the big secret
and we were expendable until we did.
"By now Pak was prodding the Commissar around the corner in front
of the guardhouse with a knife in his backside. We came in sight and
found the four guards watching for us—Anders was standing by the
door."
"Tell them to open that gate," I screamed at the fat boy. He opened
his mouth but it was no use. Either somebody had it in for him or else
those goons really obey orders. The alarm had gone off and the gate
was closed and that was that. We kept walking. Pak stuck him again
and he let out a yelp. That's when the guard commander figured the
setup as fishy. He lifted his gun and sprayed. Of course all of us hit
the dirt, firing, when he started to act mean, but the old Commissar
wasn't a combat man. He was still on the way down when he got it in
the throat and crumpled up on top of Pak. By Golly, it was a mess.
Pak came up looking like a Red Indian instead of a Korean and then
he blew his stack. He let out a shriek of rage like a runaway stallion
and started straight for the gate, shooting from the hip. He knocked
out the commander and one more and the other two beat it behind
the guardhouse. Where Anders had got to I don't know. I think he
went inside, but he wasn't in the guardroom when we reached it. It
was getting pretty hot with rounds coming in through the windows
from the three floors of the factory and some from around the
corners; fortunately the gate was partly protected by the guardhouse
or we'd never have made it. Pak went out and dragged the dead
commander into the door to look for the gate key but a sniper got him
in the arm. That was when I knew we had to get out fast or die. I sent
Sammy to fix up Pak and detailed Sergeant Wong to blow the lock to
pieces while the rest of the men kept the snipers' heads down with
continuous fire. Then I remembered Anders. I poked my gun around
the back end of the guardhouse just in time to hear a couple of shots
and see the two guards go down. I hollered and he stepped out of the
door of the latrine holding an automatic. I guess he'd got tired waiting
and decided to finish it himself.
"'Good, Doctor, very good,' I said. 'Now let's get out of here.'
"He looked a bit shaken but he tucked his haversack under his free
arm and we ran for the gate.
"Well, that's about all there was to it," Blackie concluded. "We got to
the woods with no more casualties and left three men to cover the
open area for a while and discourage pursuit until it got dark and we
could get lost. Most of us had a scratch or two and Pak was woozy
from loss of blood but we got back to the old village all right and
waited for your party to come in."

As I said before, Blackie told me all this much later. At the time they
started fighting we were lying hidden in the scrub by the gorge.
Makstutis had a transistor switch to the demolitions in his hand. He
and I were right beside the track. We would move to safer places
when the train came in sight.
"Make sure the last tank car is on the bridge before you blow it," I
said anxiously. "If one is left on the far side we'll never get to it."
"OK Colonel," he said. "It's all set up. Should be a piece of cake, as
the Limeys say."
Ten minutes after the first explosion we heard the quick hard slapping
of the beehive charges and the rattling as the firefight got going.
"Sounds like they're having plenty of trouble," I muttered.
"Yeah, I guess so," Makstutis admitted, "but that Blackie's a hot shot
and so are Pak and his boys. I'll bet they make hash outa that joint."
"They'd better or they'll be in the stew themselves," I said, in a weak
attempt at levity.
He gave me an anguished frown and then, his face suddenly grim,
shushed for silence. Faintly I thought I heard an engine straining up
the grade. Makstutis crawled over and put his head to the rail.
"It's on the way," he said. "Better take cover." He stood up and
signalled the alert.
Lim and I were crouching behind a big rock outcropping halfway
down into the gorge. A faint trail led from there to the bottom—
perhaps a relic of the construction days when the bridge was being
built. It was far enough away to be safe when the bridge blew up but
from there we could reach the bottom in a hurry. My heart was
hammering fast, partly from excitement and partly from weakness. My
knees were wobbly and I could hear the blood rush past my ears. I
tried to swallow but I was too dry. Now the train was around the bend
and I could hear the slow chuff-chuff-chuff as it crawled up the track.
The sound suddenly sharpened as the engine, a big American style
steam cylinder, shoved its nose past the cutting and out on to the
bridge, travelling at a walking pace. A movement at the other end
caught my attention and, for a moment, a great tightness clamped
down on my chest. Kim was standing at the edge of the cutting,
calmly waving to the engine driver.
"The damn fool," I raged inside. "What in Hell is he doing?" And then I
realized and almost wept in admiration and pride. Afraid that the
enemy, already on the alert, would notice the lack of guards and stop
in time, he was calmly risking his life, pretending to be one of them
and enticing the Reds on to destruction. By now the engine was
almost up to him. He waved again and moved casually up the
embankment into the bush.
Behind the coal tender came a passenger coach full of soldiers, two
flat cars and then the five tank cars. At the end, as the train clawed
over the bridge, came two more flat cars, another guard coach and a
sort of caboose. The bridge itself was exactly six car lengths from
bank to bank. To be sure that all the tank cars would be caught,
Makstutis had to let the first passenger coach get into the cutting on
our side and the other one remain on the far approach. He threw the
switch.

For a moment in time the bridge buckled upwards under the last tank
car. Then, like a slow motion close-up, it started to bend downwards
in a vee, moving faster and faster as the law of gravity took over. The
rear tank car dropped into the vee, pulling the flat cars down with it.
The crash of the explosion was rolling away down the canyon and
now the screech of tearing metal sounded. The rear flat cars fell off to
the side and the passenger coach behind them twisted over and
wedged itself crossways between the main concrete buttresses and
the far bank. By a miracle of bad luck it did not go down with the other
cars and even as I turned away the guards came tumbling out of
windows and doors unhurt. I looked towards our end. Three tanks
had gone down with the bridge and lay twisted among the steel
girders in the foaming river. Of the other two, one hung crazily over
the angle between the steel and the bank. I could not see the leading
tank car but I learned later it had remained upright but derailed. The
couplings had broken just ahead of it, leaving the engine, the first
guard car and the two flat cars free. That engineer was a smart man.
Realizing that they hadn't much chance pinned down in the depths of
the cutting, he pulled the throttle wide open and went for the open
country as fast as the train would accelerate. With the wheels
screeching and sparking on the tortured rails the engine bellowed up
the grade like a charging bull trying to escape from the stockyards.
I didn't know all this. I could hear the roaring engine and the storm of
firing that followed. It would be suicide to attack the tank cars in full
view, I thought. Better first dispose of the three that lay in the bottom
of the ravine. I nodded to Lim and we started down. It was slow work
at the bottom. In places the river ran right to the edge of the cliff and
we had to scramble around on the big boulders or climb up and down
the rough rock face, but we made progress and eventually we stood
under the shattered bridge. Down here the light was dimmer and the
sound of water washing around the wreckage deadened the noise of
the sporadic firing above. In mid-stream the rearmost tank car lay on
its side, split open by the fall. The other two, though buckled, were
intact. They had toppled off to the side of the bridge and now lay
across the big rocks on our side of the river in the shape of a twisted
Z. Lim laid down his gun and started to work. His lungs heaving in his
poor sick chest, he scrambled over the rocks and then disappeared
under the middle tank car. He came back up dripping wet and
motioned for a demolition charge. I crawled to him and gave him one.
Between gasps for breath and above the noise of the water and the
echoing battle he shouted in my ear.
"I'm going to blow this one from underneath, at the lowest point above
the water, so all the stuff will drain out."
I nodded in approval and he disappeared again. In a couple of
minutes he was back. "We have about five minutes," he cried, his
voice shaky with fatigue. "Let's get the other one."

I pulled him to his feet, where he stood shivering with cold and
exhaustion, and picked up the guns and charges. We moved to the
second car. This one was propped up at an angle with the low end
dug into a patch of sand, easy to get at. I handed him another
explosive and he jammed it against the steel, in the sand. He was
about to activate the fuse when suddenly he straightened, twisted half
around to face me and fell forward. The echoes of the shot
ricochetted off the walls of the gorge. I estimated it came from across
the water and in the same instant made a diving run for cover. I hit
hard and rolled behind a small boulder as another shot hit it and
whined away into the air. I was thinking fast. Some of the Reds must
have been trying a sneak attack across the bottom of the gorge and
had seen us at work. In spite of our uniforms it was obvious from
what we were doing that we weren't friendly. I'd be marked down and
shot if I tried to get back and ignite the last fuse. And there wasn't
time now. I had to get out of there! The first charge might explode that
full car like a can of tomato juice, spraying death in all directions. I
was trying to get up the nerve to dash for safety when the shouts
came from behind me. It was Makstutis, with Kang and Hip Sing.
They had crawled up close to me when the fighting started.
"Doc! Doc!" Makstutis was yelling, "Get that last fuse started. We'll
keep their heads down."
"Get back!" I screamed frantically. "The other tank is gonna explode.
It'll cover you with virus."
"That's rough, Doc," Makstutis called back calmly, "but what's four
men compared to millions. Better get cracking."
I felt ashamed, physically sick and disgusted. I had a chance and
they had none and yet, facing that death, they could still think of
others while all I wanted to do was to lie there, afraid even to run. Oh,
I could blame my sick mind or my weakened physical state. They
would excuse it on those grounds and never say a word to me no
matter what I did. But I knew better. Today I was beaten down while
better men than I were still fighting.
I was up and running with the nausea of moral defeat rising in my
guts. Quitter! The one word I feared above all ... and it applied to me.
Better to die now than have to live the rest of my miserable life with it.
I felt a heavy blow on my back that threw me off stride. At the same
time I heard the crack of a small mortar shell behind me and
something sharp and stinging penetrated my right hip. They must be
lobbing them across at extremely short range, trying to drop in behind
the rocks and get my riflemen. A burp gun gnattered and chewed up
the sand beside me as I reached the tank car but stopped abruptly as
somebody blasted back. I stooped down and activated the fuse. I was
halfway back across the open sandy patch when the first tanker blew
up.

CHAPTER 15
There was a faint smell of decay, of cold moist flesh, in the air. I
shoved up from the sand and rose wearily to my feet. I looked down
and saw the wet stain spreading over me from the back. My legs felt
damp. I was too tired to care. The odor of the virus culture, of the
bleeding death, was in my nose and mouth and I was too tired to
care. I staggered past a rocky outcrop and almost fell. Sergeant Kang
reached for me from cover.
"Don't touch me," I protested weakly. "The stuff's all over me."
"Some of it got us too, Doc. Better let me help you get away before
the next one goes up."
We advanced cautiously up the ravine away from the bridge. The
second tank car had blown and there was no pursuit. Apparently our
men on the rim of the gorge had pinned down the attackers or else
the horror of the bleeding death had driven them away. Now that my
aching chest had eased a bit I could think again. We went around a
couple of bends and the sound of firing died away.
"We've got to get this virus off, it's our only hope," I said.
"OK Doc," Makstutis was agreeable. "Whatever you say. The damn
stuff stinks like a frightened polecat."
I led the way along the stream and found a chest-deep pool with a
fast water flow. I walked right in, gun, helmet, jack boots and all, and
thrashed around for a moment under water.
"Now you do the same," I said when I came out.
I had some soap in my pocket and Hip Sing produced another bar.
With one man standing guard, we undressed and scrubbed ourselves
and then our clothes and weapons as thoroughly as possible while
the light faded. Numbly I noticed a large hole in my jacket and a
ragged tear in the plastic suit. I shook the suit and a piece of iron two
inches square fell out. No wonder my ribs were sore and my chest
ached! Makstutis saw it fall and grinned at me crookedly.
"Your lucky day, ain't it, Doc?"
"Yeah, out of the frying pan, now into the fire. Wait until tomorrow."
He shrugged. "That's the way the rocket roars."
We wrung out the water as best we could and wiped it off the guns. I
felt better from the cold bath though I was weary to the crying stage.
The wound in my thigh was small and not troubling me much so I let it
alone.
"That should help a little," I surmised when we were dressed again.
"At least it may protect the others from the disease."
We were starting to climb back up the side of the gorge when an ear-
battering crash rolled up the river to meet us. Then there was silence.
I don't remember too much about that climb back up the gorge. I
know I fell often and always there was a helping hand, a quiet word.
We got back to the bridge in darkness and were stopped by Kim's
guards. The fight was over. They had been waiting for us. Four men
were dead, three in the fight for the train and Lim in the river bed. Two
more were wounded in the arm and head but could walk. One man
had a broken leg. I vaguely remembered telling Kim how to splint it
with poles cut from brush and giving him some morphine. I didn't like
the risk of exposing any of them to the bleeding death but there
wasn't much I could do about it right then except try not to touch
anyone. Makstutis, the two NCO's and I, kept apart from everyone
else and waited for the fever to strike. We kept going in the darkness,
a darkness that became a dream world to me except for the steady
support of hands at my elbows and the slow dragging of my feet as I
lifted them and put them forward. Just one more step; one step more;
one more step; one step more. We stopped and the hands released
me. I crumpled where I stood and slept.

I woke to a pattern of shifting light and shade beyond my closed

eyelids and a cool wind that blew across my face. I opened my eyes
and slowly they focused on the leaves that rustled above me. The
aching misery of my legs and body forced itself into my brain and
carefully, deliberately, I sat up. We were in a thickly wooded valley. A
tiny clearing opened from where I sat, bisected by a narrow stream.
On the other side, about ten yards away, Kim and his men moved
about quietly, cooking the last of their rice on a dry wood fire that
gave no smoke. I stood up for a moment while specks whirled before
my eyes as my blood pressure dropped. The feeling passed. I was
still damnably weak but better than yesterday. I looked around for my
companions in isolation and saw them squatting close to their own
fire. They seemed normal. So far so good! We might have another
twelve to twenty-four hours before the hemorrhagic fever started to
raise hell with us. By that time, with luck, we could be holed up in our
refuge. Maybe Anders would be able to help us. At the worst, as he
was immune, he could take care of us and feed us.
I was still not completely aroused when Makstutis came over with a
mixed mess of hot rice and kimchi in a ration can.
"Here's your bacon and eggs, Colonel," he grinned irrepressibly. The
man just wouldn't give in, I thought. "How do you feel this morning?"
"Pretty good, considering," I replied.
I finished eating and walked down to the stream to splash some water
on my face. Kim was there, washing up. I kept down-stream from
him.
"How are you feeling, sir?" he said, towelling his face with his
undershirt.
"OK so far, Kim. I need a cigarette. Have you got any? No, not your
packet! Just one. I'll ask again if I need it." I caught the black Russian
weed he threw at me and dragged gratefully. "I didn't see much of the
fighting at the bridge after Makstutis threw the switch," I said, sitting
down on a boulder. "I was down in the bottom of the gorge most of
the time. Clue me in on what happened."
He squatted comfortably on his heels, oriental style, and I was
momentarily amused at how quickly he had reverted from his western
training.
"When the bridge fell down," he began, "the boys along the canyon
rim all fired on the coach stuck in the approaches across the way. A
lot of the Reds were hit getting out of it but a lot more made it and
started a firefight across the canyon with us. That lasted quite a
while."
"I saw the beginning of it," I said.
"I heard from Makstutis that some of them got down in the bottom and
shot at you and you were hit."
"That's true, but I was hit by mortar fragments. Did he tell you that I'd
never have got out if it hadn't been for him and his two men?"
"No, he didn't. He did tell me you all got splashed with that virus
stuff."
"We sure did, and nobody except Anders is to come near us until we
find out if we're going to get the fever or not. But what happened to
you?"
"While the fight was going on back and forth across the canyon," he
began again, "the engineer tried to take off with what was left of his
train ... it broke apart just ahead of the first tank car. He almost did it
too! The two men I had posted up above, on either side of the cutting,
couldn't do much as they were firing down at too steep an angle.
They did manage to keep the Commies' heads inside the coach,
however, and, when the train started up the grade, five of us were
able to scramble up on the flat cars, leaving the other six guys to
finish the fight at the bridge. Two of them were killed later on by an
unlucky mortar shell burst.
"As soon as we got on the flat car I put a half a dozen burp gun
pellets straight down the middle of the passenger coach and while
they were wondering what to do about it, Tommy Lin sneaked up
close and threw a grenade through the glass of the back door. But he
didn't hold it long enough. Somebody fielded it and threw it right back
before it could explode. Lucky for us he was too strong. It bounced
out past the door and rolled over the side just as it went off. About
that time I figured we had to stop the train or they'd take us to
Vladivostok, so Tommy and little Rhee Sung boosted me up on the
roof.... It took both of them to do it ... while the other guys gave the
Reds a few rounds to keep their heads down. I hauled my two
buddies up with me and we pussyfooted over the top, hoping the
Commies wouldn't try to shoot up through the roof. It was steel
anyway. That helped! We jumped down on the coal tender and the
fireman saw us. Boy! Did he yell! He dropped that shovel and dived
out the side like a frightened frog. The engineer took to the other
door.
"By now the train was out of the grade and in open country, really
travelling. I sent Rhee back over the top to warn the others, before
the Reds got wise, and when I figured they were set I put on the
emergency brake ... it's a good thing I learned about engines on the
pineapple plantations back in Hawaii ..." he laughed. "Well, sir, that
damned train just about stood on its nose and jack-knifed. I'll bet the
gooks really got thrown about. Then I put her in reverse. The wheels
were screeching like a drunk wahine at a hula, and slipping and
sliding like crazy until they caught a hold. When she stopped and
began to back up a lot of the Reds made a break for it. We got a few
but most of them got away. When they saw we were going back
towards the bridge a gang of those left tried to rush the cab. Tommy
was waiting on the coal pile and mowed them down but a wild shot
downed him when he tried to get back to me. I wanted to stop the
train but he yelled at me to go on. I tied down the whistle as the signal
and the other guys jumped. Then I gave her full throttle and I jumped
too. Tommy stayed on. I guess he figured he was finished and he
might as well take some of the Reds with him. Anyway they never got
into the cab to stop the engine. It must have barrelled down that
grade at a hundred miles an hour. It smashed those two tank cars to
glory and pushed the whole damn lot into the canyon."
"That was the big explosion I heard?"
"That was it," Kim agreed and added, "That broke up the fight. Good
boy, that Tommy. He went out the right way for a soldier."

We set out for the rendezvous about midmorning. It would have been
safer to wait for night but I was afraid the virus would knock us out
and Kim agreed. The scouts reported no signs of life ahead so we
marched in our two groups, a prudent interval of twenty-five yards
between. The day was warm later on. About sixteen hundred hours I
started to sweat a bit and I noticed beads of perspiration on
Makstutis' forehead and a large drop forming on the end of his nose.
He smiled weakly when he caught my eye.
"Guess I'm starting to get that fever, Doc," he said. "The other two
guys have it too. How're you doing?"
I wasn't too bad and said so. The protection Dr. Anders said I'd get
from the Songho Fever must be working. We went up on top of a
steep ridge and I noticed Hip Sing was unsteady on his feet. I went
over to him.
"How are you making out, boy?"
"I ..." he swayed slightly and licked his lips.... "I don't feel so good,
sir."
"Sit down, son. Let's have a look at you."
His head was scorching hot and his cheeks flushed like an inebriated
Japanese. I felt his pulse. Even after a rest it was over one hundred
and forty. At a rough guess he must have been running a fever of one
hundred and three degrees. I let him rest for a bit and then, with
Makstutis on one side and I on the other, we stumbled on down the
trail into the valley. He collapsed a couple of times before we got to
the bottom and finally we were dragging him along, his arms over our
shoulders, toes catching in the dust. Sergeant Kang followed reeling
in semi-delirium but still carrying our weapons. Somehow he reached
almost to the bottom of the slope, right behind us, and then pitched
forward on his face. The guns clattered and rolled down ahead of
him. His arms, outstretched as he fell, caught my legs and tripped
me. I went down on one knee, Hip Sing crazily over me, while
Makstutis struggled to keep his balance and pull us up again. We got
Sing over to the narrow brook that tumbled along the valley floor and
there Makstutis' knees buckled under him and he sat down. I was
feeling rough myself, but not that rough.

"Get Hip Sing's clothes off him if you can, Mak," I said, and went back
for Kang. He was still comatose so I grabbed his arms and jerked him
down the slope to level ground. I couldn't drag him any more, I hadn't
the strength. I got down on my knees and rolled him over to the
water's edge. I stripped him to his undershirt and poured water over
him with his helmet. His pulse was almost impossible to count, it was
beating so fast, but it was still surprisingly strong. That fever had to
be brought down before it fried his brains! No man can live long at a
body temperature over 105° and I knew his must be at least that.
Even if he recovered his brain could be permanently damaged by the
intense heat inside his skull. I got him into the water with his head
and shoulders on the bank. It was cold but there was no time for
gentler measures. The exertion made the swirling come back in my
head and I lay down beside him until the world came to rest again.
About five minutes later I heard gasping sounds and looked up. I had
forgotten Makstutis and Hip Sing. The Mak was still fumbling with
Sing's clothes but in his delirium he would forget and sit there,
muttering to himself, while his fingers fluttered uselessly at the
buttons. He was doing that now. The sounds were coming from Hip
Sing. As I watched, he started to retch, his face was a sweaty grey-
green. A great gush of dark brown blood came up and flowed away
from the side of his mouth. He sank back and was still. I crawled over
to feel his pulse but he was dead. Makstutis sat there and whispered.
Somewhere above I heard a shout. Under the weary haze that
covered my mind I knew I had to act but it was so much trouble.
"Doc ... Doc ..." I heard it again and looked up. Kim, watching back on
the trail, had seen that we were not following. Now, heedless of the
danger, he was coming to help us.
"Don't come any nearer!" I forced the words through the dry lining of
my throat. He was perilously close already if this virus was
transmissible through the air, as Anders claimed.
"But I can't just leave you there," he pleaded from the other side of
the water.
"We'll all die if you catch it too," I croaked, and rallied my wits. "Kim,
Anders may be at the farmhouse waiting for us. Get there as fast as
you can. Tell him the bleeding death has got us. Maybe he can still
help. And don't let anybody touch us, no matter what happens, until
he gives the order." I heard no more. Forcing the last bit of strength
from my aching muscles I turned back to Makstutis and pulled off his
outer clothes. He lay there mumbling and rambling like a Yogi in a
trance, the foam drying on his cracked lips. He was too big to roll into
the water so I poured it on him from his helmet. The cold seemed to
restore his sanity for a moment ... his eyes opened. The whites were
gone and, from the center of those bright red bleeding spheres, the
blue irises flickered as he tried to focus on me. He smiled.
"Good old Doc," he said feebly.
It was too much. I crouched there and sobbed, the aching tightness
blocking my throat as I shakily poured water over him.

The light kept bobbing about in the strangest way. It couldn't be a

firefly, too big. It was up high on the slope at first but soon it dropped
down, wavering back and forth. I knew then it was a shaded flashlight
and I heard the sliding of boots on the rocky path.
"That's close enough." The voice was strange at first and then I
remembered that was how Anders sounded.
Until the darkness and rising fever stopped me I had kept pouring the
water over Makstutis where he lay, unconscious and unmoving on the
ground. Kang floated low and lifeless in the water like a beached log.
I checked him once. His pulse was still there but slow and almost
imperceptible. As the fearful heat rose within me I lay down in the
stream beside him and shivered there as long as I could endure.
Then I would get out again and return to my work. Finally, too sick
and dizzy to do any more, I crawled to the bank and lay down on my
back with my legs in the water to cool off the blood steaming inside
me. Then I passed out.
The light flickered closer and waved about over my companions. It
came to me and I squinted up feebly, trying to avoid the glare.
"How are they, Dr. Anders?" The voice came from the slope.
"One of them is dead ... a corporal. The Russian and the Sergeant
are very bad, unconscious. Dr. Macdonald is awake," Anders said
and then, to me, "Do you understand me?"
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