ABSTRACT
Important Reversal Patterns In our discussion of certain deciencies in the Dow Theory from the point of view of the practical trader, we mentioned the fact that it did not tell us what specic stocks to trade in. (EN9: Obviously, no longer a problem as the investor may buy the DIA and trade the Average like a stock.) A conservative and wealthy investor, more interested in safety than maximum prot, can solve this problem by making up a comprehensive and thoroughly diversied list of sound, well-seasoned “blue chip” issues and handing his broker an order to buy the lot when the Dow Theory signals a Bull Trend. Some of his selections will do better than others; some may “go sour,” but wide diversication will ensure that he gets a fair Average result. Better results should be obtained if we can nd a way to select for purchase the most favorably situated issues at any given time and can manage to sell them promptly and switch to others whenever the prospects for the rst have been fully discounted.
