ABSTRACT
An army, which has pushed forward too rapidly, penetrated far into enemy territory, suffered casualties, and outrun its supplies, must halt eventually, perhaps retreat a bit to a more easily defended position and dig in, bring up replacements, and establish a strong base from which later to launch a new attack. In the military parlance with which we have all become more or less familiar these past few years, that process is known as
consolidating
one’s gains. Although it will not do to overwork the analogy, there is much in the action of the stock market which may be compared to a military campaign. When a stock pushes ahead (up or down) too fast, it reaches a point where the forces that produced its move are exhausted. Then it either reverses its trend (in a Major or Intermediate sense), reacts to a good Support Level, or
Consolidates
its position, in some sort of “sideways” chart pattern composed of Minor Fluctuations, until it has caught up with itself, so to speak, and is ready to go on again.
