ABSTRACT
The technical method is essentially conservative. Those who have always feared the short sale as a purely speculative gamble might well reexamine short selling from the standpoint of using the short sale as a regular part of their investment program as counterbalance to the long holdings. The result to be looked for in this conservative balanced and diversified program is primarily protection of capital. By its very nature, it eliminates the possibility of plunging for spectacular profits, but it also provides the mechanism by which the technical method can stand on its merits, largely independent of the changes and chances of the market. All major stock market Bottoms have corresponded with extremely low Magee Evaluative Index (MEI) readings. The June 1984 MEI low of 8% Strong, together with the 8% level reached on February 25, 1984, constituted a Double Bottom oversold reading for this index.
