Summarizing the above characteristics, you desire:

Rating High

ftice/earaings ratio Low

Yield High

Earnings growth Large

•Capitalization Small

•Motion Large

aiort interest Large

Volume interest Large

This is what you look for if you are interested in buying the stock. If you are looking for short-Mle candidates, all criteria should be reversed except those marked (*).

A WORD OF CAUTION AND EMPHASIS

Of the above criteria, volatility is by far the most important. If you have avoided volatile issues in the past, remember that your situation and your capabilities have changed completely now that you are aware of cyclicality. Volatile issues go both up and down rapidly. Thfe may have set an unacceptable risk level for you in the past. But as risk is decreased through improved timing capabUity, volatility becomes a major ingredient in the formula for profit optimization!

Do not make too much of an issue for yourself of the remaining screening factors. They should be used for one purpose only: to get your scan Ust cut down to useful size by the use of at least reasonably logical comparison criteria. Remember that stocks fluctuate-cyclicaily. If you make a "meal out of a sandwich" in your screenmg proceffi, they wiD fluctuate on without you before you can get your analysis completed!

WHEN YOU SHOULD USE ALTERNATIVE SCANNING METHODS

There are many variations of scan criteria. Cyclic readability, volatility, and imminence of action signals should always be considered before all else. However, if you cannot estabUsh the number of issues you need on which to trade by these, or if you remain dissatisfied with the quality of the resultant choices, re-scan using alternative methods.

For example, scan lookmg for triangles in the process of formation (on either the daily or weekly charts). You have already witnessed the potency of using the price-motion model to resolve these chart patterns. At any given time you are unlikely to find more than a few, but these few are excellent candidates for your stable.

There is another technique which is soundly based on the model. While scanning Mansfield, focus yoiu" attention only on the nine-year, yearly-iiigh-low sub-chart inset in the lower left-hand comer. What you are looking for is a steady and large decli»>" "

several years (the more and the longer the better!), followed by no more than one year of rising prices. Current price should still be low by comparison with the highs of several years ago.

If the stock does not meet this test, ignore it and pass on. If it does pass the test, turn your attention to the main body of the chart. Now you are looking for a cyclic pattern which is contained within a definite range over a period of nine to 24 months. This range will be contained within a more or less horizontal envelope. Note the upper bound of this envelope and whether or not the last week of trading has broken out of the band on the topside. If so, add the stock to your hst of candidates to be screened as before.

What you are accomplishing, of course, is selection which assures you that the laie smooth sweep of fundamental motivation has recently turned up. Quite obviously investor interest in the stock is now stirring again and you wish to take advantage of the resulting fundamental upward push-augmented by the cyclic action which rides the ftjndamental like frosting on a cake! The analog of this procedure which applies to short-sale candidates is obvious.

Many variations of the scan are possible, and each will produce trading choices of merit-fiw long as:

• The stocks are cyclically readable and volatile.

• The scan criteria you use are soundly based on price-motion model concepts.

TAKE ADVANTAGE OF THE "STABLE" CONCEPT

Now that youve got a half-dozen or so prime trading vehicles in hand-what do you do with them?

Heres where the concept of a "stable" of stocks enters the picture. The purpose of the stable is threefold:

1. To center your full interest and attention on a specific group of stocks on which you will trade until the next periodic scan replaces issues with demonstrably better ones-or action signals are given and passed by because you are fully invested in other issues.

2. To force you to maintain current and up-to-date charts and analyses on your chosen issues!

3. To assure the maintenance at all times of sufficient "ready-to-go" issues, so that the idle time between trades is minimized.

For general awareness, you can cUp out and use the Mansfield and Geiergraph charts directly. One simple way of handling these is to insert the daily Geiergraph and weekly Mansfield charts side-by-side into plastic 5Vi- by SVinch folders available at any stationery store. These already have a sheet of black "art" paper in them, against which the charts show up vividly. They are punched, and can be inserted in alphabetical order in a three-ring binder for the sake of compactness, or hung on hooks on a pegboard if you like. With care, these can be updated in pencil daily if you have

chosen a short duration trading cycle. For long duration cycles, simply replace the charts periodically.

However, these charts are far too miniature for graphical analysis accuracy. For this purpose you must plot your own charts. The problem is data. Pulling daily his and lows from a newspaper, or even weekly ones from Barrons, is very time-consuming (besides requiring maintenance of a tremendous back file of newsprint). One way around this is offered by the Investment Statistics Laboratory, a division of Standard & Poors, in a publication called ISL Daily Stock Price Index. It comes to you quarteriy, and contains tabulations of daily and weekly high, low, close, and volume data on all issues traded on the New York and American Exchanges. The books are hardback and durable, and back issues are available as far in the past as 1961. With this service it is a simple matter to extract and plot your own charts for analysis purposes. The maximum amount of newsprint you need ever keep on hand is for 90 days~and this may be discarded as soon as a new issue of ISL arrives.

With your stable charts in hand, complete your cyclic analysis on each. Do not fail to update these analyses as time passes and the price motion of the stock permits new or additional conclusions to be drawn. In addition, you may utilize the excellent daily and weekly charts in Mansfield of the DJ 30 Industrial Average for analysis purposes. This wEl keep you abreast of the market as a whole, and determine for you whether the climate is one in which you should be taking long or short positions.

HOW TO TRACK YOUR STABLE

If your time is limited or if you are investing very large amounts, you will be forced to trade on longer dirration cycles. In such a case, daily or even weekly updating of your charts may satisfy your tracking needs.

However, if you are pushing towards real profit-maximization through the use of short duration trading cycles, you wiU require more accurate methods of knowing what your stable is doing. This is especially true if you are capitalizing on the profit-compounding potential of mid-band action signals.

One way of accomplishing fine tracking is through the use of special buy and sell orders. In this case you are depending on the exchange floor specialist to track your stock for you. Unfortunately, there are severe drawbacks to this approach for our purposes.

A better way is to station yourself or an aid at a brokerage during the periods of time in which you are awaiting action signals. Use of the tape display and/or the electronic quotation devices there can provide you very fine tracking indeed.

The ultimate tracking tool is a combination dry-tape printer and analog computer available from Trans-Lux Corporation. Called the "Personal Ticker," this unit can be installed in your home or office. By a simple process of exchanging slip-in tabs, this unit is programmable for up to 40 particular stocks. Special arrangement with the exchanges permits input by wire of each trade of all stocks-exactly as at your brokerage. The unit then ignores all trades on stocks it is not programmed for-but the