The market is the only gambling arena we know of where you have to bet while the action's in progress.



1. Buying during a Selling Climax
  If you can read the signs right, a selling climax is just about as low-risk a chance to make a successful trade as you'll ever get. And yet it develops during the scariest of conditions. Let's review the basic rules of such a buying opportunity. Prices have to have been falling for an extended period beforehand; you can't get a selling climax near a market top. A true climax marks an important low; sellers are cleaned out. That's what makes it a low-risk buying opportunity.

2. Buying on the Test of the Low

This test has its own elements of reduced risk, and presents a calmer chance to buy for longer-term objectives. What makes buying on the test of low desirable is that it is accompanied by an array of favorable indicator signals and individual stock-chart improvements, rather than the isolation of trying to keep your head during the hysteria and gloom of a selling climax. But what makes this climate different from those minor rally phases during the prior path downward? First, there is the climatic action-heavy-volume dumping. Second, the fear and panic has created, at last, a bearish consensus. Instead of the attitude, early in the decline, that it was survivable. Third, we've begun to see certain buyable stocks, the leading action of which serves to confirm that we're on the right track. The longer-term moving-average line is a consistently useful tool both for stocks and for averages.

3. The breakout buy

Such breakouts to the upside mark the third opportunity in a cycle for intelligent and objective buying. But before we come to the moment of the breakout, let's discuss the base-building action. A base begins as sideways actions. You may wonder why buying during this period isn't good enough. Well, for one thing, as long as the long-term moving average is still pointing downward, the base could turn out